Report 19 – Released on May 7, 2020

WESTERN OVERVIEW:

The United Kingdom remains within the EU trade zone through 2020. Historically among top EU milk producers, UK March 2020 milk production is 2.4 percent below March 2019 according to Eurostat. Milk production January – March 2020 is -1.2 percent YTD compared with January –March 2019.The European Commission has approved a regulation authorizing individual dairy producers and producer organizations to deviate from normal competition rules and collectively plan production to offset imbalances resulting from COVID-19 for a six-month period. The time period rationale is that six months coincides with spring and summer, which is the high production season in the milk and milk products sector and should therefore have the most significant impact.

The cited challenges for looser competition rules include collecting, transporting,manufacturing and selling dairy products. Contract cancellations and port congestion are also cited. These factors are expected to lead to reduced milk production. Planning for milk production might involve payments to not produce.

A link to the European Commission’s evaluation of challenges facing the dairy industry is here: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2020.140.01.0001.01.ENG&toc=OJ:L:2020:140:TOC

This Monday the European Commission also published regulations implementing Private Storage Aid (PSA) for EU produced cheese. Sources note that the background is a determination that the cheese sector is coping with market disturbance resulting from supply – demand imbalance. Many cheese manufacturers are not able to process milk into non-cheese dairy products. This has led to production of cheeses which have lower current demand. A goal of PSA for cheese is to help maintain price levels. A feature of the new regulation extends cheese PSA beyond cheese with a protected designation of origin or a protected geographical indication, the standby scheme, to most EU produced cheese. According to Eucolait, those seeking aid may apply beginning May 7, 2020. The application period ends June 30, 2020.

European Commission regulations make various rules and standards for the current cheese PSA program. Storage aid is allocated among EU countries in specified volumes. The top 5 Western European country volumes are: Germany, 21,726 MT; France, 18,394 MT; Italy, 12,654 MT; Netherlands, 8,726 MT; and Spain, 4,592 MT. To be eligible for cheese PSA, the contractual storage period must be between 60 and 180 days. The amount of aid is the combination of 15.57 euros/MT of storage for fixed storage costs, and 0.40 euros/MT per day of contractual storage.

EASTERN OVERVIEW:

There has been active discussion among European dairy sources about recent events in Poland.Many EU countries are encouraging consumers to favor domestic dairy products. According to Eucolait, Poland has gone a step further, launching a campaign to prevent sourcing milk and dairy products from other member states. The Polish government has published lists of companies buying product from abroad, indicating the volumes imported, and accusing them of lacking economic patriotism. The European Commission has been asked to investigate whether this violates business confidentiality and data protection laws.

Information for the period April 27 -  May 8, 2020, issued biweekly

     Published by:
     Dairy Market News - Madison, WI
     Eric Graf, 608.422.8590
     Email: Eric.Graf@usda.gov

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