In 2006, cream production in Germany was also extended. When the weather was good, cream and cream products sold well within Germany, and there was interest from other countries too. A total of 560,000 tonnes of cream products was produced, which was 1.5 % more than in 2005, despite negative indicators from agricultural policy.

The agricultural reform had a particularly large impact on the milk fat market. The butter intervention price was reduced by a total of 25 %, making it very difficult to exploit butter fat. Alongside this, subsidies and export payments will also be considerably reduced in the butter sector. This pleases consumers – low butter prices at ALDI [discount supermarket] and similar companies are encouraging trade. Since summer 2007, however, butter prices have increased significantly.



Milk powder suppliers

The powdered milk markets have shown very varied trends. The price level in the protein sector was relatively stable, especially for casein. There was no need for intervention to be employed. German farmers exceeded the milk quota available to them only slightly, meaning that there were hardly any surpluses in the skimmed milk powder market. A total of 191,000 tonnes was produced, or almost 18 % less than in the previous year. This quantity was successfully absorbed by the market, and exports to non-EU countries further relieved pressure. However, the Commission has now abolished export payments, making it harder to shift the goods. However, cheese production continues to increase, meaning that less skimmed milk powder is available and production is reducing. Prices have risen accordingly.

In the full fat powdered milk sector, prices suffered from the general reduction in use of fat. Demand was also hesitant because the chocolate industry required smaller quantities. At the beginning of the year export sales remained strong, but later on reductions in export payments impacted on exports to non-EU countries considerably. In spring 2007, the situation changed significantly, and prices rose.




Growth in whey

When cheese production grows, the quantity of liquid whey also increases, and therefore so does the production of whey powder and its derivatives. The price trend was highly stable, because the alternative product skimmed milk powder also showed a solid price trend. In addition, Brussels abolished subsidies in the powdered baby milk sector, and as a result skimmed milk powder was replaced by whey powder as an ingredient. The demand for whey powder increased and prices exploded.

Organic is booming

The market for raw organic milk has become undersupplied. The sector as a whole is somewhat surprised by the strong organic boom. Nonetheless organic milk remains a niche market, and it makes up just 1.5 % of total production. Some discount supermarkets are also now marketing organic milk which will increase the pace of sales. Bonuses for organic farmers have increased significantly, making the production of organic milk more attractive to farmers.

Organic milk products are still a niche market

The same was true for last year. Although there were some areas of growth they did not exceed the average for the sector. Since it is often not possible to market organic milk as such, prices are falling. Some farmers are abandoning the organic milk market because of the high cost disadvantages. This will remain a small market with low profits. Continued market success of organic milk products will depend on the significantly higher cost factors such as production, milk collection, segregated processing and logistics being reflected in the prices of these products.

Organic milk delivery in Germany



    Amount in thousands of tonnes
    share as %
Source: BMELV