Dairy sector

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Dairy sector

• Promoting the leadership of agro-food industry
• 15-16 November 2007
• Veijo Meriläinen, President EDA

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Contents

• Dairy sectors societal relevance
• Global perspective
• Dairy sector in EU
• EU Dairy vision
• Challenges facing the dairy sector
• Raw material
• Better regulation and simplification
• Route to market
• Innovations
• Concluding statement

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1. Dairy sectors Societal Relevance

• The dairy sector is fundamental for the quality
  of life in Europe
• Contribution to health, responsible and safe
  nutrition for consumers
• Economic importance for rural development and
  environmental sustainability

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2. Global perspective

• Total world cow milk production is 550 mln tonnes
  
• EU is the worlds number one cow milk producer
  with 142 mln tonnes, far ahead of US ( 80 mln
  tonnes) and India (38 mln tonnes)
• Milk production is growing in China, India, US
  and South-America, EU is lagging behind
• Since 2003 global demand has outstripped supply
  and the stocks have been cleared. Today demand is
  definitely greater than supply!
• Only 7-8 is traded globally. EU has lost its
  share and New Zealand is now the biggest exporter

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3. Dairy sector in EU - characteristics

• EU milk production is highly clustered 6 member
  states (Germany, France, UK, Netherlands, Italy
  and Poland) contribute together more than 70 of
  the cows milk collected in EU
• The dairy industry represents around 15 (EUR 117
  billion) of the turnover of food and drinks
  industry in Europe
• EU dairy industry in general is basically
  national and the structure is fragmented
• Local SMEs are in a significant role only a
  few companies position themselves as global and
  pan-european
• Co-operatives and private enterprises have
  different approaches concerning expansion and
  milk procurement
• Example of the versatility in the next slide

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Countries are different Example of versatility
Romania
Denmark
5 833
4 627
Milk production 1000 tn
1 133
4 492
Milk collection 1000 tn
19
97
1 626 000
558 000
Number of dairy cows
1 168 000
6 500
Holdings with dairy cows
1,4
85,7
Average number of cows per holding
3 600
8 300
Milk yield per cow
361
67
Number of processing plants
19,0
30,4
Milk price /100 kg
SourceEurostat
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4. EU Dairy strategy

• Dynamic
• Innovative
• Global player
• Healthy nutrition
• Sustainable
• Competitive

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5. Challenges within the dairy sectorAccess to
raw material is key to global position

• Milk production is highly regulated by quotas and
  mobility of raw material is difficult
• Raw milk is perishable and cant be transported
  long distances
• Milk production is challenging no compromises on
  food safety, labour intensive and milk is
  collected daily
• Seasonality of production leads to overcapacity
• Requires long term investments on farm and
  industry level
• Competitiveness of the dairy processors is
  increasingly decisive for the pricing of raw
  material milk to farmers

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5. Challenges within the dairy sector Better
regulation and simplification

• Flaws are identified, but results are not
  satisfactory
• Slow decision-making process
• Lack of predictability
• Horizontal regulations concerning feed, hygiene,
  claims and labelling
• New regulations for animal welfare and quality
  labelling?
• Milk specific regulation drinking milk, spreads
  and preserved milk

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5. Challenges within the dairy sector Route to
market Access to world market

• Global players include different geographical
  regions in their business strategies, but SMEs
  have difficulties in approach. Specific support
  mechanisms could be helpful
• Industrial policy is made too much on terms of
  agricultural policy
• Technical and sanitary measures are barriers to
  trade animal disease outbreaks, divergent
  analysis and sampling methods, zero tolerances,
  milk products and animal health standards

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5. Challenges within the dairy sector Route to
market Access to consumer

• Negotiation power
• Private certifications and standards
• Trade terms and conditions
• Private label

Source Food Engineering Ingredients, RLF,
Planetretail
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5. Challenges within the dairy sectorInnovations

• Innovations have been and are essential in
  improving the global competitiveness of dairy
  industry and creating value added products
• Innovations in the future are more and more
  linked to the health and well-being of consumers.
  This means that more scientific evidence is
  needed for marketing of these products
• EU should create and improve platforms to support
  such development in research. The Technology
  Platform on food research, called Food for Life
  is a good example of such development and
  creating science based innovations
• Claims are essential and needed for marketing and
  consumer communication of these new products.
  This means that approval of claims should not
  prevent or slowdown this development
• European level programs in science and research
  (7th framework program) are essential in boosting
  the science-based innovations in open
  environment. Probiotic dairy products are good
  examples of commercial success in this area
• SMEs should have easier access to these programs

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6. Concluding statement

• EU dairy industry is world class
• Efficient processing plants
• International brands
• Superior product quality
• But also a market that needs rules higher
  efficiency in EU policy framework needed.
• EU dairy competitiveness can be further enhanced
  if EU policy together with the industry addresses
  the challenges ahead.

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Thank you!

• Promoting the leadership of agro-food industry
• 15-16 November 2007
• Veijo Meriläinen, President EDA