Dairies in the EU must keep milk producers in line if they do not want to jeopardise their investments. Christophe Lafougere (photo: IDM) from the consultancy GIRA recommended to the companies at the DIN Conference in London on 6 May to focus on more added value in the assortment (less profitable items are to be dropped from the portfolio), to offer index or long-term milk supply contracts to the farmers and to focus on cooperation to reduce costs.
The market situation in the next five years will be very different from the last five years, Lafougere said. There will hardly be any commodity surpluses in the literal sense. Instead, the gap between supply and demand will narrow. In 2026, the EU may still have 23 million tonnes of milk available for export, while North America may still have 13 million tonnes available for the world market – not counting production-limiting measures by governments. The world market, however, will need at least 30 million tonnes more mopro. How New Zealand will fit into this scenario is hardly predictable at present.
In any case, Lafougeres concluded, milk fat will become an absolutely scarce commodity in the future.
