Global dairy firm FrieslandCampina has warned that the disappearance of the EU milk quota could lead to more volatility in the dairy market.

The warning came as the firm reported flat revenues (0.6% up) of €11.3bn during 2014. Operating profit rose by 56.2% to €489m, but corrected for currency and one-time items it fell 10.7%.

The company’s pay-out to member dairy farmers was €42.70 per 100kg of milk, a small fall of 0.5%.

Cees ’t Hart, CEO Royal FrieslandCampina saidL “In 2014 Royal FrieslandCampina’s results were more influenced by external conditions than in other years.”

“The year 2014 could accurately be described as ‘dynamic’. Although the disappearance of the EU milk quota will quite possibly lead to even more volatility on the dairy market, the prospects for FrieslandCampina and the member dairy farmers remain positive.”

The company saw 5.7% volume growth in infant nutrition, especially in China and Hong Kong, but a 5.4% volume reduction in dairy-based beverages due to lower consumption and pressure on market shares.

Meanwhile, branded cheese volumes fell by 14.5% to Russian boycott and competition on the European market. The Russian boycott had an operating profit impact estimated at €80m.

Overall, the company expects that demand for dairy products will increase slightly next year.

As a result of the lower price level of dairy products it suggests that consumers in emerging markets will be able to afford more dairy products, while the relatively cheap euro will mean that dairy products from the euro zone will be better able to compete against other suppliers from countries with different currencies.

However, it did warn that China’s need for dairy products and raw materials and whether Russia’s boycott of western agricultural products will be lifted are both difficult to estimate.

The company stated: “Taking a longer-term view the outlook remains positive. As the world’s population grows and welfare increases in many regions the demand for food, and in particular food rich in nutrients including dairy products, will continue rising.”

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