In the European Union, milk production in the first half of this year was nearly 1% ahead of the same period last year. But despite this seemingly comfortable lead, there are currently significant concerns in the market about the availability of milk due to the bluetongue virus. This is causing a lot of sentiment in the dairy market.
Specifically, European milk production increased by 0.9% in the first six months of 2024 to 75.4 million tons, according to Eurostat data. In terms of tonnages, the increase was strongest in Poland, where production rose by a remarkable 6% to 6.9 million tons. This brings the production volume difference with the Netherlands to a minimal level. In our country, supply decreased by 1.4% to 7.04 million tons. It seems to be only a matter of time before Poland surpasses the Netherlands as the third-largest milk producer within the European Union.
The other countries in the top 3 are France and Germany; here too, supply increased in the first half of last year. In France, it increased by 1.3% to 12.45 million tons, while German production increased by 0.2% to 16.6 million tons. Also in Italy, the fifth largest dairy country in the eurozone, production increased by 2% to 6.8 million tons. Among the major countries, only Ireland recorded a significant decrease. Production there dropped by over 5% to 4.4 million tons. This decline is mainly due to an extremely slow start to spring, caused by heavy rain and low temperatures. Meanwhile, production has recovered quite well. In June, milk supply was almost back to last year's levels.
Based on production figures, one would not expect major concerns about milk availability. Especially since milk prices are on the rise across Europe, which usually motivates dairy farmers to produce more. Additionally, export figures outside the European Union are lagging behind last year. But nothing could be further from the truth. By mid-August, there is a lot of sentiment in the market, mainly due to an expected milk shortage. This is particularly evident in the butter market, where stocks have been tight all year. Both butter and cream prices have recently reached record levels.
Dutch supply declining rapidly
Back to milk supply and the concerns about availability in the second half of this year. Despite the increase in the first six months, these concerns are not unfounded. Firstly, there is a seasonal decline, although this is an annual recurring pattern and therefore not surprising. However, the decline could be faster than expected, due to bluetongue.
A good example of this is milk supply in the Netherlands, where the virus has been active for some time. Production often halves in infected cows, or even decreases further. It is also questionable how quickly lactation will recover. The decline in milk production is rapidly accumulating: In July supply was 3.15% below the level of the same month a year earlier in our country. In June, a decrease of 2.2% was observed, while in May, 1.58% less milk was produced.
Infection hotspots in Europe
The virus is also spreading in other countries. In recent weeks, the bluetongue virus has exponentially spread further in the Netherlands, Belgium, and Germany. Outbreaks have also been identified in France and Denmark. In Belgium, outbreaks have now been identified throughout the country. The situation is much worse than a year ago. Take Germany, for example, where only 23 outbreaks were identified last year, and this year, almost 2,000 cases have been reported. This is also reflected in the weekly milk supply figures reported by ZMB. In June, production was still above last year's level, but supply has since dropped. A similar scenario is likely in the other affected countries, although this cannot yet be confirmed with monthly production data from Eurostat.
Dairy farmers are being urged to vaccinate massively, although the vaccines do not provide complete protection in cows. The virus is likely to remain active in the coming months, as it may take a while before frost sets in and renders the midges harmless, although the larvae can withstand freezing temperatures. The extent to which the European milk production is affected by the virus is still difficult to estimate, but the concerns in the market are valid.