Editorial ¦ IDM
What comes after Corona?
Prospects for a decent milk year in 2021
In the last weeks of 2020, two major uncertainties loomed over the dairy market in 2021: the further
development of the Corona pandemic and the threat of a hard Brexit. The latter would have meant high
tariffs for trade in dairy products between the remaining 27 EU countries and the UK. With shipments of
around 500,000 tonnes of cheese, 80,000 tonnes of butter and 300,000 tonnes of sour milk products,
as well as not inconsiderable quantities of milk powder, the impact would probably have been massive.
The last-minute trade agreement of Christmas Eve eliminates customs duties and import quotas. So there
is still a good prospect for the exchange of goods, even if more formalities, which are unavoidable due to
the new status as a third country, will probably have a somewhat dampening effect.
The second major uncertainty is the further course of the Corona pandemic. However, with the start
of vaccinations in the last days of 2020, there is justified hope for an improvement in the situation.
Demand for dairy products so far has been robust despite the serious negative impact of the pandemic
on the global economy. World milk volumes, which have grown more than originally expected during
2020, have been well balanced. No new stocks of dairy products have built up. Consistently high
demand from the world's largest importer, China, has been a major contributor.
The main consequences of the Corona outbreaks everywhere were that there was a partial shift of
sales from out-of-home consumption to food retail. This process has been well managed by market
stakeholders. Exports to southern European countries have also fallen less sharply than initially feared,
although the tourism business there has suffered greatly, with negative consequences for incomes and
demand in the catering and hotel industry.
However, it remains a drop of bitterness that prices on the milk market collapsed during the initial uncertainty
at the beginning of the pandemic. Although they recovered quickly, they did not reach the level of
the beginning of 2020. This means that in 2020 milk prices for many milk producers have fallen for the
third year in a row, while at the same time society's expectations towards more sustainability are growing.
In the first months of 2021, dairy consumption is expected to remain more on the side of food retail than
usual, as public life is expected to remain constrained initially due to the pandemic. As the year progresses,
life should gradually return to normal, provided the fight against the pandemic is successful.
Then, out-of-home consumption will increasingly return to its former strength and supermarket sales
will return to more normal levels. Many questions remain open as to what exactly will happen in the
post-Corona period: How will incomes, employment and inflation evolve? Will work change permanently
or will new consumer trends emerge from the crisis? What is certain, however, is that (dairy
products) will continue to be eaten in 2021 – in Europe and around the world. With this and low stocks
at the beginning of the year, a successfully concluded trade agreement with the United Kingdom and
probably a less strongly expanding milk production, there is the prospect of a decent milk year in 2021.
January/February 2021 ¦ international-dairy.com · 3
Monika Wohlfarth
ZMB, Berlin
/international-dairy.com
