Global Dairy Industry Today

“ The annual growth rate of global milk production, at present, is about two per cent. From 522 million tonnes in 1987, milk production grew to 843.2 million tonnes in 2018. This is expected to rise to 860 million tonnes in 2019. World milk production is projected to increase additionally by 177 million tonnes by the year 2025. Dairy industry must empower dairy farmers to retain competitiveness and access to global markets and stay in readiness to face the challenges of globalization by optimizing international market opportunities and threats. New technology interventions being made across the globe will endeavour to reduce the vegetative cells of bacteria and spoilage organisms, complete elimination of pathogens, increased shelf life using environmental friendly packaging and using energy and water saving methods.

Milk is recognized as a most nutritious product all the world over. The annual growth rate of global milk production, at present, is about two per cent. From 522 million tonnes in 1987, milk production grew to 843.2 million tonnes in 2018. This is expected to rise to 860 million tonnes in 2019. Against this background, milk output in India is anticipated to increase by 5.3% in 2019 to nearly 196 million tonnes equivalent to 23% of world total milk output.

World milk production is projected to increase additionally by 177 million tonnes by the year 2025. During the same period, per capita consumption of dairy products is projected to increase by 0.8 and 1.7% per year in developing countries, and between 0.5% and 1.1% in developed countries. Because of the size of the dairy industry, these growth rates can produce big development payoffs for people’s livelihoods, for the environment, and for public health.

Whole fresh cow milk contributes about 82.7 %, buffalo 13.2%, goats 2.3%, sheep 1.3 % and camels 0.4% of the world milk production. Milk animals are raised in a number of dairy production systems such as specialized, landless, market oriented and subsistence oriented integrated dairy crop systems. Pastoral systems in few countries rely on mobility to produce milk and to a lesser extent on other livestock products and services. Over 150 million farmers keep at least 2-3 milking animals. Farmers often mix herds with more than one species of dairy animals. New commercial dairy farming units are emerging wherein the average number of dairy animals will be 90-300. Farmers’ will increase production when it is profitable for them, and when it would be a more profitable use of land.

Adverse weather conditions held back milk production in all parts of the world. The strongest growth in milk was achieved in India, Pakistan, Turkey, Australia, Poland and The UK. France, the Netherlands, Germany and New Zealand all experienced a decline in milk production for different reasons. For China, 2018 was more favourable year for milk production.

Whole Milk Powder, Skim Milk Powder, butter, butter oil and ghee are traded globally as commodities. The Governments are planning dairy development activities for improving human nutrition particularly for the young and for enhancing opportunities for rural development, including employment opportunities and livelihood. Consumers will increase consumption when the products are safe and price competitive. Towards those objectives, the processors will satisfy the customers, expand business opportunities that increase profit and exports with added confidence for investments for reliable supplies of high quality safe milk.

The strategy for dairy development will be based on key result areas and programmes. For improved productivity, many development programmes will be launched. To provide livelihood opportunities and increased incomes, dairy enterprise development programmes and starts up are expected to be launched with built-in incentive programmes.

Dairy business investment interests are growing all over the world. The annual growth in fluid milk consumption is expected to be highest in Argentina and India (within 5-6%). This growth rate will stay between 0.5 to 2.0% in Northern America, Brazil, EU, Mexico, Japan, Taiwan and Belarus.

India is world’s largest milk producer with 21% share followed by USA, China, Pakistan and Brazil in the descending order. Countries with highest milk surpluses are New Zealand, USA, Germany, Australia and Ireland. Milk production in Africa is growing more slowly, than other developing regions, because of poverty, poor animal genetics and adverse climatic conditions. The highest milk deficit countries are China, Italy, The Russian Federation, Mexico, Algeria and Indonesia. Focus on export to these countries is expected to be intensified.

The socio-economic benefits of global dairy are well recognized. Dairy animals are a regular source of food and cash for farmers, who either consume or sell milk every day. Milk provides livelihood to small holders. Dairy animals are store of wealth, which can be sold any time of need and transport them even for long distances. The animals are used as collateral guarantee for loans. They also generate dung which is valuable as fertilizer, fuel and construction material. Dairy animals contribute to social status and social capital thereby facilitating networking, supply chain relations and alliances. Dairy animals are possibly more popular assets among rural women in developing countries as animals are acquired through inheritance or markets than land & other physical and financial assets. The women are definitely the owners of dairy animals. They often feed the animals, milk them, clean them and their barn, compost the manure and often responsible for family health and sale of milk.

It is heartening to note that dairy industry creates jobs for dairy professionals, and for dairy producers who are often organized in cooperative or liaise with other value chain actors to process and sell milk to consumers.

Dairy production makes judicious use of natural resources such as land, water, nutrients and energy. New technologies in global dairy farming are helping quantifiable information in farm management, such as smart phone data application, automated milking parlours, micro-sensor technology, robotics and satellite system.

Dairy trade growth rate is rather slow due to trade frictions and moderate prospects for world economic growth. World dairy product exports (in milk equivalent) are forecast to rise by 1.8% to 76 million tonnes in 2019, a significant slow down from 2.8% estimated for 2018. Much of the expansion in world exports is anticipated to be sustained by a surge of deliveries from New Zealand, and modest increase from Mexico, the EU, Argentina, India & Canada. China is expected to lead the expansion in world dairy imports this year, with Mexico, Malaysia, Egypt and Brazil, to step up purchases. Australia’s limited milk supply this year is likely to result in a 3 percent cut in its overall dairy exports.

World exports of Whole Milk Powder are likely to expand by 2.3% to 2.5 million tonnes driven by sharp rises in imports by China, Brazil, Bangladesh, Singapore and Vietnam. Brazil is likely to step up imports, as Whole Milk Powder production continues to be short of domestic demand. New Zealand, Argentina, Uruguay, and Belarus are expected to be major suppliers of Whole Milk Powder. Since January this year, international price quotations for Whole Milk Powder from Oceania have been rising, indicating strong demand for the product.

World Skim Milk Powder exports in 2019 are forecast to grow by 2.8% to 2.7 million tonnes, much slower than the average pace of 8.6% recorded in the previous two years. Among the SMP importers, China, Mexico, the Philippines and Malaysia may purchase more SMP in 2019, to satisfy emerging demand from food manufacturers.

World butter exports in 2019 are predicted to expand by 2%. As it is a significant slow down from the 7% growth recorded in 2018, China may import butter increasing by 10% because of improved economic condition. Rising tourist arrivals are expected to increase the export of butter to Egypt, Saudi Arabia, Malaysia, and UAE.

India’s butter exports which more than doubled in 2018 are expected to advance by a further 16% this year, passionately India is gaining global market access.

Cheese exports are forecast to expand by 1.7% in 2019 to more than 2.6 million tonnes. Rising consumer demand combined with increased interest for a wider range of cheese variety, some countries like Australia, Japan, Republic of Korea, Canada, USA and Mexico are forecast to increase their purchases. Global cheese exports are expected to originate from New Zealand, the European Union, Argentina and Belarus. Incidentally, dairy processors have to face many challenges which are full of opportunities. Consumers will demand assured nutritional adequacy, health and wellness, safety, shelf stability and pricing. Consumers’ choices will be based on accessibility and affordability and secured supply chain management to earn trust.

Compared with January 2019, quotations raised for all dairy products were higher in April 2019, butter by 15.9% to US$ 5246 per tonne; cheese by 23.4% to US$ 4288 per tonne; WMP by 13.8% to US$ 3326 per tonne and SMP by 4.9% to US$ 2404 per tonne.

Different countries extended restrictions on imports of milk products by raising import fees and reinforcing animal disease and animal products movement control regulations. Major policy developments in India were to extend a ban on milk and food preparations with milk or milk solids as an ingredient from China until laboratories at Indian ports are upgraded for testing the presence of toxic chemical, melamine.

In order to meet consumer demands, the dairy industry will place reliance on increased use of natural ingredients and avoidance of artificial ingredients and increased compliance on nutritional labeling rather than advertising claims. They would prefer foods certified for food safety management systems by independent certification agencies to ensure safety and quality characteristics.

Dairy industry must empower dairy farmers to retain competitiveness and access to global markets and stay in readiness to face the challenges of globalization by optimizing international market opportunities and threats. New technology interventions being made across the globe will endeavour to reduce the vegetative cells of bacteria and spoilage organisms, complete elimination of pathogens, increased shelf life using environmental friendly packaging and using energy and water saving methods. Processing will be largely based on data analytics, sensors and digital technologies.