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Agricultureand Rural Development
Sophie Hélaine, DG AGRI, EC2019 Agricultural Outlook ForumWashington, 22 Feb. 2019
Main drivers of the Outlook for the EU dairy sector
Agriculture andRural Development
Meat and dairy consumption pushed down
By societal demands
THEFLEXITARIAN DIET MEAT FOR ONLY
2 TO 3 DAYS A WEEK
DAY 4
Agriculture andRural Development
Meat and dairy consumption pushed downby the development of alternative products…
Retail and foodservice volume of plant-based drinks (million litres)
Source: DG Agriculture and Rural Development, based on Euromonitor
0
200
400
600
800
1 000
1 200
Soya drinks Other plant-based drinks Plant-based drinks
Nevertheless shares of alternative products
remain small
• 4% of cow's milksales
Source: Euromonitor
Agriculture andRural Development
But actual impact on total consumption still smallHigher EU domestic use of dairy products, except for drinking milk
0
30
60
90
2006 2018 2030
Consumption of selected dairy products
(kg/capita)
Liquid milk Cheese Butter Yogurt Cream
➔ Smoothened decline in liquid milk consumption
➔ Use of cheese keeps growing
➔ Fat filled powders on the rise
➔ Increasing cracking of milk into technical ingredients
➔ + 0.9 million t of milk domestically used yearly
Agriculture andRural Development
Global trade expansion but lowerEU leading position on world dairy products market
milk powders
and cheese
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Dairy
Average annual increase in dairyglobal import demand (million t)
2006-2018 2018-2030 Value added productsTechnical ingredients
Adoption of Western cuisine
0 %
10 %
20 %
30 %
40 %
50 %
Cheese Butter SMP WMP Whey powder
Share of EU on world exports in 2030 (%)
40
23
31
13
46
Agriculture andRural Development
Lower production growth expected
Mainly cheese and other dairy products
➔ modest increase in milk production
+ 16 Mt to 182 million t
in 12 years
-0.5-0.4-0.3-0.2-0.10.00.10.20.30.40.50.6
Cheese Butter SMP WMP Wheypowder
Freshdairy
products
Otherdairy
products
Dairy annual production growth 2018-2030
(million t of milk equivalent)
Agriculture andRural Development
Big unknown: dairy fat and protein price relationship
EU SMP stocks empty in 2019
➔ Building SMP stocks in 2016
➔ Sales in 2018 and January 2019
➔ No buying-in in 2018 although SMP prices < Intervention price
0
50
100
150
200
250
300
350
400
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
StockPrice EU SMP price (EUR/t) and stocks (1000 t)
SMP stocks SMP price SMP intervention price
Agriculture andRural Development
Big unknown: dairy fat and protein price relationship
Higher milk price to drive production increase
➔ Back to closer butter and SMP prices
➔ Higher milk price to drive production increase
➔ More value added products => higher milk price
150
200
250
300
350
400
450
0
1,000
2,000
3,000
4,000
5,000
6,000
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
MilkProducts EU dairy product prices (EUR/t)
SMP Butter Raw milk price
Agriculture andRural Development
… and impact production (de)localisation
Other challenges for the livestock sectorSustainability requirements stimulate actions
To mitigate GHG emissions
and stimulate efficiency increase
01,0002,0003,0004,0005,0006,0007,0008,0009,000
2006 2018 2030
Cow's milk yield (kg/cow)
To reduce ammonia emissions
To reduce nitrogen leakage, phosphates
CAP Reform
COP 21WaterDirective
Agriculture andRural Development
Challenges can becomeopportunities
Focusing on differentiated products and value creation
Organic production
• 10% of dairy production in 2030
• more complex in meatsector
Pasture-based products
GM-free products
Locally-produced
Agriculture andRural Development
Thank you
Sophie Hé[email protected]
To know more on OUTLOOK:Short-term outlook: https://ec.europa.eu/agriculture/markets-and-prices/short-term-outlook_enMedium-term outlook: https://ec.europa.eu/agriculture/markets-and-prices/medium-term-outlook_enEU agricultural outlook conference: https://ec.europa.eu/info/events/2018-eu-agricultural-outlook-conference-2018-dec-06_en
On CAP:CAP reform: https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultural-policy/future-cap_enCAP indicators: https://agridata.ec.europa.eu/extensions/DataPortal/cmef_indicators.htmlFacts and figures: https://ec.europa.eu/agriculture/statistics/facts-and-figures_en
