Due to oversupply, global milk prices worldwide are under pressure. The Board of Directors of Arla, one of the largest dairy cooperatives in Europe, expected that the pressure beginning 2016 will subside some.
The price for whole milk powder is expire since beginning of 2014 as a result of Russia's import bans on Western food, of weaker economic development in China, as well as the end of the quota system in the EU was around 53%. China and Russia had obtained 28% of the global dairy products until then. This value decreased from 10% this year.
Peter Tuborgh, Arla, CEO expects that the world's largest importer of whole milk powder, with the beginning of the next year again has to import China more dairy products, because then the supplies in the country will be exhausted. Also, the offer of some countries outside Europe will grow less strongly.
The European milk market was liberalized in April 2014 due to the Elimination of the 30-year-old quota system, which allows farmers to expand their production any. Subsequently, this led to a larger offer and price pressures.
Tuborgh is but not too worried, because the production in Europe has grown since the end of the quota system only to 1-2%. Farmers still need help. The policy is needed here now. Extending offers a way of intervention. For example, France at a Conference of Agriculture Ministers will committed on September 07.
The Arla chief expects a worldwide increase in milk demand by 2% to 3% in the coming years, powered by the world's rising wealth in emerging markets. Protests of farmers in some European countries have meant that some food chains in Britain, Scandinavia and Germany pay more for milk to their suppliers.
Tuborgh expects that the deflation, which has been observed in many markets this year will fade away. Sales of Arla Foods fell 3.8% compared to the previous year to 5.1 billion euros in the first half of the year of 2015, at the same time the profit by 19% to EUR 122 million declined. The Denmark-based company is the seventh largest dairy company that 13,500 farmers in seven EU countries as part of the world.
