The global dairy industry is changing as people want more organic and eco-friendly products. Producers are now using green practices and offering new products to overcome economic challenges.
Summary:
The global dairy market is changing a lot. U.S. milk production dropped by 1.0%, while the European Union’s milk production went up by 2.0% and Argentina saw a 4.4% rise. This puts pressure on U.S. farmers to be more efficient and try new strategies. Overall demand is mixed; China is buying a lot, but skim milk powder imports are not as strong as expected. There is also a trend towards organic and eco-friendly products. Even though inflation is making things more expensive, and exchange rates are shifting, the dairy market is staying strong. In 2025, global milk supply is expected to grow by 0.8%, thanks to cheaper feed and better weather. The USDA says U.S. milk production will be at 227.2 billion pounds, the EU at 149.4 million metric tons, and Argentina is showing recovery. New Zealand is also slightly increasing production by expanding herds. Trade is adapting due to these production changes and demand patterns.
Key Takeaways:
- The U.S. experienced a 1.0% drop in milk production, largely impacted by a significant decline in California.
- EU milk production rose by 2.0%, surpassing forecasts for the second month in a row, indicating strong regional growth.
- Argentina’s dairy production increased by 4.4% year-over-year in December, showcasing resilience and expansion.
- Global dairy demand is varied, with China maintaining strong import levels, while other regions show reduced demand, particularly for skim milk powder.
- U.S. dairy farmers may need to adopt new strategies focusing on efficiency and market diversification to remain competitive amidst shifting global dynamics.
Shifting consumer preferences, particularly towards organic and sustainable dairy products, are causing significant changes in the dairy industry. This trend is compelling producers to adopt more eco-friendly practices and be transparent about their product sourcing. Additionally, the growing popularity of plant-based alternatives is prompting producers to diversify their product offerings, thereby reshaping the industry landscape.
Despite economic issues like inflation and changing exchange rates, the global dairy market remains resilient. Inflation may raise production costs, but it does not deter producers from their commitment to quality. Changes in exchange rates may affect international trade, but they also present opportunities for innovative sourcing and pricing strategies.
Global Milk Production Trends
RaboResearch forecasts a 0.8% growth in milk supply from the major exporting regions in 2025. Affordable feed costs and improved weather conditions support this growth. However, the picture varies significantly across different regions:
- United States: The USDA projects milk production at 227.2 billion pounds for 2025, a 0.8 billion pound decrease from earlier forecasts. This reduction is due to lower-than-expected milk per cow yields and adjustments in dairy cow inventories.
| Year | Projected Milk Production (Billion Pounds) |
|---|---|
| 2025 | 227.2 |
| 2026 | 229.0 |
| 2027 | 231.1 |
| 2028 | 233.5 |
| 2029 | 235.8 |
| 2030 | 238.1 |
- European Union: EU milk production is forecast to decline marginally to 149.4 million metric tons (MMT) in 2025, down from 149.6 MMT in 2024. This decrease is attributed to declining cow numbers, tight farmer margins, environmental regulations, and disease outbreaks.
- Argentina: After facing challenges in 2024, Argentina’s dairy sector shows signs of revival. In November 2024, milk production increased by 1.5% yearly, the first growth in 18 months. The industry is benefiting from improved producer economics and government policies that have reduced inflation and improved access to financing.
- New Zealand: Milk production is expected to increase slightly, with farmers expanding herds and improving feed and management practices in response to higher global dairy prices.
| Region | 2024 Production (MMT) | 2025 Forecast (MMT) | % Change |
|---|---|---|---|
| EU-27 | 149.6 | 149.4 | -0.13% |
| USA | 228.0 | 227.2 | -0.35% |
| China | Data not available | Marginal growth | N/A |
| New Zealand | Data not available | 21.3 | N/A |
The expected drop in U.S. milk production by 0.35% by 2025, compared to the steady production in the EU-27, shows a shift in the global dairy market. This trend suggests that U.S. farmers need to be more efficient and ready to compete with other countries that have stable or growing milk production. These changes might also alter trade patterns, with countries like New Zealand keeping their strong position and China adjusting its imports. Making local changes and smart market decisions will be crucial for dealing with these changes.
Trade Dynamics
The global dairy trade landscape is evolving in response to production shifts and changing demand:
- United States: Dairy exports on a milk-fat basis are forecast to increase to 11.9 billion pounds in 2025. However, exports on a skim-solids basis are expected to decline due to less competitive pricing for dry whey and nonfat dry milk.
- European Union: Cheese production remains the primary focus of the EU dairy processing industry, supported by solid domestic consumption and continued export demand. EU27 cheese production in 2025 is forecast to reach 10.8 MMT, up by 0.6% from 2024.
- China: Imports of fluid milk, whole milk powder, and skim milk powder are forecast to continue declining in 2025 due to higher domestic milk production. Cheese imports are also expected to decline due to decreased demand for processed cheese.
| Year | All-Milk Price Forecast (USD/cwt) |
|---|---|
| 2025 | 19.20 |
| 2026 | 19.00 |
| 2027 | 19.10 |
| 2028 | 19.30 |
| 2029 | 19.50 |
| 2030 | 19.70 |
The global dairy trade is changing, bringing both challenges and opportunities. The European Union and Argentina are doing well because they are producing more milk. This means they can sell more dairy products around the world and make good profits, especially in places where people are buying more dairy.
On the other hand, U.S. dairy farmers might struggle if they don’t keep up with these changes. Milk production in the U.S., especially in California, is down. This could make it harder for American farmers to compete with countries that are growing fast. U.S. farmers might need to find ways to be more efficient and control costs to stay competitive in the global market.
Some countries might face problems because they can’t quickly adjust to changing global demand for dairy. These countries might have to pay more or find it harder to get dairy products. However, new ways to produce dairy and working together with other countries might help solve some of these issues.
Consumption and Demand Patterns
Global dairy demand remains mixed amid economic pressures. China, a key player in the worldwide dairy market, is expected to see a rebound in dairy imports:
- China: Dairy import volumes are projected to grow by 2% year-on-year in 2025, reversing a three-year decline. This potential recovery follows a steep 17% drop in net dairy product imports during the first eight months 2024.
| Product | 2024 Imports | 2025 Forecast | Trend |
|---|---|---|---|
| Whole Milk Powder | 2.0 million tons | 2.1 million tons | Upward |
| Skim Milk Powder | 1.5 million tons | 1.55 million tons | Upward |
| Cheese | 0.5 million tons | 0.51 million tons | Upward |
| Butter | 0.3 million tons | 0.31 million tons | Upward |
- European Union: Domestic consumption of fluid milk is expected to continue declining, forecast at 23.5 MMT in 2025, down by 0.3%.
In recent times, more people are choosing different kinds of milk and new dairy products. Plant-based milks, like almond, soy, and oat, are becoming popular because they are seen as healthier and better for the environment. This change shows how people are leaning towards eating more plant-based foods.
At the same time, more people want dairy products that are good for health. Many are picking products high in probiotics, protein, and vitamins. This trend shows a focus on staying healthy and strong, which is changing how people buy dairy.
Concerns about the environment are also affecting how people shop. Many are aware of the impact of traditional dairy farming, like greenhouse gas emissions and water use. Because of this, there’s a bigger demand for dairy and alternatives made in environmentally-friendly ways, leading producers to go green and make eco-friendly choices.
Key Challenges and Opportunities
- Environmental Regulations: Dairy farmers, particularly in the EU, face increasing pressure from environmental regulations, which may limit production growth.
- Economic Pressures: Tight margins and economic uncertainties challenge dairy farmers globally, leading to industry consolidation in some regions.
- Market Diversification: With changing global demand patterns, producers and exporters may need to explore new markets or niche opportunities.
- Technology Adoption: Investments in technology and sustainable practices are helping some farmers improve yields while managing costs.
- Trade Uncertainties: An increasingly complex geopolitical environment and protectionist policies present risks to the stability of global dairy markets.
The Bottom Line
The global dairy industry is changing a lot, with different production levels, trade shifts, and demand from various regions. U.S. milk producers are facing challenges as competitors in Europe and Latin America grow stronger. This means U.S. dairy farmers need to work on being more efficient and find new market opportunities to stay ahead. Looking ahead to 2025 and beyond, there’s a chance for growth for those who are ready to adapt and use new technology, focusing on being sustainable and innovative.
Learn More:
- Global Dairy Trade: Key Insights Every Dairy Farmer Should Know
- The Hidden Crisis: Why U.S. Dairy Farms Are Disappearing Faster Than Ever!
- Is 2024 Shaping Up to Be a Disappointing Year for Dairy Exports and Milk Yields?
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