Archive:Milk and milk products - 30 years of quotas

This article is part of a set of statistical articles based on the Eurostat online publication "Agriculture, forestry and fishery statistics". It presents information on milk and milk products in the last 30 years in the European Union (EU).

On 2 April 1984, following years of significant overproduction of milk and milk products (such as skimmed milk powder and butter), the Common Agricultural Policy (CAP) introduced milk quotas in the European Union. Prior to that, EU dairy farmers had been guaranteed a price for their milk (considerably higher than on world markets) regardless of market demand. The system also had an impact on world market prices, as the EU frequently subsidised exports to the world market. Starting in 1984, each EU Member State had two types of quota: one defined the maximum amount of milk delivered to dairies and the other the limit for direct sales at farm level. If the quantities of milk were above the defined thresholds a levy was applied to the farmers concerned.

The milk quotas, along with several other CAP reforms, brought to an end the milk powder and butter ‘mountains’ of the late 1970s and early 1980s. Reduced guaranteed prices along with the decoupling of direct payments from production also contributed to the stabilisation of farmers’ revenues in this sector .

In the 2009 ‘Health check’ of the CAP, the EU decided to prepare the ending of milk quotas for a so-called ‘soft landing’ by increasing the quotas by 1 % every year over 5 consecutive years, beginning on 1 April 2009 . On 1 April 2015, 31 years after being put into place, dairy quotas were abolished. This change in the milk sector is set to allow farmers the flexibility to expand their production and to profit from the growing extra-EU demand for milk products .

The quota system was the main policy instrument in the EU milk sector. It is crucial for understanding the development of statistics on milk and milk products in the last 30 years analysed in this article.

The availability of milk statistics in the EU is largely dependent on the EU enlargements and two aggregates have been used to better understand the historical data. In 1983 the European Community consisted of 10 Member States (Belgium, Denmark, Germany [at the time West Germany or Federal Republic of Germany], Ireland, Greece, France, Italy, Luxembourg, the Netherlands and the United Kingdom) which constitute the EU-10 aggregate. Depending on the variable, the EU-15, EU-27 and EU-28 aggregates can only be obtained in more recent datasets.

Figure 1: Cow's milk production, EU, 1973–2013
(million tonnes)
Source: Eurostat (apro_mk_farm)

Figure 2: Number of dairy cows (¹), EU, 1983–2014
(million heads)
Source: Eurostat (apro_mt_lscatl)

Figure 3: Utilisation of milk by dairies, by type of product, EU, 1983–2013 (¹)
(million tonnes)
Source: Eurostat (apro_mk_pobta)

Figure 4: Number of dairy farms, EU, 1983, 1993, 2003 and 2013
Source: Eurostat (ef_ls_ovaareg), (ef_ls_gzdcow), (ef_olslsuft) and (ef_lscow)

Figure 5: Number of dairy cows, EU, 1983, 1993, 2003 and 2013
Source: Eurostat (ef_ls_ovaareg), (ef_ls_gzdcow), (ef_olslsuft) and (ef_lscow)

Table 1: Farm production and dairy products, EU, 1983 and 2013
(thousand tonnes)
Source: Eurostat (apro_mk_farm) and (apro_mk_pobta)

Main statistical findings

From 1973 to 1983 the production of cow’s milk on EU-10 farms grew from 92.3 million tonnes to 111.8 million tonnes (see Figure 1). The milk quotas succeeded in maintaining the stability of cow’s milk production in the EU and the high production of the early 1980s was never again reached. Even in the context of the successive enlargements, EU milk production has experienced an overall reduction.

The number of dairy cows has significantly decreased in the last 30 years. In 2014, the total EU-28 figure (24.0 million head) was lower than the EU-10 figure in 1983 (25.7 million head). The decrease in the dairy cow herd along with the stable level of milk production indicate an improvement in milk yields over the last three decades.

30 years of milk production

As mentioned above, in 1983, the year before the introduction of milk quotas, EU-10 cow’s milk production peaked at 111.8 million tonnes. Close to half of the production came from France and Germany (at the time West Germany or Federal Republic of Germany) with 25 % and 24 % of milk production respectively.

From 1973 to 1983 production had grown by 21 % in the EU-10 (see Figure 1) and indicated the need to reduce excessive production of milk and dairy products, which was overrunning demand. The capping of milk production in 1984 produced immediate effects, and in 1984 EU-10 production figures of cow’s milk fell to 109.6 million tonnes.

The milk quotas were very effective in stabilising milk production and controlling growth. Over the course of the next three decades the production of milk in these 10 EU Member States would never reach 1983 levels again. In the EU-10 from 1984 to 2013, cow’s milk production fell by 1.0 %, and the average annual growth rate was – 0.03 %. Throughout the various EU enlargements, the EU-10 kept the lion’s share of overall EU-28 milk production, with more than two thirds of cow’s milk production since 1991.

Looking into the production data of cow’s milk in the EU-28 — which are available from 1991 onwards (including reunified Germany) — there was a declining trend as well: production shrunk from 159.0 million tonnes in 1991 to 153.8 million tonnes in 2013, a – 3.0 % change. The EU-28’s production experienced an average annual growth rate of – 0.2 % over the same period.

Figure 1 highlights a significant decrease from 2008 to 2009, which is at least partly due to the global financial and economic crisis. This decrease was much more significant in the EU-28 (– 4.2 %) than in the EU-10 (– 0.2 %).

In the last five years cow’s milk production has picked up, not only in the form of a post-crisis recovery but also due to the ‘soft landing’ measures introduced from 2009 onward in the EU. These measures consisted of a yearly increase of 1.0 % in the quotas to anticipate the end of the quota system in 2015. From 2009 to 2013, the rise in the cow’s milk production was higher in the EU-28 Member States (+7.5 %) than in the EU-10 Member States (+5.4 %). In some countries (such as Greece, Croatia, Portugal and Romania) there was even a reduction in cow’s milk production from 2009 to 2013 in spite of the increase in the quotas.

Dairy cows

Animal husbandry has gone through significant technical developments over the last few decades. Indeed, the increase in milk production is not only linked to a rise in the total number of dairy cows, but also depends on other production factors such as improved breeding techniques, optimised diets, better milking methods and increases in the size of farms.

As shown in Figure 2, the number of dairy cows in the EU decreased over the duration of the milk quotas. Within this timeframe the EU-10 Member States in particular showed a reduction of 38 % in the number of dairy cows, from 25.8 million head in 1983 to 16.3 million head in 2014. In 2001 the EU-27 population of dairy cows was close to the EU-10 figures in 1983: 27.1 million head. From 2001 to 2014 there was a 12 % decrease in the number of dairy cows. The EU-28 had 24.0 million head of dairy cows in 2014, which was 1.8 million head less than the number in the EU-10 31 years before.

The final five years of the quota system recorded a reduction in the EU-28 number of dairy cows. However this tendency is not homogeneous across all EU Member States. While the overall figures for the EU-28 show a decline (– 1 %), the EU-10 Member States experienced a 3 % increase in the number of dairy cows from 2009 to 2014. The share of EU-10 in the total EU-28 dairy cow population was 64 % in 2007 and increased to 68 % in 2014.

Dairy products

The extra-EU trade in dairy products has increased in recent years and, according to the European Milk Market Observatory, is expected to continue to grow.

The production of dairy foods is directly linked to the availability of its main ingredient: milk. Figure 3 representing the historical evolution of the use of milk by dairy products from 1983 to 2013 follows the trend pictured in Figure 1 and shows (similarly to the data on milk production) small variations in the total quantities of milk throughout the three decades.

In 2013, three quarters of the 134 million tonnes of EU-28 milk used in dairy goods were produced in the EU-10. From 1983 to 2013 the volume of EU-10 milk used for dairy products increased by 3 %, an annual growth rate of 0.08 %.

The share of milk for each type of product has shown some deviations over the years. The percentage used in butter production decreased from 49 % in 1983 to 32 % in 2013. In 2000 milk for butter products lost its dominance to milk used in cheese production which had a 24 % share in 1983 and a 40 % share of all milk for dairy production in 2013. Milk used in the production of milk powder has varied from 3 % to 6 %, the smallest share throughout the time series of the dairy products.

In 1983, drinking milk accounted for 16 million tonnes or 16 % of total dairy production. In 2013, this share had been reduced to 13 % (18 million tonnes). On the other hand, over the same period, milk used for the production of cream for direct consumption had gained 7 percentage points (pp) in the share of the EU dairy products, reaching 13 % in 2013.

Structure of the farms

From 1983 to 2013, the number of farms with dairy cows decreased by 81 % in the EU-10

The structure of EU farms has gone through significant changes within the 30 years of the milk quotas. In general, when taking into account all agricultural holdings, from 1983 until 2010 there was a decrease of 3.6 million farms (– 55 %) in the EU-10. On average in these 10 EU Member States, 326 holdings per day ceased their activity over the last 30 years.

When looking in particular at farms with dairy cows, the reduction was even sharper: 81 % of the number of holdings disappeared (1.2 million holdings). The total number of farms with dairy cows in the EU-10 decreased from 1 514 441 in 1983 to 288 600 in 2013, meaning that four in every five farms with dairy cows disappeared from 1983 to 2013 (see Figure 4).

However, the proportion of specialised dairy farms has increased. In 1983, around 0.7 million holdings in the EU-10 were specialised in dairy cows. These farms represented 48 % of the holdings with dairy cows and reared 69 % of the dairy cows. In 2013, the number of specialised dairy farms fell to 0.2 million. These farms represented 65 % of the farms with dairy cows and raised 81 % of the EU-10’s dairy cows. While in the EU-10 the number of specialised dairy farms was smaller than the number of farms with at least 10 dairy cows, on the contrary, in the EU-28 there are more specialised farms than farms with at least 10 dairy cows.

The EU-28 had close to 0.6 million specialised dairy farms in 2013, of which close to one third (33 %) were located in the EU-10 Member States. In the same period, these specialised farms had 17.7 million dairy cows, 71 % of which belonged to farms in the first 10 EU Member States.

When considering all holdings with dairy cows in the EU-28, including the newest EU Member States which generally present, numerous, smaller and less specialised farms, the situation is quite different from EU-10. In 2013, although the EU-10 had 15.5 million dairy cows (which represented two thirds of all EU dairy cows), the number of farms with dairy cows was 0.3 million — 19 % of the EU-28 total number of farms with dairy cows. The remaining 18 EU Member States had 7.8 million dairy cows (33 % of the EU-28 total) which were raised in 1.2 million holdings (81 % of the EU-28 total) (see Figure 5). This reflects the economic importance of dairy cattle mainly in those Member States that have joined the EU after 1983.

Farm production and dairy products by country

61 litres of drinking milk per person were produced in the EU-28 in 2013

The production of milk amounted to 112 million tonnes in the EU-10 in 1983 (see Table 1). After 30 years under the milk quota policies these 10 countries produced 109 million tonnes of milk, a 2.8 % reduction in milk production.

With a share of 71 %, the EU-10 Member States dominated EU-28 milk production in 2013. Germany alone accounted for 20 % of the milk produced in the EU-28, followed by France (16 %), the United Kingdom (9 %), Poland and the Netherlands (each 8 %). The share of the EU-10 countries remained stable due to the rigid quota system in place. However recent changes have allowed for a yearly 1 % increase in the quotas (since 2009) enabling Germany to expand its share, from 24 % of the EU-10 total cow’s milk production in 1983 to 29 % in 2013. This increase includes the effect of German reunification, which is estimated at 4.2pp. The quotas of the other major milk producers had shrunk from 1983 to 2013 in France (22 % or – 3 pp), the United Kingdom (13 % or – 2 pp) and the Netherlands (11 % or – 1 pp).

Of the milk produced on EU-28 farms in 1983, 93 % was distributed to dairies for further processing. This percentage increased in the EU-10, reaching 97 % in 2013. In the EU-28 in 2013 the share of milk collected by dairies was 92 %. In Ireland, Malta and Sweden 100 % of the milk was delivered to dairies, contrasting with the lowest values in Romania (22 %) and Bulgaria (44 %).

Only a small percentage of the milk was from ewes, goats and buffaloes and was produced in very specific EU regions. The share of these types of milk grew slightly in the last 30 years — from 2.3 % in 1983 (EU-10) to 3.5 % in 2013 (EU-28). In this period the collection of milk from ewes, goats and buffaloes increased by 23 % within the EU-10 Member States, reaching close to 3 million tonnes. Greece was the main producing country of these types of milk with a share of 21.4 %, in 2013, followed by Spain (21.1 %), France (17.0 %), Italy (14.9 %) and Romania (12.8 %).

In terms of volume in tonnes, drinking milk presented the largest production within the produce deriving from milk in 1983, with a share of 69 % in the EU-10. 30 years later, the EU-28 presented a very similar share: 71 %. The production of drinking milk presented a 4 % increase from 1983 to 2013 in the EU-10 Member States. In 2013, close to 32 million tonnes of drinking milk were produced in the EU-28, which corresponded to around 61 litres of milk per EU resident .

As for the other dairy products, both milk powder and butter production dropped (– 33 % and – 24 % respectively) between 1983 (EU-10) and 2013 (EU-28). In contrast, the production of cheese almost tripled in the same period, from an EU-10 production of 3.8 million tonnes in 1983 to 9.3 million tonnes in 2013. The United Kingdom was the top producer of drinking milk with a 22 % share of EU-28 production in 2013, while Germany was the leader in the other dairy foods, producing 25 % of the milk powder, 28 % of the butter and 23 % of the cheese.

Data sources and availability

Milk and milk product statistics are collected under Decision 97/80/EC, implementing Directive 96/16/EC. They cover statistics on production and utilisation of milk by dairy farms, as well as statistics on milk collection, utilisation and use by dairy enterprises. Further to these annual statistics, monthly cow's milk collection and triennial data on the structure of dairies are provided by the EU Member States.

Due to the continuously decreasing number of dairy enterprises, national data are often subject to statistical confidentiality. Thus, providing EU totals in this context is a challenge and information presented in the analysis may be based on data not available with the usual precision, so that the published figures cannot disclose confidential values; each exception is clearly footnoted under the tables and figures presented. On the one hand, statistics from these few enterprises provide early estimates on trends. On the other, a complete overview of the dairy sector requires detailed information from farms and this means that the final figures on milk production are only available at an EU level about one year after the reference year.

Statistics on the structure of agricultural holdings are taken from the Farm Structure Survey (FSS), for more information on this survey see the FSS dedicated section of Eurostat Website.

Context

For over 30 years, the EU’s dairy sector operated within the framework of milk quotas, which were introduced in 1984 to address problems of surplus production, but expired in April 2015. Until then, each EU Member State had two quotas: one for deliveries to dairies and the other for direct sales at farm level. Milk production data were used for signalling imbalances in the market that, if serious enough, would trigger public intervention (of butter and skimmed milk powder) and/or private storage. When national quotas were exceeded, punitive ‘super-levies’ were recovered from the farmers or dairies involved.

Further Eurostat information

Data visualisation

• Eurostat Statistical Atlas (Chapter 11: Agriculture)
• Regional Statistics Illustrated — Agriculture

Publications

• Milk and milk products
• Portrait of the EU milk production sector
• Changes in annual milk yield
• Historical data on Farm structure survey

Main tables

• Agriculture (t_agri), see:

Agricultural production (t_apro)

Milk and milk products (t_apro_mk)

Database

• Agriculture (agri), see:

Agricultural production (apro)

Milk and milk products (apro_mk)

Fat contents and protein contents (cow's milk) - annual data (apro_mk_fatprot)

Milk collection (all milks) and dairy products obtained - annual data (apro_mk_pobta)

Cows' milk collection and products obtained - annual data (apro_mk_cola)

Cows' milk collection and products obtained - monthly data (apro_mk_colm)

Production and utilization of milk on the farm - annual data (apro_mk_farm)

Dairies structure - triennial (apro_mk_str)

Farm structure (ef)

Dedicated section

• Agriculture

Methodology / Metadata

Dairy products are recorded in terms of weight. It is thus difficult to compare the various products (for example, fresh milk and milk powder). The volume of whole or skimmed milk used in the dairy processes provides more comparable figures. In such an accounting system, some volume of used skimmed milk may acquire negative values. For instance, production of cream uses whole milk and generates skimmed milk the production of cream is thereby expressed in relation to the quantity of used whole milk and a negative quantity of skimmed milk. Whether this skimmed milk is then used by another process or delivered as such, it will be recorded as a positive quantity of used skimmed milk, counterpart of that negative quantity.

Data was used from two different datasets: Agricultural production (apro) and Farm Structure Survey (ef). These two data sets have differing methodology, which explains the minor disparities in some figures. For details on methodology see:

• Livestock and meat (apr_mt) (ESMS metadata file — apro_mt_esms)
• Farm structure (ef) (ESMS metadata file — ef_esms)

Source data for tables, figures and maps (MS Excel)

• Milk and milk products 30 years of quotas (2015)

Other information

• Commission Decision 97/80/EC of 18 December 1996 laying down provisions for the implementation of Council Directive 96/16/EC on statistical surveys of milk and milk products (Text with EEA relevance)
• Council Directive 96/16/EC of 19 March 1996 on statistical surveys of milk and milk products

External links

• European Commission - Agriculture and rural development
• European Commission - Why milk quotas were introduced?
• European Commission – A short story of milk quotas
• Soft landing report
• European Milk Market Observatory