Competitiveness of the EU dairy industry

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Competitiveness of the EU dairy industry

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proved in any of the countries. It is remarkable that the added value in EU-10

has decreased in some countries.

Raw material prices and productivity at farm level influences the competitiveness

of the food industry. In Italy, the United Kingdom and the Netherlands

the scale of dairy farms has increased considerably since 2000. In Germany

and France the scale has only slightly grown. Although the number of cows did

not increase considerably, the added value of dairy farms has grown disproportionally

in those countries. This did not lead to a higher added value per employee,

however.

The EU dairy sector performs just below average, despite the loss in world

market share. Compared to the previous report (Wijnands et al., 2007) the improvement

in labour productivity and the growth in value added compensated

for the loss in market share. New Zealand performs well because of the high increase

in world market share. The USA has a high score on all indicators, despite

the fact that the companies do not specialise. Compared to the previous

benchmark, Australia improved its position (thanks to more value added) and

Canada looses out on all indicators.

Within Europe, Italy, Austria and United Kingdom are the most competitive

countries. The postion of the UK is remarkable, as it has problems to use its

whole milk quotum. And indeed the development in market share is rather weak

for the UK, but it has a superb improvement in labour productivity. This shows

the importance of the general economy for the dairy industry, in this case a

booming economy and a relatively liberal labour market.

In the future scenarios the strongest effect in terms of total sectoral income,

however, is due to the macro-economic drivers, i.e. population and income

growth. Under the final EqualGR scenario income of EU food processing

strongly increases due to the improved demand of dairy products at global

level. In all other regions the expansion of European food processing industries

has a small negative impact. However, under full liberalisation in the European

dairy industry total value added in food processing industries remains relatively

constant in the EU while it expands especially in Australia and New Zealand.

Quota demolition will effect Europe positively, since increasing world market

demand can be answered. This will affect mainly the position of New Zealand

and Australia.

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