MD_DA100

     European Dairy Market Overview

     Report 13 - Released on March 26, 2020


     WESTERN OVERVIEW:

     Milk production in Germany, the leading Western European milk producer, has been ahead of
     last year according to early reporting in recent weeks. Retail demand for more fluid milk,
     arising from consumer stocking prompted by COVID-19, has also yielded more cream. The same
     pattern is reported in France and some other Western European countries.

     Higher production is coming up against more challenging movement of Western European dairy
     products. An unusual change in Western Europe is recent reversal of the decades long
     European Union effort to create and maintain open internal borders. COVID-19 has motivated
     individual sovereign member states to impose varied new restrictions on people and goods
     moving across borders. This has impacted the flow of dairy products and weakened some dairy
     prices.

     As many European Union member states began to impose COVID-19 motivated border crossing
     controls last week, sources say there were huge backups of goods and human crossings at some
     borders. This is said to have resulted from document checks and physical checks of goods. A
     result was the lower pricing of some dairy powders as well as butter.

     This led to efforts this week to suggest ways to make the crossing control process more
     efficient. An European Commission (EC) proposal suggests maintaining “green lanes” to
     expedite crossings of essential goods such as dairy products. Even though the EC suggested
     this as a common protocol, it is up to each member state as to how borders are controlled. A
     goal of the EC has been open borders. That has been the norm. The new reality of varied
     border controls imposed individually by member states is new to the EC. It is too soon to
     assess whether this will help speed movements of goods and people.

     There is very persistent demand for cheese within Western Europe. Retailers are actively
     seeking cheese to keep coolers stocked. The magnitude of current demand is said to be a
     challenge for the entire logistics chain. Cheese exports from the EU during January 2020,
     80,766 MT, increased 19 percent from January 2019, according to Eurostat. Cheese exports to
     the United States, 14,322 MT, were +46 percent. Cheese exports to Japan, 8,546 MT, were -5
     percent. Cheese exports to South Korea, 5,841 MT, were +57 percent.


     EASTERN OVERVIEW:

     COVID-19 motivated imposition of new border controls in Eastern Europe has seemed more
     restrictive than in Western Europe. European dairy officials cite Hungary and Poland, in
     particular, as having problematic delays and restrictions at borders which have caused some
     concern. Poland, a leading European dairy producer, produces more milk than is consumed in
     Poland. It will be important to the dairy industry to work toward a way to keep the milk
     moving outside the borders.

     Elsewhere, movements of workers are a concern of the dairy industry, as well as movements of
     goods. Historic open border policies over the years have resulted in a number of dairy
     workers regularly crossing borders between home and work. Some dairy managers say that the
     Czech Republic has now effectively banned cross-border commuting of some Czech workers. New
     rules mandate that Czech citizens working in Germany or Austria may only cross the border
     every 21 days, then have to face a 14-day quarantine upon returning to the Czech Republic.
     This will effectively reduce workers available in dairy plants and on farms in Germany and
     Austria.

     Information for the period March 16 - 27, 2020, issued biweekly

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

     Additional Dairy Market News Information:
     Dairy Market News (DMN) by Phone: (608)422-8602
     DMN Website: https://www.ams.usda.gov/market-news/dairy
     DMN MARS (My Market News): https://mymarketnews.ams.usda.gov