DAIRY

Collapse of sales to Russia and Asia forcing up stocks; skim milk hits 250,000 tonnes Beleaguered processors relying on intervention WIth a disastrous drop in dairy exports from the EU so far this year, processors are making more use of the intervention system than has been seen for many years. By the end of June public stocks of butter had risen nearly fourfold since January to 14,000 tonnes while those of skim milk powder had climbed by 25% to 250,000 tonnes. Of these quantities, 1,600 tonnes of butter and 84,000 tonnes of skim milk powder were held in the UK. The stock build up is attributed solely to the lack of export sales to third countries outside the EU as a result of last yearÕs Russian and Asian crises. EU exports of butter are expected to be down this year compared with 1997 by 70,000 tonnes, cheese by 100,000 tonnes and whole milk powder by 30,000 tonnes. The current stocks of butter are not exceptional, though they are expected to soar by the end of the year, and they represent less than one dayÕs normal consumption across the EU. The more worrying build up is that of skim milk powder where the growth in stocks is now becoming persistent. Ironically, the first measure to be implemented from the Agenda 2000 dairy reform package recently adopted by the EU will be increases in next yearÕs milk quotas in selected countries totalling 1.39 million tonnes. This seems likely to add over 130,000 tonnes of surplus skim milk powder a year to the current mini-mountain and to boost butter stocks by some 70,000 tonnes a year, unless world dairy exports suddenly recover to 1997 levels a most unlikely event. {{PROVISIONS }}