Abstract
The extremely instable milk price development in the last decade has changed the production, investment volume and the trade positions in milk sector in many countries. The price growth on 30% in 2007 and fall in 2008, increased the risk especially for the producers with low technology, making small business in this sector unprofitable. This instability hardly affects European milk producers during the reduction of the EU protection of milk market. The goals of this paper are to eliminate the major reasons for the price instability on the global milk market, and to show how the changes in the global prices, production and trade impact the milk market in the European Union.
Highlights
By September 2008, the FAO index of dairy product prices had fallen to 218, down almost 28 percent from its all time high of 302 in November 2007 (FAO, 2008)
The goals of this paper are to eliminate the major reasons for the price instability on the global milk market, and to show how the changes in the global prices, production and trade impact the milk market in the European Union
After the years of relative stabile development of global supply and demand on milk, the unexpected price fluctuations in 2007 and 2008 caused sufficient changing both in the world demand and in the production of milk, creating big gaps, which, in their turn, increased price instability
Summary
By September 2008, the FAO index of dairy product prices (base 1998=100) had fallen to 218, down almost 28 percent from its all time high of 302 in November 2007 (FAO, 2008). After the years of relative stabile development of global supply and demand on milk, the unexpected price fluctuations in 2007 and 2008 caused sufficient changing both in the world demand and in the production of milk, creating big gaps, which, in their turn, increased price instability. Since mid1990th the world milk consumption is growing in average 10-15 million t milk per year, based on the population growth and increasing income in many countries (IFCN, 2008).
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