Tuesday, 17 February 2015

Belarus milk yield up; more bad news for EU dairy farmers?

Belarus has said the current modernisation of their dairy industry will allow 6.9mmt of milk to be produced in 2015, up 10% on the previous year.

The Belarusian Minister of Agriculture reported that a total of 300 dairy farms were built and 1,063 were remodelled as part of the national program for developing the dairy industry since 2010.

Now this is a Minister of Agriculture of a totalitarian agricultural state that has a former collective farm director at its head, who likes to take a direct and personal role in how farming is conducted so I would treat these figures with a degree of caution.

But Belarus has been upgrading its agriculture for a number of years now and the president does take direct action in that process so it’s very likely that milk output (if not efficiency) will increase and it will find a home in Russia.

If you listen to pretty much anyone associated with EU dairy industry over the last six months it will be catastrophic as Russia has been such a significant market for dairy products that the food sanctions has been the root cause of all the low prices.

So Belarus upping milk output and taking a larger share of the Russia dairy market which it will do as a member of the Customs Union is a problem for western dairy farmers?

Not necessarily.

Bringing in sanctions has had an impact and some sectors felt it more than others and it may well have been the final nail in a number of coffins but a lot of the shouting is just part of the process to leverage compensation from the EU emergency fund.

Isn't the real long term problem of low milk prices oversupply, that there is too much milk about for the domestic and global market?

EU milk quotas are about to be dropped so I guess we’ll find out soon enough.