Euro farmers scale back milk production

Global production has been falling after last year's slump in dairy prices prompted farmers to rein in output. Photo/File

European farmers scaled back their milk production in June, the first time they've done so since March 2015, Fonterra Cooperative Group says.

European Union production fell 2 per cent in June from the same month a year earlier, continuing the reduction in output as farmers culled stock, spent less on supplementary feed, and poor weather weighed on the region's producers, Fonterra said in its monthly update.

Annual EU production rose 4 per cent in the year ended June 30, the same pace as in the year through May 31.

Global production has been falling after last year's slump in dairy prices prompted farmers to rein in output, although recent gains on Fonterra's GlobalDairyTrade auctions in recent months may revive some of that lost interest.

Fonterra's update shows other regions have also scaled back output, with New Zealand milk production down 1 per cent in July for an annual decline of 2 per cent, while Australian output fell 10 per cent in July for a 3 per cent drop over the past 12 months.

US production increased 1 per cent in July and grew at the same pace on an annual basis.

The New Zealand processor expects annual milk collection of 1.52 billion kilograms of milk solids for the current season, which at the current forecast farmgate payout would see farmers receive about $8 billion, up from the $6.1 billion paid in 2016.

The projected 3 per cent decline in milk collection across New Zealand "reflects the likely impact of farmers using more traditional practices to manage their businesses within the limits of the current milk price," Fonterra said.

"Over the past two seasons farmers have reduced stocking rates and supplementary feeding to help lower costs."

Fonterra's New Zealand milk collection in August fell 5 per cent to 95.8 million kgMS, with the North Island take down 6.4 per cent and South Island down 0.7 per cent. Australian collection dropped 12 per cent to 8.4 million kgMS.