ICOS attended the European Commission’s annual Agricultural Outlook Conference, held online last week.

The conference examined European and global agricultural markets, as well as a wide-ranging discussion on the challenges and opportunities for the sector in reaching the EU’s 2030 climate targets.

Current EU Commission forecasts foresees that EU milk production growth could slow down to 0.5% per year over the next decade and reach around 162 million t by 2031. Furthermore, this growth is expected to be achieved with a 7% reduction in dairy cow numbers. The EU’s main competitors, New Zealand, and the US, are also expected to see a modest growth, respectively +0.2% and +1.2%. Most global growth will come from developing countries, creating concerns about the sustainability of those production systems and global GHG emissions.

Nutritional aspects and functionality will drive EU dairy demand. However, the growth in EU consumption of cheese, fresh dairy products and butter could remain relatively low and expanding production is likely to be absorbed by growing exports. There is also anticipated to be a growing consumer focus on alternative production systems, notably organic, grass based and GM free systems.

The EU is likely to keep its leading position in global dairy trade, with a strong global demand for SMP expected to be a key driver of further trade growth. This, together with the anticipated sustained strong valorisation of milk fat, are expected to drive an increase in the EU raw milk price, which will be needed to offset some of the rising input costs arising from compliance with additional environmental legislation.

You can read the outlook report from the European Commission here: https://ec.europa.eu/info/sites/default/files/food-farming-fisheries/farming/documents/agricultural-outlook-2021-report_en.pdf

Alison Graham – European Affairs Executive