The European Dairy Market, 2022

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european flag France and Germany are the two main milk producing countries of Europe accounting for 37% of the EU’s total output. Both countries had a very weak production year in 2021 with milk collections down 2-3%. According to the Farmers Journal ‘reports suggest very poor fodder quality in France and rising feed prices are putting the brakes on milk production despite the very strong milk price outlook’. This issue indicates deeper underlying problems that won’t be solved by the milk season starting again.

Rising costs for farmers have put a huge strain, especially on smaller farmers. Even though milk prices have increased significantly throughout 2021 and early in 2022, the bigger issue is a squeeze on profit margins. The market has been volatile for farmers over the last 5 years and the rising costs for feed, fertilizer, electricity have been the final straw for many smaller farms. With the exit of a significant number of farmers there is a massive supply surplus that will struggle to meet the ever increasing demand for dairy from Europe and worldwide.

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