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March 13, 2007

European dairy industry prepares for liberalisation – Interview

European Commission’s proposals for reform of the EU’s dairy industry will herald significant change. Joop Kleibeuker, secretary general of the Brussels-based European Dairy Association, spoke with David Haworth about market liberalisation, new product development and the opportunities for EU dairy products in export markets.

European Commission’s proposals for reform of the EU’s dairy industry will herald significant change. Joop Kleibeuker, secretary general of the Brussels-based European Dairy Association, spoke with David Haworth about market liberalisation, new product development and the opportunities for EU dairy products in export markets.

The European Commission’s proposal to simplify the organisation of dairy production in the EU, announced last month, is already having profound effects on the industry, according to Dr Joop Kleibeuker, secretary general of the Brussels-based European Dairy Association (EDA).

Liberalisation as such may not have a direct influence on the way consumers view dairy products, which represent 15% of the total turnover of Europe’s food and drink industry, says Kleibeuker, but it nonetheless represents an evolutionary turning point.

Traditional market management tools, such as marketing and production subsidies, are now routinely questioned, as are the EU’s excess production internal disposal measures. Some national rights to subsidise dairy production will be thrown out of the window in the future, and certain aids for private storage will also disappear. In addition, the Commission has proposed replacing the 27 national quality classes for butter with a single quality definition applicable to the whole EU.

But these and other technical measures are coming at a time of great change in nutritional expectations and habits, notably the growing consumption of dairy products containing less milk fat.

Listing the already wide range of dairy elements in food, feed and pharmaceuticals, Kleibeuker confidently predicts that the broadening of the range of added value products on offer from the dairy industry will continue. “In addition we can expect more growth in exports in the coming years,” he says. “In fact this is already evident in the popularity of French and Italian cheeses in the US market. I’m thinking of other markets that have great potential – Canada, Japan and [South] Korea. In the near future, we foresee China and Brazil as eager destinations for European dairy products.”

More than that, the EDA leader says, there are growing possibilities to export ingredients such as casein and caseinates which are widely used in yoghurts and cheese as well as non-dairy products.

Kleibeuker also sees growth potential for whey and whey-based products, which are increasingly used in the production of specialty beverages such as sports drinks, baby food and special drinks for the old and infirm. The development of more specialist beverages aimed at niche consumer segments offers considerable commercial potential, Kleibeuker adds.

“We have to adapt our industry by looking to these and other products, but such adjustments are not only about exports,” he says. “There are a lot of possibilities in increasing (EU) consumption, especially of cheese which has had a growth of between 1% and 1.5% over the past 15 years. The EU’s new member states will help this trend to continue.”

The strong growth potential for cheese stems from the fact that it is used in such a wide range of products, including pizza toppings and hamburgers. Nearly 50% of milk goes into cheese manufacturing.

Indeed, in the Netherlands and Germany cheese is being used as a meat replacement. The Dutch company Campina has developed a cheese product called Valess that can be eaten like meat, which Kleibeuker describes as “an interesting product”. Cheese-based snack bars offer further growth potential. These products are now being sold in the US, and Kleibeuker is certain they will quickly find their way into the European market.

Kleibeuker notes that large companies like Danone, Finland’s Valio, Friesland and Campina are developing a broad range of products, such as lacto-free milk and brands which claim to reduce blood pressure and ameliorate other common complaints such as high cholesterol. “The strength of milk and its ingredients is that they are already a healthy part of anyone’s diet,” he says.

Recent research shows that in a calorie-reduced diet some three or four daily helpings of dairy items can be linked to weight and fat loss, Kleibeuker states, adding that the EDA is focusing closely on nutrition issues. In addition, the association has two other policy priorities, namely the environment and food safety.

Like other food sectors, the dairy industry is waiting for the European Commission’s Common Agricultural Policy (CAP) ‘Health Check’ which is expected to be published next January or February. It is intended to be a comprehensive examination of whether the reformed CAP is functioning as it should in a union of 27 states, not only internally but also in a world context.

Kleibeuker gives ambiguous praise to the agriculture Commissioner Mariann Fischer Boel who, he says, is very good at revealing one more policy adjustment each time she speaks. The EDA is in no doubt that the Health Check will contain further proposals for the dairy industry’s development.

Looking to the future, is Kleibeuker optimistic about what will emerge from the present turmoil of change in the dairy industry, the debate about nutrition and the prospect of new products? Well, he says he is not pessimistic.

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