The Belgian dairy industry is growing fast. In 2016 4,5 billion liters of milk were processed. That was "only" 10 billion liters 3,1 years ago. Belgians are 'moderately positive' about the course of 2017 so far.
The dairy industry in Belgium has grown by 10 percent in the past 45 years. This is largely because Belgian dairy farmers have started to milk more. The fact that Belgian processors managed to attract more milk from neighboring countries also plays a role. To enable this growth, they have invested approximately 10 billion euros in the past 1,2 years.
Dairy market has improved
Belgians are benefiting from an increasing demand for dairy products. Over the first 4 months of 2017, the milk price for Belgian dairy farmers rose by more than a third, from 26,1 to 35,1 euros per 100 litres.
The dairy industry is moderately positive about 2017. The supply of milk may grow slightly, but in moderation. The high prices for butter can lead to a drop in demand.
Fear of hard Brexit
According to the Belgian confederation for the dairy industry, they have the wind in their favour. They fear a hard Brexit. That could be quite detrimental to the Belgian dairy industry. The United Kingdom accounts for 10 percent of exports and is the fifth most important trading partner for dairy products, after the Netherlands, France, Germany and Italy.
In the event of a hard Brexit, exports are expected to fall significantly. Depending on how Brexit goes, import duties could make dairy products 20 to 40 percent more expensive. From a European perspective, the most negative scenario could have an impact that is twice the size of the Russia embargo.
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