March 22, 2017

EU Milk Production Bouncing Back

 |  By: Fran Howard

It appears that EU-28 producers, who have cut back after many months of low milk prices and heavy culling, are once again ready to expand milk production.

As of December 2016, the EU-28 dairy herd stood at 23.5 million head, a drop of 0.21% or 49,000 cows from the prior year. “Overall, this drop reflects the first year-over-year reduction in the EU-28 dairy herd since 2011,” reports Sara Dorland, analyst with the Daily Dairy Report and managing partner at Ceres Dairy Risk Management, Seattle. “While the total decline in the EU milking herd was modest, changes within the region were notable.”

The two largest milk-producing countries in the European Union, Germany and France, both culled heavily. Germany’s herd declined by 66,940 head, and France culled 31,000 cows from its herd, compared with the previous year. Eighteen of the 28 countries had fewer milk cows at the end of 2016 than they did at the end of 2015, and those countries reduced their collective herd by 225,270 head in 2016. 

“However, three countries added more than 150,000 cows in 2016, which offset most of the decline,” notes Dorland. The Netherlands added 77,000 head, Ireland added 55,340 cows, and Poland added 26,400.

In 2017, producers in the Netherlands are expected to reduce their combined dairy herd by 150,000 cows as they meet EU Commission regulations to reduce nitrates. “Some of the herd reduction in the Netherlands could come from exporting cows, and that could help farms in surrounding countries quickly rebuild their herds,” Dorland notes.

EU producers are becoming more efficient. “If output per cow continues to grow, it could push milk production higher this year,” says Dorland, who notes that Europe does not produce monthly estimates for production per cow, but Daily Dairy Report (DDR) analysts calculate the number by dividing annual milk production by reported cow numbers.

DDR data suggest that while Germany experienced declines in its milking herd, annual average milk production per cow totaled 16,437 lbs., up 1.6%. France appears to have experienced a 2% decline in production per cow as well as fewer cows, while Ireland’s output per cow was nearly unchanged compared to the prior year. The Netherlands experienced a 2% to 3% increase in output per cow on a larger milking herd.

Environmental constraints could make milking more cows a challenge in Europe, forcing producers to rely on increasing output per cow to expand production in coming years. Poland is a good example, Dorland notes. In December 2007, Poland had 516,780 more dairy cows than it did 10 years later in December 2016. In 2016, however, Poland produced 11.1 million metric tons of milk, up 27% from 2007’s 8.7 million metric tons.

“Dairy producers in countries suffering from lower milk prices in early 2016 may have managed costs by feeding lower-quality forages,” Dorland notes. “A recovery in prices in 2017 means producers will likely be able to afford higher-quality feed this year, which could boost output per cow. Reports are already surfacing that European milk supplies are not only seasonally higher, but also some countries may be seeing milk growth from higher output per cow.”

World markets could have trouble absorbing increasing milk supplies from the EU-28 this spring, which could result in milk powder heading back into Intervention, she adds.