EU milk quotas will end on March 31 2015, and information from the observatory will help all members of the milk supply chain adjust to the change.
Roger Waite, Commission spokesman for agriculture and rural development, told DairyReporter.com market transparency is essential to track the changes in the post-quota market - and warn if a crisis looms.
Market transparency
“As we’re about to move into a post-quota world, there’s very much a feeling we need some sort of additional element out there to live with the liberalization,” he said.
“There are all sort of opportunities out there which is excellent. We want to have more market transparency so we have a clearer picture of where the market is going, what the trends are, and if there’s a crisis coming, the brakes get put on earlier.”
Information on dairy markets is currently available from a variety of sources, but the observatory will provide a ‘one-stop shop,’ Waite said.
The observatory – which can be accessed here - is open to all members of the supply chain, as well as policy makers and the Commission.
It publishes raw data, as well as analysis on past and present trends in EU and world dairy markets. It will also cover other aspects including production, the balance between supply and demand, production costs and market perspectives.
The website has been launched now so that people can get used to using it before quotas are removed.
US and NZ don't have the same capacity
Milk quotas were introduced in the EU in 1984 to address the problem of over-production in the region. Waite expects their removal will lead to significant expansion of export possibilities, particularly for the Chinese market.
“We’ve got a lot of producers who see excellent opportunities out there. So we can expect an expansion of production. If you look at medium term forecasts, you will see they indicate an expansion of demand worldwide, in particular for cheese which has added value – and Europeans are very good at making cheese.
“And what we also see from the forecasts is that the other main producing areas – New Zealand, the US – they don’t have the facility to expand production capacity, but we have.
“There are concerns that production expands faster than demand, which would cause problems with prices. Our estimates say that won’t be a great problem, but it’s always a concern. Again, this is one of the reasons the observatory will be very helpful. As soon as there’s a trend – we don’t export as much as we thought, for example - we can put the brakes on.
“And we hope it will help farmers when it comes to making their own business decisions.”