Europe's milk production remaining high for a few years will mean hard times for New Zealand dairy farmers, the special agricultural trade envoy says.
Cows graze in Vosges, France. Photo: AFP
New Zealand dairy interests are hoping European farmers will reduce production to stimulate depressed world dairy prices.
But European Dairy Farmers spokesperson Steffi Wille-Sonk told RNZ Rurals that was not going to happen anytime soon.
That was because dairy farmers were lifting production despite low milk prices to get a return on their investments.
A Hawke's Bay farmer, New Zealand's special agricultural trade envoy Mr Petersen spent two weeks in Europe meeting with government and industry leaders.
He said there was no doubt Europe was churning out more milk.
"The increased production is going to continue, particularly for most of the season and that is going to be the difficult thing for New Zealand is how do we cope with world markets still getting increased production out of Europe.
Mike Petersen Photo: Twitter
Mr Petersen said milk deliveries across Europe were up 15 to 20 percent a year after quotas were lifted, with farmers' increased production now hitting its stride.
"So we're seeing the full effects now coming into play. Unfortunately I think that is going to last well into their Autumn which is when they'll start thinking about drying off their cows."
But he said there had been talk about limiting what farmers produced.
The European commission had a series of meetings about how they could put voluntary measures in place for each country to try and put, effectively, supply quotas back in place to limit production.
"But it's on a voluntary basis so this is up to every country now to try and reduce production on their own terms and some countries simply aren't going to do that.
"In fact, it's very difficult to see how that mechanism will work. In my view that voluntary measure will fail and production will continue to increase.
"Ireland is one country for example that was a seven-billion-litre producer that's had ambitions to grow by 50 percent over 10 years, and I've every confidence that they'll achieve that.
"Other countries I think will produce extra milk and [with increased competition] then will settle down into what I call a normal rate of production.
"But I think it's going to take a couple of years before we see the market settle in Europe after the lifting of quotas and that's going to be a couple of difficult years for New Zealand."
Mr Petersen said European dairy farmers were being paid about 25 to 28 Euro cents ($NZ 0.41 to 0.46) a litre, while New Zealand farmers were getting about 18 Euro cents ($NZ0.30 a litre.
He said the difference was because Europe's milk price was based on supplying consumer goods to a domestic market.
