Further consolidation is needed in Germany's dairy sector to ensure the country can compete in the world's fast-growing markets for dairy products, according to DMK, the nation's largest processor.

DMK was formed last year through the merger of German co-operatives Nordmilch and Humana Milchindustrie and accounts for 20-25% of Germany's milk production. 

Speaking to just-food at the Anuga trade exhibition in Cologne, a spokesperson for DMK said Germany's dairy industry remained fragmented compared to markets like Denmark and the Netherlands. 

However, the largest dairy processors in Denmark and the Netherlands, Arla Foods and FrieslandCampina, account for a far greater amount of local output.

Aside from the creation of DMK, Germany's dairy sector has seen a number of M&A moves in recent months, led by Arla, which has moved to buy Hansa Milch and Allgäuland Käsereien.

More consolidation was vital, the DMK spokesperson said, to enable Germany's dairy industry to compete effectively in fast-growing markets for dairy in regions like Asia.

She said DMK should not be the only dairy processor in Germany driving the consolidation in the sector. "We hope the fact that other European dairies are trying to get into the German market wakes up some of the other local dairies to take part in the concentration of the market."

The merger of Nordmilch and Humana Milchindustrie has created a company with the ability and resources to expand its overseas operations and develop new products for consumers in emerging markets, the spokesperson explained. "Size allows you to develop your business and to improve your innovation," she added.