The European dairy industry must be pro-active in facing its challenges, according to Dr Joop Kleibeuker and Veijo Merilaïnen, secretary general and president respectively of the European Dairy Association.
Here they talk briefly about product development and research.
Is the EU dairy industry doing enough on innovation?
We would like to have an open discussion with the Commission in the near future about more research and programmes funded by the Commission to improve our competitiveness on a global level.
The overall picture of the EU dairy industry is that it is very fragmented, but our customers are becoming more powerful. Around 50 per cent of the food retail market is under the 10 biggest retailers. When the industry is very much squeezed, it has limited resources to invest.
There are few companies that have a pan-European reach, but there are many companies that are growing well, like Campina or Arla Foods.
Would dairies in the EU benefit from a New Zealand-style system, where firms rely on R&D instead of subsidies to be competitive?
We are moving in that direction, and the position taken by the Commission [at the recent World Dairy Forum in Copenhagen] clearly reflects that.
But, the Commission has also indicated that milk production is not solely competitive and that having cows in the meadows remains an important part of the European landscape. It may use the direct payment system to support this.
Also, the EU is different from New Zealand and Australia because we have a much broader range of dairy firms and industries than they have there.
How well is the EU positioned to capture important added value markets?
When you look at the property development and presence of new products on the market, you see that we are much stronger in the EU [than the US]. That is why we think we are in a good position when you consider markets for added value.
Cheese is the key. We have excellent cheeses in Europe, with the history and the stories behind them. Added value ingredients, such as whey powder, will also be very important.
How useful are Protected Designations of Origin (PDOs)?
They give the product an emotional value that can support marketing of the product. It is an interesting system, but sometimes people are trying to apply it to products that have already become generic. Everybody agrees that to keep this system working, you should not give it to every different product.
What can the industry do to combat a growing anti-dairy campaign?
It's actually a very small group of people. In Finland, in some special cases where a person is, for example, lactose intolerant, we* have tailored our products to meet their needs. This shows a more pro-active approach.
It is important to remember that milk is one of the best raw materials to produce food for ordinary nutrition.
* Veijo Merilaïnen, speaking here, is also with Finnish dairy group Valio.
Read the second part of the interview, which considers wider economic policy such as milk prices and CAP reform, on DairyReporter this Thursday.