Cheap foreign boxed milk and semi-hard cheese have reappeared on the market, making it impossible for the domestic dairy industry to operate

(Photo: Pixabay)

According to the National Chamber of Agriculture and the Dairy Product Council, even in the current situation, it would be very important for customers to look for Hungarian products and choose from the range of domestic processors. The decline in the purchase price of domestic raw milk did not stop in August either, the price of HUF 151.47/kg is 32 percent lower than the level reached at the beginning of the year and 17 percent below the price a year ago. However, the price drop is not only characteristic of Hungary, since the beginning of the year the purchase price of raw milk has been falling throughout the European Union. The reason for this is partly the milk surplus created as a result of the expansion of milk production in Europe, as well as the falling consumption of milk and milk products by the general population across Europe as a result of high inflation.

The decrease in EU raw milk prices is also felt in the prices of dairy products

Thanks to this, the competitiveness of EU dairy products has already started to increase: in the first seven months of 2023, European exports of almost all major dairy products strengthened. However, this is not very good news for domestic processors. It is clear that the re-increasing import, especially in the case of cheese and UHT milk, has a market-destroying effect. In the first half of the year, parallel to the decrease in domestic sales, the amount of foreign semi-hard cheese arriving in our country increased by 4,000 tons (+11.3%). According to the National Chamber of Agrarian Economy (NAK) and the Tej Product Council (TTT), it would be extremely important to limit cheese imports, as semi-hard cheeses that sometimes arrive at prices well below the actual production cost cause serious damage to the Hungarian dairy industry. The situation is similar in the box milk market. In the first half of the year, the wholesale import of canned milk almost doubled from a much lower base (+48.8%).

Due to the decrease in EU milk prices and the influx of imports, domestic processors are able to sell their products at ever lower prices

The transfer price of the main dairy products has been falling since the beginning of the year: since January, the transfer price of Trappist cheese has fallen by 36 percent, butter by 34 percent, and cottage cheese by 16 percent. The transfer price of UHT milk with a fat content of 1.5 percent fell by 29 percent, while the price of 2.8 percent UHT milk previously sold by the authorities fell by 26 percent. Along with the processors’ transfer price, consumer prices also decreased, but despite the lower prices, the decline in demand has not stopped yet. In the first eight months, domestic processors were able to sell 12 percent fewer products of butter, 7 percent of sour cream, 17 percent of butter cream, and 12 percent less of cow’s curd. Demand has only increased in the case of milk: thanks to the popularity of 2.8 percent UHT milk at the official price, after the expansion of our milk sales last year (+2.5%), it is also true that we are drinking more milk this year.

The regulators related to the previous official prices and the current mandatory promotions still do not help the product path

According to experts in the sector, customer preferences have changed due to inflation and the price cap that was previously in effect. It is clear that the price of products is again at the center of consumer decisions. All of this results in customers increasingly turning to private label products or replacing products within the same category with a relatively cheaper product. In the case of some basic dairy products, the online price monitor helps customers find their way around. According to the NAK and the TTT, due to the unfavorable market situation, in the last two years we have lost 8 percent of the dairy farms and 5 percent of the dairy cow herd, and it is feared that if the above-mentioned processes continue, a further decrease in the herd should be expected. Even in the current situation, it would be very important for customers to look for Hungarian products and choose from the range of domestic processors.

In terms of the number of new products, the dairy industry is one of the most innovative food industry sectors worldwide

The Hungarian dairy sector is also actively looking for answers to emerging consumer needs, for example health problems due to certain food allergies, through serious research and development activities. Today, lactose-free products can be found for almost the entire product range, be it cheese, sour cream, cottage cheese, or various milk-based desserts. Those who are lactose intolerant can also safely consume these products without having to compromise on the taste, texture, and usability of the products. No one has to turn to plant-based products, rice drink or soy yogurt today because of lactose sensitivity! At the same time, customer preferences must also be influenced by the industry: more emphasis must be placed on consumer education than before, and more and more customers must be reached with new information both online and offline.

NAK/TTT