Discover how Rabobank’s forecast of a 20% drop in Northwest Europe’s milk production could impact the dairy industry. Will your morning coffee be affected?
Wake up to the reality of a significant milk supply reduction in Northwest Europe over the next decade. According to a report by Rabobank, the dairy processing industry may need to grapple with a possible 13 to 20 percent reduction in milk supply. This presents an undeniable call for an evident revamp of existing strategies.
What’s behind this downward shift? There are several contributing factors anticipated. Milk production in Denmark, Germany, Belgium, and the Netherlands is expected to structurally decrease due to stringent margins, environmental regulations, and labour market challenges. Compounded with this, the region is also likely to face the impacts of climate change, leading to weather extremes.
“Puch-boll companies should focus on high-quality products, such as high-quality protein ingredients, consumer branded items, and cheese,” says Richard Scheper, a Dairy Analyst at Rabobank.
Rabobank’s researchers have plotted two potential scenarios for the period leading up to 2035. The first anticipates a 13 percent reduction in milk supply, while the second, a drastic 20 percent decline. Whichever comes to pass, both outlooks signal an impending hit to cooperatives that will result in substantial income losses.
So, what does this mean for the dairy processing factories? They’re staring at a steep slope, because the sharp decline will provoke overcapacity issues. In light of this, Rabobank suggests companies concentrate on high-quality products. Scheper advises firms to be proactive and prepare for any imminent financial challenges.
One way to navigate through these tough waters? Consolidating milk processing capacity. This strategic shift could help smoothen out the impacts of the changing market landscape and the associated declining milk volumes.
