Price fluctuations and changing market conditions in the dairy sector are both an opportunity and a threat

9 February 2010

While the extreme price fluctuations in the dairy market in recent years are unwelcome, they also offer opportunities. The combination of price volatility and changing global market conditions (less regulation, for example) are the challenges the dairy sector must overcome over the next few years. This is the conclusion of a seminar organised by the European Dairy Association (EDA) on 3 February. A range of speakers from various links in the dairy chain talked about this subject.

All speakers agreed that the extreme price fluctuations were unwelcome. And while a wide range of opinions and ideas were expressed, the common denominator was that cooperation between the public and private sectors was necessary to achieve a more stable price. Joop Kleibeuker, Secretary General of the European Dairy Organisation, explains: ’Price is a signal from the market: price fluctuations are part of a good market and they are also necessary. But the extreme price fluctuations we’ve seen in recent times are ruining the market. The European Union could help reduce the fluctuations, for example by using market instruments such as intervention and strategic stock management.’

Changing global conditions call for a flexible dairy sector. Werner Buck, Chairman of the European Dairy Association: ‘One of the challenges faced by the dairy sector is the extreme and unwelcome level of price fluctuations we’ve seen since 2007. To tackle this challenge, we need to learn to adapt, and although this process has started, it will take time to complete. I’m convinced that to secure the existence of the dairy sector for the long-term as well, the dairy industry must be profitable and must deliver added value to farmers, customers and other players in the dairy chain.’