MD_DA100 European Dairy Market Overview Report 1 - Released on January 6, 2022 As 2022 opens, dairy analysts in Western Europe foresee: continuing firm dairy markets; production and transportation challenges resulting from labor shortages; uncertainty related to COVID factors; and cost pressures. In short, similar factors to those dominant during 2021. Looking ahead, 2022 milk production is expected to continue to be lower than desired. Decisions will have to be made regarding allocating available milk among dairy products. Currently cheese continues to be high on the priority list. German dairy analysts suggest that even with the recent change in government, following sixteen years of the previous governing coalition, no significant changes in agricultural policy are expected in the near term. The new coalition government has selected a Green Party official to be Minister of Agriculture. Yet, it is noted that agriculture is typically a lower profile policy focus in Germany, than for example, making cars and trucks. So, the initial focus of the new governmental coalition is not expected to be on agricultural policy. That should leave the largest dairy economy in Western Europe continuing on a similar trajectory as before. While there is an EU wide effort to reduce carbon emissions, which has led some member countries to undertake actions to reduce cow numbers, Germany has noted declining cow numbers for other reasons during the last several years. So, no new abrupt governmental measures targeting cows are anticipated in the near term. As 2021 ended, so did many contracts for Western European cheese. New contracts now beginning generally specify higher pricing. Manufacturers are enforcing higher prices, which brings higher revenues. Little potential for any significant increase in cheese availability in coming months is expected. EASTERN EUROPEAN OVERVIEW: Poland continues to lead other Eastern European milk producing countries in dairy output. As with Western Europe, cheese production remains a priority. Internal demand for cheese has restricted availability for export markets. Information for the period December 27, 2021 - January 7, 2022, issued biweekly Secondary Sourced Information: Western European milk production January – October 2021 decreased 0.1 percent from January – October 2020 according to data supplied by the European Commission. United Kingdom milk production January – October 2021 increased 0.4 percent from January – October 2020 according to CLAL data supplied to USDA. Western European cheese production January – October 2021 increased 1.9 percent from January – October 2020 according to data supplied by the European Commission. This is the only increase for the period among primary dairy products except for cream, which also increased. Western European exports of cheese January – October 2021 increased 0.3 percent from January – October 2020 according to CLAL data made available to USDA. The largest export volumes go to the United Kingdom, followed by the United States, then Japan. United Kingdom cheese production January – October 2021 was steady with January – October 2020 according to CLAL data supplied to USDA. United Kingdom exports of bulk milk January – October 2021, almost all of which goes to Ireland, decreased 1.3 percent from January – October 2020 according to CLAL data made available to USDA. United Kingdom imports of bulk milk January – October 2021 increased 2.1 percent from January – October 2020 according to CLAL data made available to USDA. The largest import volumes are mostly from Ireland, followed by Germany, then Sweden. The United Kingdom is a net exporter of bulk milk. United Kingdom exports of cheese January – October 2021 decreased 20.2 percent from January – October 2020 according to CLAL data made available to USDA. The largest export volumes go to Ireland, followed by Belgium, then France. United Kingdom imports of cheese January – October 2021 decreased 18.2 percent from January – October 2020. The largest import volumes come from Ireland, France, and Denmark. The United Kingdom is a net importer of cheese. Milk Production in Poland January – October 2021 increased 0.3 percent from January – October 2020 according to CLAL data made available to USDA. Butter production for the period was -5.2 percent. Cheese recorded the greatest increase of primary dairy products, up 3.0 percent. Among the powders, WMP was +2.8 percent and SMP was -6.6 percent. 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