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On March 31, 2015 the regime will end milk quotas. What will happen next? According to Paolo De Castro, president of the Agriculture Committee of the European Parliament, price volatility will increase, which is already very high. Suffice it to say that spot milk quoted at 50 cents per liter in December 2013 is now worth 30 cents per liter.
In light of this prediction on the post milk quotas, the proposal on the European Union table is that of a 'bis milk package' that gives producers greater certainty about the future.
Then there is the Chinese market which becomes interesting for Italian and European milk producers, even if it remains complicated. On the website www.clal.it you can read prices, trends and scenarios at a global level of the dairy sector and, in the light of a generalized increase in milk production and consumption, one can realize how rapidly China is increasing imports.
The forecasts confirmed by the operators say that in China the dairy market will increase by 5-10% in the next five years. Liquid milk will increase by approximately 7% from the current 14 million tons of current consumption, equal to an average per capita consumption of 29.4 kg per year.
However, there are problems related to the particular tastes of consumers. The Chinese still do not like the smell of cheese and associate this product with the white color, which penalizes the aged and 'yellow' products.
The Chinese, however, appreciate mozzarella and fresh cheeses and love ice cream more and more. The picture is such as to suggest the possibility of positive synergies with some typical Italian productions. The Italian starting point is that 55% of milk production is destined for the production of high quality PDO cheeses.
The point also underlined during the recent Clal Dairy Forum is that, in the post era milk quotas, dairy producers will not be able to fail to deal with the foreign market, in particular Asia and China. In fact, the world demand for milk is growing all over the world, but not in Europe. For 2022, milk exports from EU-28 countries are expected to increase by around 225.
With the milk and cheese market becoming global and complex, here are the financial tools. For example, we talk about futures to reduce volatility and insure the risk associated with price fluctuations. Cme Group, which operates in the agricultural, energy and metals sector managing contracts for over 3 billion dollars, has opened an office in London precisely to push futures also in the milk sector.