Implementing regulation 2020/599 - Authorisation of agreements and decisions on the planning of production in the milk and milk products sector - Main contents

EN

Official Journal of the European Union

L 140/37

Due to the current pandemic of COVID-19 and the extensive movement restrictions on persons put in place in the Member States, the milk and milk products sector is experiencing an economic disruption that is leading to financial difficulties and cash-flow problems for farmers.

The spread of the disease and the measures in place limit the availability of labour, compromising notably the stages of production, collection and processing of milk. This adds to the difficulties of the sector, as the processing industry needs to find alternative solutions to collect the raw milk that continues to flow while facing difficulties in their factories.

The mandatory closure of shops, outdoor markets, restaurants and other hospitality establishments has also brought the operation of the hospitality and catering industry to a halt, leading to significant changes in demand patterns for milk and milk products. Consumer demand has shifted towards essential foodstuffs to the detriment of specialty milk products. The hospitality and catering industry is traditionally responsible for the consumption of approximately between 10 and 20 %, depending on the product, of the Union milk and milk products production. As a result, there has been a drop in demand for certain products in the milk and milk products sector sold in the hospitality and catering industry. For example, more than half of the Union mozzarella cheese production is destined for the food service industry. The increase in consumption of certain milk products in the retail sector has not compensated for the drop in demand in the hospitality and catering industry.

In addition, buyers of milk and milk products in the Union and on the world market are cancelling contracts and delaying the conclusion of new ones in anticipation of further price falls. Moreover, exports of milk and milk products are affected by logistical challenges, as the start of the pandemic of COVID-19 in China has led to significant port congestion there and elsewhere. The period of increased blank sailings is expected to continue at least until June 2020, leading to containers being scarcer, rates increasing significantly and exporters seeing their shipments postponed. Third-country exports represent approximately 15 % of the total Union production, in volume, of milk and milk products.

As a result, the processing of raw milk intake is partially being diverted into bulk, long shelf life, storable products that are less labour intense, such as skimmed milk powder and butter, beyond the regular market demand. Yet, many manufacturing sites in the Union do not have the capacity to process milk into different products, and have to continue producing milk products for which there has been a sharp drop in demand.

This supply-demand imbalance is generating economic disruption to the milk and milk products sector. As a result of that imbalance, wholesale prices for milk and milk products have suffered significant drops, notably since the beginning of March 2020: 19 % for skimmed milk powder, and 14 % for butter. Skimmed milk powder and butter prices have been...