Discover why 2,400 German dairy farmers hung up their milking gloves in 2023. Uncover the factors that led to this mass exodus in our in-depth analysis.
Germany closed out 2023 with 50,581 agricultural holdings with dairy cattle, a drop of 2,400 (or 4.4%) from the tally in December 2022. Over the course of one year, the number of dairy cows shrank by 2.5% to a total of 3.7 million animals, as reported by the Information Centre for Agriculture, BZL. The Centre emphasized that this is a continuation of a decade-long decline in the German dairy herd, despite an increase in the annual milk yield per cow, from 8,504 kg in 2022 to 8,780 kg last year.
Like their peers across the globe, German dairy farmers continually battle a steady dip in the consumption of their products. In 2023, milk consumption in Germany slipped to a new minimum of 46 kg per head, another 1% decline from the record low of 2022, as per BZL. Further impacting the sector was the fact that Germans purchased and consumed 23.8 kg of cheese per head as opposed to 24.6 kg the year before, while butter and milk fat usage fell by 1.4% to 5.56 kg per person.
“The growing popularity of plant-based alternatives in conjunction with the gradual decrease in prices for milk and dairy plant-based alternatives in local stores have heavily influenced the consumption pattern,” BZL remarked.
Perhaps you’ve wondered about the dining habits of our eastern neighbours? Well, according to the Bundesinformationszentrum Landwirtschaft (BZL), they’ve been indulging in averages of 46 kg of drinking milk, 23.8 kg of cheese and a dazzling 5.56 kg of butter per person! Of course, everything changes and sadly, or perhaps healthily, these consumption numbers have taken a slight dip, with drinking milk and cheese intake both dropping by 0.8 kg.
What’s causing this surprising turn of events? The BZL believes these declining numbers can be attributed to soaring supermarket dairy prices, which have undoubtedly made some think twice before picking up a bottle of milk or a block of cheese. Furthermore, the ever-expanding range of dairy substitutes now on offer is proving irresistible to many, helping to move the statistical needle away from traditional dairy consumption.
In the face of this rapidly evolving dairy landscape, it’s clear that the traditional milk and cheese-producing sectors in Germany face some serious challenges as they strive to adapt and remain competitive.
In 2023, the German dairy industry produced approximately 4.2 million tonnes of consumer milk, marking a near 1% drop year-over-year. Yet, the country’s self-sufficiency rate for consumer milk stayed more or less stable at 107%. With cheese production moving up from 2.64 million tonnes in 2022 to 2.66 million tonnes last year, combined with a decreased domestic consumption, the German cheese industry managed to export a record volume of 1.41 million tonnes, a stellar 6.6% more than in 2022 and the highest level since 1992, BZL highlighted.
The production of butter and associated products touched 480,500 tonnes, which is a modest 1.8% increase but nevertheless significant lower than the record 506,400 tonnes produced in 2020. Germany bought 10% less butter from other countries, settling at 156,000 tonnes. Now, the country’s butter imports are about 20% lower than in 2021. Remarkably, the trade statistics for butter in 2023 came close to achieving a balance for the first time.
Speaking during the Milk Forum 2024 in Berlin, Vice-President of the Farmers Union Deutscher Bauernverband, Karsten Schal warned, “This year, the number of dairy farms in Germany will, for the first time, fall under 50,000. At the end of last year, the number of dairy cows hit the lowest point since the reunification of Germany. We are very apprehensive about the upcoming transition plans. Technically, the dairy industry is surrounded by uncertainty, just as we are dealing with challenges in terms of animal welfare, climate protection, evolving customer consumption patterns and grappling with overwhelming bureaucracy.”
Identifying the Key Reasons Behind the German Dairy Exodus
Undoubtedly, you’re wondering why such a powerhouse in the dairy industry is witnessing a mass exit of dairy farmers. Key factors like the COVID-19 pandemic and the evolving consumer preference have significantly influenced the German dairy landscape in recent years, upsetting the status quo and causing a challenging environment for the dairy farmers.
Take a moment to understand what the pandemic has done to the dairy industry. The introduction of COVID-19 restrictions led to a dramatic decrease in demand from the catering and hospitality sector. Coupled with disrupted supply chains due to labor shortages and the irregular availability of raw materials, these forces created a chaotic business environment that has proved insurmountable for many dairy farmers.
Now, let’s explore the changing consumer behavior. Over the years, health consciousness and a shift in dietary preferences have resulted in a growing demand for fresh over processed cheese. This change has encouraged a rise in production innovation. However, not all dairy farmers have been able to adapt quickly to these rapidly shifting demands.
Moreover, German dairy farming operations are largely sectioned off by regions: with Eastern, Western, Southern, and Northern regions all having distinctive dairy practices. With this segmentation comes significant variability in regional demands and resources, making uniform industry adaptation more challenging.
In a healthy market scenario, such challenges precipitate consolidation and encourage competition. Inevitably, more adaptable and innovative market players strive for survival while others retreat. Unfortunately, for now, it appears that a notable number of those taking a step back are German dairy farmers.
Remember though, the German dairy industry is not all about its impressive dairy cattle herd and powerful cow families. It’s about the people – the approximately 2,400 who in 2023 chose to back away from dairy farming. While the shortfalls of this year are undoubtedly daunting for the remaining dairy farmers, it’s also a reminder of the need to adapt, react and innovate to safeguard the industry’s future growth.
The Government’s Role in the German Dairy Industry Crisis
While analyzing the mass exodus of farmers from the German dairy industry, it becomes paramount to understand the role of the government in this critical situation. It is in the intersection of policy and practice where we often find the roots of such complexities.
Understanding that Germany, with its dairy cattle herds and second largest cattle population in the EU, holds an undeniable position of influence in the dairy market, one might assume the country would have a sturdy support structure for its dairy farmers. However, this is unfortunately far from the reality. Over the past year, there has been an evident lack of decisive action and support from the government during this crisis.
The impact of COVID-19 on the German dairy market cannot be overstated. Dairy farmers were hit hard by restrictions, labour shortages, and raw material availability issues. However, it was the government’s response, or lack thereof, to these challenges that has heightened the exodus.
Despite being home to key players like Arla Foods, Bayernland eG, and Danone SA, the government’s inaction to provide necessary relief measures has resulted in a staggering number of farmers choosing to quit the dairy industry.
From aligning policy to understanding the intricacies of regional distribution from Eastern, Western, Southern, and Northern territories or recognizing the importance of various distribution channels, from convenience stores to online retail, a proactive approach from the government was sorely needed. Yet, farmers were met with silence and inaction.
The government’s role in this crisis, whether through action or inaction, has thus had a profound impact in shaping the landscape of the German dairy industry. In such tumultuous times, it’s crucial to recognize these complex dynamics for better solutions and, hopefully, a more robust dairy industry in the future.
The Global Dairy Market Influence on Germany’s Dairy Exodus
Now, when it comes to the international dairy market, it’s not hard to see how it has had a significant impact on Germany’s dairy industry. As you may know, Germany prides itself on housing the largest dairy cattle herd and being regarded as the second highest in terms of cattle population in the European Union. Historically, this has accorded Germany a key role in the global market scene, allowing the nation to flex its dairy muscle, so to speak.
Nonetheless, recent years have seen a vast and marked change in the global dairy marketplace. Changes in dietary preferences towards health-conscious options and innovations in dairy processing have shifted the rules of the game, a shift admittedly not anticipated by many German dairy farmers. This was only expedited by the rise of plant-based dairy alternatives and increased technological advancements, which added strain on traditional dairy farming and processing methods.
The hit on the industry was further amplified by substantial disruptions caused by occurrences like COVID-19. Many sectors faced challenges, with dairy being no exception. Issues such as labour shortages, restrictions, and raw material availability could not have been forecasted but sure did leave an immense impact.
A mention-worthy trend that seemingly took hold of the Germans was the preference for fresh cheese over processed cheese. Germany, despite being an international dairy powerhouse, witnessed a decrease in demand for its traditional products. Coupled with the soaring rise of e-commerce and online retail, the mounting pressure undeniably played a part in causing many German dairy farmers to reconsider their operating strategies or quit the industry altogether.
In conclusion, the trends and movements within the global dairy market have posed considerable challenges for German dairy farmers. While this paints a disturbing picture for the current state of the dairy industry in Germany, it can also be interpreted as an opportunity for recalibration and innovation, if you look at it optimistically.
The Bottom Line
In conclusion, the dairy exodus in Germany during 2023 is certainly indicative of a complex matrix of issues affecting the industry. The interplay between government policies, global influences, domestic challenges, and shifting consumer behavior all play a role, ultimately driving dairy farmers towards other occupations. As we continue to observe these trends, it’s essential to remember the broader context of market dynamics and strategize accordingly. The decline of dairy in Germany serves as an important case study with potential ramifications for the global dairy industry, particularly for producers and exporters in the U.S.A. who look to navigate the evolving dairy landscape successfully.
