EU unable to compete with US in dairy market

According to data on changes in the global dairy market presented by European Commission bodies, the European Union is losing its global market share in the area of exports of dairy products, with the US capturing an increasing portion. Such tendencies make Lithuanian milk producers worry.

“The data on EU dairy exports do not inspire optimism among representatives of EU countries.  Lithuanian dairy market tendencies are closely related to the situation in both the European Union and global dairy market. Thus, we cannot simply complain that the common EU dairy market is shrinking, sales are on the decline and therefore everyone experiences more difficulties today. We should keep in mind that the EU as an exporter is losing its global market share, yielding it to US-made products,” Mindaugas Juozaitis, General Manager of Agrowill Group, said.

In his words, with the EU export share shrinking, Lithuania’s possibilities to sell its dairy products are diminishing. Judging from the tendencies, total EU dairy exports are declining while EU exports are on the rise. In 2008 compared to 2007, there was a decrease in EU exports of butter, cream, skimmed milk powder and cheese. The US, meanwhile, saw its dairy exports grow.

The US is capable of developing its dairy business as well as defending its producers and penetrating global markets more effectively, even if it has to breach agreements sometimes. The European Union, meanwhile, restricts itself to grants for farmers and is not capable of more serious defence and development of its dairy industry. This is the reason why its share of the global market is shrinking. This is bad news for Lithuanian milk producers and milk processors.

Referring to the information and expert conclusions provided by the European Commission, Juozaitis said that the fact that Lithuania had the lowest milk purchase price of all EU member states and one of the highest product prices showed that the dairy market was quite distorted.  Lithuanian product prices are higher than the average and are therefore non-competitive in the EU market. Meanwhile, the overall price level of EU dairy products tends to drop, with the price of some dairy products getting close to the raw milk purchase price. This reflects overall imbalance of EU market prices. Lithuanian milk producers must find resources for enhancing competitiveness.

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