Pressure on milk supplies on both sides of the world

New Zealand’s milk production was down 3% year-on-year in August, the month when supply starts to rise towards an October-November peak.

The sharp change from a 1% increase in July supplies is likely to boost world dairy markets.

Meanwhile, a Dutch dairy co-op has added 10% to the EU’s efforts to cut milk production.

This measure comes on top of the €150m EU incentive for reducing milk production, which has been fully subscribed.

Friesland Campina has made €15 million available for a six-month scheme to pay its its dairy farmer members to produce less milk.

From next Saturday, October 1, FrieslandCampina will pay 10 cents per kg of milk in a scheme designed to cut its supply by 150 million kg of milk in the period up to March 31, 2017.

The measure is intended to accelerate the reduction of phosphate pollution on Dutch members’ dairy farms, in anticipation of Government measures to cut farm phosphate production as much as 8%.

Dutch farms are likely to have to cull as many as 100,000 cows to meet EU soil phosphate targets.

The Netherlands led growth in 2015 EU milk production after EU milk quotas were scrapped in April 2015, but this brought phosphates 4-8% over allowed limits on Dutch dairy farms. (Although Ireland had the highest percentage growth at 16.3%, most of the extra milk came from the much bigger Dutch dairy sector’s 10.5% increase).

From January 1 next, farmers will be issued with phosphate rights, based on the number of cows they had in July, 2015, and cannot produce more phosphate than the quantity for which they have rights. The dairy sector is also talking with the Dutch government about supplementary incentives aimed at reducing phosphates.

Because of shortages of the processing capacity, FrieslandCampina also implemented a bonus for limiting milk supply at the beginning of 2016.


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