The Competitiveness of Agriculture in the European Union: Dairy Industry in the Focus

Abstract

The European Union produces 15% of its agricultural production in the dairy industry. Furthermore, one quarter of global milk production is produced in this region, and European milk consumption is three times higher than the world average. In 2017, total milk production for the EU28 was 170.1 million tonnes, the vast majority of which is cows’ milk production, 164.8 million tonnes. Consumption of fresh dairy products in EU Member States totalled 30.7 million tonnes of milk and 15.6 million tonnes of other fresh dairy products (Eurostat, 2017). The article focuses on the European Union’s and Hungary’s dairy export and analyses it with Balassa’s (Revealed Comparative Advantage, RCA) index. Our aim is to explore the foundations of the region’s competitiveness and the role and opportunities of Hungarian dairy sector.

The analysis is based on EU dairy export data for the period 2000–2017. The main result of the analysis is that in terms of competitiveness, the order of the countries, export performance (the largest ones: Denmark, France, Ireland and Belgium) is not fully in line with the order of dairy producing and processing (the largest ones: Germany, France, the United Kingdom, the Netherlands) or dairy export (the largest exporters: Germany, Netherlands, France and Belgium). The reason is that the highest customer value can be achieved through the production of high-end products, and the most competitive countries specialise in the production of one or a few of these products.