In the first full year following the abolition of dairy quotas, new figures from the EU Commission show that the EU28 countries were able to increase exports of butter and cheese to international markets and maintain market share. In 2016, EU28 exports of butter increased 20% to a record 162,285t, while cheese exports increased more than 11% to breach the 800,000t mark.

Exports of butter and cheese to our largest markets in particular all saw growth in shipped volumes. The US is the EU’s most important trading partner for both butter and cheese commodities. Last year, the US imported 11% more butter from the EU to reach 19,265t, while cheese imports were 2% higher at 142,220t.

Saudi Arabia has also grown to become a major destination for EU dairy commodities, with a total of 18,809t of butter and 44,840t of cheese exported to the country in 2016.

In contrast, exports of both skim (SMP) and whole (WMP) milk powder from the EU28 declined in 2016 as weaker demand and the EU’s intervention policy affected the market. Traditionally, north African countries such as Algeria and Egypt have been the primary home for EU milk powder exports. While this remains the case, the volumes shipped last year were much lower, with SMP exports to Algeria and Egypt down nearly 20% and 25% respectively.

EU intervention undoubtedly sucked up large volumes of SMP last year, but another important factor is that cheaper product from countries like New Zealand, in particular, displaced EU28 milk powder exports.