After nine months of “modest falls” Dairy Australia reported February milk intakes were only 1.2 per cent down on the same month last year. Production across the 28 EU states is expected to grow by 0.6 per cent this coming year with increases in per-cow production offsetting a likely fall in herd size, according to Dairy Australia.
The EU Commission compensated dairy farmers to reduce production in a bid to stifle milk growth in a time of depressed global prices.
But Dairy Australia’s Situation and Outlook report said the effectiveness of this $228 million program had been questioned as it “compensated farmers for production decisions they had already made”.
Skim milk powder stockpiles are still an issue for global markets. With new EU product subject to intervention there was expected to be even less demand for older product.
The EU intervention storage scheme has reopened for the new season. Since March there has been a total 7937 tonnes of SMP added to intervention.
In the last week of May another 572 tonnes were added, including 30 tonnes from the UK, but the bulk of the offering was from Lithuania.
The total offering of SMP from the EU into intervention last year was 334,551 tonnes and only 40 tonnes has been sold from this. Twenty tonnes went to the UK and the rest to Germany. The EU Commission had been holding out for higher prices, but tender offer values declined over the tender rounds because of the ageing of the product, Dairy Australia said.
Dairy Australia analyst John Droppert said there was only about $A152 a tonne difference between old SMP and the new season SMP. With new product going into intervention there was little demand for SMP and even less interest in old product. The old SMP was likely to become livestock feed.
The EU has increased its production of liquid milk by 10 per cent, while whole milk powder and SMP production has declined 17 and 18 per cent respectively, according to Dairy Australia.
Source: The Weekly Times