No need to fear lifting of European dairy quotas

A Rabobank dairy analyst has reassured the Australian dairy industry that European dairy quotas being lifted are unlikely to negatively impact the Australian dairy sector.

Dairy production has historically been capped in European countries, but this is set to change with the staged lifting of quotas due to be completed by 2015. An estimated additional nine billion litres of milk will be produced out of Europe between 2015 and 2020, a figure that has caused some concern in the Australian dairy industry.

But senior global dairy analyst for Rabobank Kevin Bellamy has allayed the industry’s fears, saying in a media release, “While there will be some increase in European dairy production as a result of the quotas being lifted, it is unlikely to be the tidal wave that some people are fearing, and continued strong medium-term growth in world demand for dairy is set to absorb the additional supply.”

Bellamy said the increased dairy production will probably go to markets such as the Middle East and Russia, which is unlikely to impact Australia’s main export markets of South-East Asia and China.

He also commented that the role of quotas in suppressing EU milk production had been somewhat overstated: “Quotas are not currently a constraint in most EU regions, with many areas producing below the quota amounts anyway, due to other limiting factors.”