Global dairy industry still in challenging times
Some 20 or so years I recall talking to a New Zealand dairy farmer at the time when the milk marketing boards were being disbanded and UK farmers had to decide where to sell their milk.
The NZ farmer didn’t understand what all the fuss was about. “Every morning”, he said, “NZ dairy farmers wake up and think - milk exports”.
It was evident he had a whole different approach to the milk business. Milk is an important business for NZ, but perhaps surprisingly, it is not one of the world’s main milk producing countries. Together with Australia, they produce only five per cent of the world’s total output. Yet, as the latest World Dairy Situation report (2016) from the International Dairy Federation informs, NZ alone is responsible for 20 per cent of all the world’s milk product exports!
Every year the 50 or so IDF member countries, from all five continents, get together and report on trends and developments in their own industries, covering production, processing, consumption, trade and pricing. For those interested in following trends and learning what other competitor countries have been are up to, and how that might influence their own future business plans, it makes valuable reading.
Total world milk output was in keeping with the long term trend of a two per cent increase, but there were some unexpected changes. Asia, for example, was the world’s largest producer of cow’s milk, a position historically held by North America. The EU was a close second, and between them they were responsible for over half the world’s output.
Milk from other animals must not be overlooked as buffaloes, goats and sheep, not forgetting camels, are important in some countries and produce about 15 per cent of total world milk. But here too were some changes. India for example, which historically has produced more milk from buffaloes than from cows, increased its cow milk output by over 10 per cent in the year, with hardly any increase from buffaloes.
However, the real problem highlighted by IDF, was that world consumption did not match the increase in production. That leads to downward pressure on milk prices. All of that led the IDF to conclude that the world’s industry faces volatility and challenging times.
However, there are some positive signals. World health organisations expect there will be an increased demand for food, including dairy products, in the coming decades as world population is forecast to rise from the current 7.5 billion to nearly 10 billion by 2050.
The future demand is clearly there, but the challenge for the world dairy industry is to achieve a better balance between supply and demand. However, that is easier said than done; milk production is like a huge oil tanker, it takes a long time to adjust the direction of travel.
John Sumner is secretary of Shropshire Chamber of Agriculture.