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The dairy sector is one of the most important parts of the EU. All states of the EU – without any exception – breed dairy cows. Dairy cow breeding is typical for many rural areas and it is vitally important for landscaping, especially in mountain areas. Milk represents about 14% of the total agricultural production output of the EU. The annual turnover of the dairy industry is € 177 milliard. The EU is one of the leading exporters of dairy products (Milk and milk products in the European Union 2006). Its share in world export is 39% for butter, 40% for cheese, 26% for skimmed milk powder (SMP) and 29% for whole milk powder (WMP) (Dairy: World Markets and Trade 2007). The increasing world milk and milk products demand significantly influences the economy of milk production in the EU, especially in the last years. Although this prognosis was made many years ago, the EU is not prepared for such a large increase of the demand. The permanent decrease of dairy cow numbers proves this to be true. The number of dairy cows in the EU 25 has decreased since 2002 from 25.1 million to 22.3 million, i.e. to 88.9% (Dairy: World Markets and Trade 2007). The utility of instruments of current agricultural policy (export subsidies, quotas, subsidy policy) becomes distinctively weaker. The real development of farm milk price is significantly different than were both short term and long term predictions. The increase of the demand for milk and milk products is predicted for 2006 and 2007. Increasing of prices is expected to cause increasing of world production (Dairy: World Markets and Trade 2007; Food Outlook 2007; OECDFAO 2007; Vysoka poptavka a ceny … 2007).

Influence of farm milk prices in the EU 25 on profitability and production volume indicator