Production in the European Union

Milk and dairy products account for 18 percent of the total value of agricultural production in the European Union and comprise the main farming activity in the EU. An historical reminder of this reality was the «butter mountains» that resulted from generous supports for producing dairy products in the EU. The EU’s dairy industry remains one of the best supported of all, even after the policy review undertaken in 2003. After all, another EU production sector is directly related to it – that of beef production, which comprises 11.9 percent of total agricultural output. The total amount of cow’s milk produced in each EU member state is determined by a percentage system instituted in March 1984 aimed at linking milk production with the needs of the market. Based on that system, the price of milk paid to the producer is protected as long as the quantities bought (by industry or individual customers) fall within specific limits. The total production of cow’s milk in the European Union in 2002 (15 member states) was 122,308 tons. Germany is the largest milk producer in Europe, with 27,900 tons in 2002. Second place is taken by France with 25,377 tons, or 20.75 percent of the total, followed by Britain with 14,750 tons, the Netherlands with 11,300 tons and Italy with 10,860 tons. These five countries, according to ICAP figures, covered 73.7 percent of total cow’s milk production in the EU in 2002. The European Union also leads in the demand for milk and dairy products with 21 percent of the world total, followed by India with 13 percent and the US with 12 percent. Just 6.9 percent of world dairy production is traded between countries, due to health regulations imposed by the fact that milk spoils easily. So in many countries the market is organized at a national level. Indicative of the trends in the European milk market, according to an ICAP survey, is that 65 percent of all milk is produced by 40 major dairy firms in the EU.

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