General Assembly BCZ – CBL | 10.06.2011 | Brussels

„The European dairy sector: The German way“

Dr. Karl-Heinz Engel

President of the German Dairy Industry Association (MIV),CEO of Hochwald Nahrungsmittel-Werke GmbH, Thalfang

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 2

I) Introduction of speaker / company

II) Introduction of the German dairy sector

III) „The German way“

Milk collection area

Company profile 2010

HochwaldNumber of members of Cooperative 8.432

Milk suppliers (group) 5.761thereof Cooperative Erbeskopf Eifelperle eG 4.436

Volume of milk per year (group) 2,01 billion kgthereof Cooperative Erbeskopf Eifelperle eG 1,58 billion kg

Turnover 1,15 billion €

Staff 1.556

0

200

400

600

800

1.000

1.200

1.400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Domestic turnover Hochwald

Export turnover Hochwald

Development of turnoverMio. €

*

Sales share by product group 2010

Cheese

Hochwald Destinations

Hochwald serves 130 countries worldwide

Rated „very good“ by Öko Test magazine

I) Introduction of speaker / company

II) Introduction of the German dairy sector

III) „The German way“

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 10

Germany: Key Figures of Milk Production

EU-15 EU-15 EU-27Unit 1992 2000 2009 2010 1992 2000 2009

Dairy farms 1.000 226 131 97 91 1.170 750 836EU-15 375EU-25 620

Dairy cows 1.000 head 5.363 4.539 4.169 4.182 23.460 20.371 23.695

Average herd size head 24 31 43 45 22 28 10EU-15 40EU-25 17

Milk yield per cow kg 4.831 6.122 6.977 7.100 4.875 6.108 6.170EU-15 6.679

Milk produktion 1.000 tonnes 27.991 28.131 29.199 29.610 120.076 121.076 147.512Source: ZMB, BMELV, Eurostat, MIV © ZMB

EUGermany

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 11

Germany; 29 Mio. t20 %

France; 23 Mio. t16 %

UK; 14 Mill. tons9 %

Poland; 12 Mio. t8 %

Netherlands; 12 Mio. t8 %

Italy; 11 Mio. t8 %

all other; 46 Mio. t31 %

Shares of EU Milk Production 2009 (million t and %)

Total EU 27:

147 million t

German position in the world: Around 5 % of all cows‘ milk

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 12

Germany: World’s second largest milk processor

10

10

11

11

13

16

16

18

24

25

29

86

Argentina

Mexico

Italy

Netherlands

United …

Russia

New Zealand

Brazil

France

China

Germany

USA

97 % of produced milk are delivered to dairies

Source:ZMB, World Dairy Situation 2009

Mill. tonnes

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 13

Capable big and medium-sized dairies …Capable big and medium-sized dairies …

Top 10 Molkereien in Deutschland /Top 10 Dairy companies in Germanynach Milchmenge 2009 / according to milk volumes

Mio. € / €m1 DMK 71002 Müller Gruppe 21003 Hochwald 19004 MUH 12005 Uelzena 9506 BMI 9007 Rücker 8508 Omira 8009 Bayernland 700

10 Zott 680Quelle/Source: molkerei-industrie, www.molkerei-industrie.de IDM International Dairy Magazine, www.international-dairy.com

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 14

…paying competitive milk prices in the heart of Europe

23

25

27

29

31

33

35

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Ø EU-15/EU-25

D

F

Nl

GB

EU: Milcherzeugerpreise

EUR/100 kg, ab Hof, 3,7% Fett, 3,4% Eiweiß

Quelle: ZMB, nationale Statistiken, EU-Kommission.

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 15

How milk is used in Germany

Käse /Cheese46%

Frischprodukte /fresh dairy products

33%

Butter&Dauermilch-erzeugnisse / Butter

& preserved milk15%

Sonstiges / Other7%

Verwendung der Anlieferungsmilch 2009 /Usage of milk in dairies 2009

Quelle: ZMP, ife

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 16

Impressive Growth of Cheese Production

198289

489

775

1 115

1 686

2 169

1951 1960 1970 1980 1990 2000 2010

Production of Cheese(processed cheese excluded)

Quelle: ZMP, ife

Since reunification: doubling of production!

(Including fresh-cheese)

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 17

High Consumption-Level

10,4

10,7

11,7

14,5

18,1

21,5

10,8

11,8

12,1

14,8

17,7

22,6

Poland

Argentina

Australia

USA

EU25/27

Germany

2009

2007

2005

Consumption of Cheesekg per capita

Sources: ZMB, IDF Committees and National Statistics

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 18

World‘s largest cheese exporter

550589 570

697 721752

861905 916

9571.009

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Import Export

'000 tonnes

Quelle: ZMP, ife

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 19

• structural change on the farms

▪ small → big

▪ south → north

▪ conventional → bio or GMO-free

• change in lobbying

▪ in times of lower or volatile milk prices:

→ milk boycott + radicalization

• change in policy

▪ despite black/yellow coalition → more consumer protection

Situation today:

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 20

• change in communication

▪ more „scandals“ on TV / in public audience

▪ more „fairness“ (?), pricing

▪ „greening“ in public audience

But everything should be cheap!

Situation today:

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 21

Removal of quota system

After removal of the quota system in 2015 we expect not a dramatic increase in milk production

Greening way of Germany

no limitation of milk production from dairy industry(private and cooperative)

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 22

Milk package of the EU - Commission

EU – Commission has managed the market the last period quite good

the milk package was born in the last milk crisis

so far low impact on German milk sector

german dairy industry is on the way to a liberal milk market after 2015

Dr. Karl-Heinz Engel | General Assembly BCZ – CBL | 10.06.2011 | Brussels 23

Thank you for your attention!