Learn how the recent spike in European milk output affects dairy farmers. What can you do to stay ahead in this changing market? Find out more.
Summary: European milk production surged in June, marking the fifth straight month of growth. Despite strong performances in France, Poland, and Italy, declines in the Netherlands and Ireland balanced these gains. Globally, major dairy exporters saw an overall drop for the 11th consecutive month due to setbacks in Argentina, the U.S., and New Zealand. June’s output hit 12.7 million metric tons or 28 billion pounds, the highest year-on-year growth since May 2023. Germany maintained steady production, while France saw a 2.9% rise. Poland and Italy grew, but the Netherlands and Ireland faltered. High temperatures and an outbreak of blue tongue disease have recently stifled Western European production. These issues and a tight U.S. milk supply have driven dairy product prices up. For businesses, this means adjusting to potentially lower global milk prices, which could reduce feed costs and milk prices. Higher output could open up new collaborations and markets, with increased demand in Asia and the Middle East.
Europe’s milk output rose for the fifth month, hitting 12.7 million metric tons in June.
France, Poland, and Italy saw significant gains, while Germany’s production remained steady.
Declines in the Netherlands and Ireland tempered these gains.
Global dairy exporters faced an 11th consecutive month of overall production drop despite European growth.
High temperatures and blue tongue disease have recently impacted Western Europe’s milk production.
U.S. dairy markets experienced increased prices due to tight milk supply and European solid performance.
Dairy farmers must adjust strategies for future price fluctuations and global supply issues.
Milk production is surprisingly increasing throughout Europe, breaking traditional seasonal tendencies. But what does this imply for your farm and the more significant dairy industry? Despite a wet spring, the EU saw a substantial rise in milk production in June. Changing weather, disease outbreaks, and evolving market dynamics all impact milk production. The USDA’s Dairy Market News notes that “hot weather in France, Germany, and the Netherlands has stifled milk production and component levels.” Additionally, blue tongue illness influences the Western European milk supply. Despite a constrained milk supply, the US dairy market is growing, and there is a balance between European growth and setbacks in other key dairy exporters, such as Argentina and the United States. Understanding these trends is critical for any dairy farmer who wants to remain ahead of the curve. Ready to delve further into this developing story? Let’s get started.
June’s Record-Breaking Numbers
In June, European milk collections totaled approximately 12.7 million metric tons or roughly 28 billion pounds. That is a 0.9% gain over the previous year, the most substantial year-on-year growth since May 2023. This spike comes after a slow spring, marking a significant milestone for the EU-27 dairy industry.
Country
June 2023 (Metric Tons)
June 2024 (Metric Tons)
Change (%)
Germany
3,100,000
3,100,000
0.0%
France
2,650,000
2,725,850
2.9%
Poland
1,100,000
1,115,000
1.4%
Italy
950,000
980,000
3.2%
Netherlands
1,670,000
1,655,300
-0.9%
Ireland
1,230,000
1,215,000
-1.2%
Others
2,900,000
2,910,000
0.3%
Country-Specific Insights
Germany, the world’s largest milk producer, kept production consistent with the previous year. Meanwhile, France, the second-largest manufacturer, had a significant 2.9% rise. Poland and Italy also recorded substantial growth, offsetting falls in the Netherlands and Ireland. These country-specific patterns are critical to understanding the overall market dynamics.
Strategic Insights for Adapting to European Milk Output Changes
Have you considered how the increase in European milk production may affect your day-to-day operations? The rise presents possibilities and problems you cannot afford to ignore.
An increase in European output may put downward pressure on global milk prices. While this may imply reduced feed and input costs for your business, it may also lower milk prices. Keeping an eye on market developments will be essential.
The increase in output may open the path for new collaborations and international markets. Look beyond your boundaries; high-quality dairy products are becoming more popular in Asia and the Middle East. So, what will be your strategy? Adapt, innovate, and grasp opportunities while facing difficulties front-on.
While Europe saw growth, other major dairy exporters encountered difficulty. Argentina and the United States had considerable setbacks, while New Zealand saw a modest year-over-year decline. The five top dairy exporters fell 0.1% from last year’s output, marking the 11th straight monthly fall. This global perspective is vital for understanding the larger picture.
Weather and Disease: The Double Whammy
Since June, increasing temperatures have caused a decline in milk production on both sides of the Atlantic. According to the USDA’s Dairy Market News, hot weather in France, Germany, and the Netherlands has reduced milk output and component levels. An epidemic of blue tongue disease has also affected productivity in Western Europe. These causes are reducing dairy product inventories and raising prices.
The Bottom Line
So, what are the takeaways from all of this? The increase in European milk output and worldwide production constraints have resulted in a dynamic and potentially profitable market. Monitor weather patterns and disease outbreaks, which may immediately influence supply and pricing. Be aware and agile to capitalize on market trends. What tactics will you use to navigate these changes? It might be critical to your dairy farm’s survival.
Protectionism is on the rise. Is your farm ready for the shake-up in global dairy trade? Here’s what you need to know now.
Summary: Feeling uneasy about the future of dairy trade? Rising protectionism is the latest curveball thrown into an already complex global market. Recent moves by China and Colombia to investigate subsidies in Europe and the U.S. could have far-reaching consequences on the dairy industry. Are you prepared for how these developments could impact your farm’s bottom line? “As a dairy farmer, understanding the implications of these trade investigations is crucial for navigating the upcoming challenges.” The global dairy trade is a complex industry with major players from Central Europe, North America, Oceania, and Asia. Exporters like New Zealand, the European Union, and the United States dominate the market, while importers like China, Mexico, and Southeast Asian nations rely on imports. International trade agreements like the US-Colombia Trade Promotion Agreement (TPA) help reduce tariffs and set trade norms, but they are often criticized for potentially favoring one side. China’s Ministry of Commerce is investigating European agriculture subsidies, which could impact the global dairy sector. The European Union’s participation could result in excess output in Europe, potentially pushing down global prices and harming farmers worldwide. A growing trend of protectionism is affecting global trade relations, with Colombia’s dairy farmers alleging that these subsidies enable artificially cheap U.S. milk powder, undermining domestic dairy pricing and putting pressure on the sector. Dairy farmers need to diversify markets, form cooperatives, advocate for fair trade policies, stay informed, leverage technology, build strong relationships with local suppliers and customers, and consider value-added dairy products.
Rising protectionism poses a new challenge to the global dairy trade.
China and Colombia are investigating U.S. and European dairy subsidies.
These investigations could impact global dairy prices and affect your farm’s profitability.
Understanding trade agreements and their criticisms is crucial for staying informed.
Diversifying markets and forming cooperatives can help mitigate risks.
Staying updated on global trade developments is essential.
Leveraging technology and forming strong local relationships can offer stability.
Consider producing value-added dairy products to enhance your market position.
Are you ready to take charge in the face of increased protectionism in the global dairy trade? As dairy producers, you have the power to navigate the changing landscape as governments scrutinize international subsidies. The recent probes by China and Colombia may alter long-standing trade agreements and market dynamics, but with the right strategies, you can steer your business through these challenges.
Take the European Union as an example. The EU, a significant player in the global dairy market, has been a major exporter of dairy products. However, the EU’s decision to impose tariffs on Chinese electric automobiles has sparked a retaliatory investigation by China’s Ministry of Commerce into Europe’s agricultural subsidies. This action, initiated at the request of Chinese dairy farmers, could have significant repercussions for European dairy exports.
On the opposite side of the world, Colombia’s government is scrutinizing U.S. funding. Colombian dairy farmers blame programs such as the Dairy Margin Coverage and the USDA’s Dairy Donation Program for the low cost of milk powder from the United States. With so much money flooding into the dairy business in the United States, Colombian farmers are concerned about their livelihoods.
The Global Dairy Showdown: How Major Players and Trade Agreements Shape the Market
The global dairy trade is a thriving business with participants from Central Europe, North America, Oceania, and Asia. Significant exporters, such as New Zealand, the European Union, and the United States, dominate the market, selling dairy products such as milk, cheese, and milk powder to nations across the globe. Fonterra Cooperative Group, based in New Zealand, is one of the world’s major dairy exporters, significantly impacting market trends.
Key importers include China, Mexico, and Southeast Asian nations, who depend on imports to fulfill rising demand. China, in particular, has experienced increased dairy imports to meet local demands due to growing consumer demand and limited domestic production capacity. Geographic indications (G.I.s) in the E.U. and cheese imports from the United States considerably impact commerce.
The US-Colombia Trade Promotion Agreement (TPA) is a crucial international trade accord. This agreement, which came into force in 2012, has significantly influenced the global dairy trade. It has led to a considerable increase in U.S. milk powder shipments to Colombia, affecting the Colombian dairy market. Such agreements, while aiming to balance advantages between exporting and importing countries, are often criticized for potentially favoring one side.
These agreements affect trade flows and domestic industry. For example, the TPA has permitted the continual supply of U.S. dairy into Colombia, which some argue undercuts local farmers. This conflict demonstrates the delicate balance necessary to preserve fairness and competitiveness in the global dairy market, emphasizing the importance of continuing reviews and discussions.
China’s Investigation into European Subsidies: A Game-Changer for Global Dairy Trade?
China’s Ministry of Commerce has begun extensively examining European agriculture subsidies. This initiative, spearheaded by Chinese dairy producers, seeks to determine if these subsidies provide European farmers an unfair competitive advantage. Experts fear that the inquiry might substantially impact the global dairy sector.
Beijing’s investigation followed the European Union’s decision to slap tariffs on most electric cars imported from China, intensifying trade tensions between the two industrial powerhouses. European dairy farmers have concerns about their market share in China and global commerce.
Stanford University economist Roger Noll states, “Trade barriers can disrupt established supply chains, leading to inefficiencies and reduced market access for many producers.” The European dairy sector, which already accounts for a sizable share of global dairy exports, may experience a fall in global competitiveness if China imposes more taxes or restrictions based on the investigation’s findings.
Data demonstrate that the European Union is a significant participant in the global dairy industry, with exports continuously increasing over the last decade [source]. Any interruptions caused by China’s discoveries might result in excess output in Europe, possibly pushing down global prices and harming farmers throughout the globe.
This inquiry into U.S. and European subsidies is part of a broader trend of growing protectionism, which has the potential to significantly alter global trade relations. The conclusions of these investigations could have long-term implications for market conditions and trade ties. They could lead to new trade obstacles or more egalitarian practices, reshaping the global dairy trade in the process.
How U.S. Subsidies Might Be Shaking Up The Global Dairy Market? Colombia Certainly Has Some Thoughts…
How are U.S. subsidies affecting the global dairy market? Colombia undoubtedly has some ideas. They are looking at U.S. dairy subsidies, focusing on two essential programs: the Dairy Margin Coverage (DMC) program and the USDA’s Dairy Donation Program.
So, what is the crux of their complaints? Let’s dig in. The DMC program provides a significant safety net for U.S. dairy producers, with $1.65 billion issued in 2023 to cover the difference between milk prices and feed costs. Furthermore, the USDA’s Dairy Donation Program helps farmers buy excess milk products to distribute to food banks. Sounds useful.
Not if you are a Colombian dairy farmer. Colombia’s dairy farmers allege that these subsidies enable U.S. milk powder to be offered artificially cheaply, undermining domestic dairy pricing. They believe this makes it difficult for local farmers to compete, putting pressure on the sector.
Imagine being a Colombian dairy farmer trying to earn a livelihood, only to have your market inundated by cheaper U.S. milk powder. Tariffs and trade adjustments resulting from the United States-Colombia Trade Promotion Agreement (TPA) are not helping since they have opened the door for increased U.S. dairy imports.
The Colombian government is delving deeply into the subsidy concerns, and the stakes are high. How will this probe impact the delicate balance of the global dairy trade? Will it result in new trade obstacles or more egalitarian practices? Only time will tell.
Impact on U.S. Dairy Exports: A Case Study with Colombia
So, how can these investigations and possible trade restrictions affect the U.S. dairy sector, particularly shipments to Colombia? The stakes are enormous, given the importance of the US-Colombia Trade Promotion Agreement (TPA) in defining this market.
Historically, the TPA allowed U.S. milk powder to flood the Colombian market. The deal, which went into effect in 2012, eliminated several trade obstacles that had previously limited U.S. dairy goods. Consequently, U.S. exports to Colombia have increased dramatically, with milk powder becoming a significant import.
Fast forward to the latest probe launched by Colombia’s government, and the situation may shift dramatically. Allegations that U.S. subsidies, such as the Dairy Margin Coverage program, artificially decrease prices have raised concerns. Colombian dairy producers believe these subsidies provide U.S. goods an unfair advantage, harming local farmers who cannot compete on price.
With greater on-farm profits and better weather conditions increasing local output, Colombia’s main dairy union is now looking for ways to restrict these U.S. imports. If successful, this might increase tariffs or outright limits on U.S. dairy goods entering Colombia.
Such actions would be troubling for U.S. dairy exporters. The TPA played a critical role in their present market domination, but government inquiries into subsidies may change this dynamic. The conclusion may restrict U.S. market access, requiring American dairy producers to seek new overseas markets or confront domestic overproduction issues.
The dairy industry in the United States is facing a difficult period. Understanding the historical backdrop and present dynamics may help stakeholders plan for future roadblocks and find methods to negotiate this complicated trading environment.
The Tug-of-War: Balancing Domestic Interests with International Trade Fairness
Let us discuss the tug-of-war between home interests and international trade equity. Have you ever pondered how protectionism affects this delicate balance?
On the one hand, protectionism may be beneficial to local dairy producers. Assume you’re a dairy farmer facing stiff competition from low-cost imported milk powder. What could be better than government policies that shift the balance in your favor? These safeguards help keep pricing stable and your business profitable.
Consider the United States Dairy Margin Coverage scheme, for example. It awarded American dairy farmers with $1.65 billion in 2023 alone. This benefits domestic farmers, allowing them to weather economic crises and maintain consistent output.
However, let’s flip the coin. The same policies may disrupt international trade dynamics. Colombia’s complaint against U.S. dairy subsidies is a prime example. These subsidies have the potential to destabilize local markets in other countries by artificially lowering the price of U.S. milk powder. Colombian dairy farmers complain that this reduces their pricing, making it difficult to compete in their market.
Trade accords such as the US-Colombia Trade Promotion Agreement seek to level the playing field. However, subsidies may distort this equilibrium, causing friction and disagreements.
So, where should we draw the line? Supporting local farmers is unquestionably essential. But so is preserving fair trading practices on a global scale. As these investigations evolve, one thing becomes clear: balancing local advantages and international justice is challenging.
Roger Noll states, “Trade barriers can protect local industries in the short term, but they often lead to inefficiencies and conflicts down the line.”
What are your thoughts? How should governments negotiate this complex landscape?
What Dairy Farmers Need to Know: Navigating Rising Protectionism
Do you feel trapped in the crossfire of global trade disputes? You are not alone. Rising protectionism is altering the dairy industry, and planning is critical.
Here are some hands-on strategies to help you navigate these turbulent waters:
Diversify Your Markets Depending on a single export market might be dangerous. Explore new markets to diversify your risk and reach a more extensive client base. Building a more significant market presence might protect you against unexpected trade interruptions.
Form or Join Cooperatives There’s power in numbers. Joining a cooperative may increase negotiating power and give access to a broader range of markets. Cooperatives may also assist in sharing resources and knowledge, making it easier to overcome trade risks.
Advocate for Fair Trade Policies Your voice matters. Engage with industry organizations to lobby for fair trade policies. Lobbying for clear rules may help guarantee a fair playing field worldwide, which will defend your interests.
Stay Informed Keep up with the most recent trade news and policy developments. Subscribe to industry publications, attend webinars, and engage in debates. Knowing what’s going on might help you predict changes and plan appropriately.
Leverage Technology Use technology to improve productivity and save expenses. Efficient methods may strengthen your operation’s resilience to market shifts. Consider investing in farm management software, precision agricultural instruments, and other innovative technologies.
Build Strong Relationships Foster partnerships with local suppliers and customers. Building a solid local network may offer a consistent market for your goods while reducing reliance on foreign commerce.
Consider Value-Added Products Consider creating value-added dairy products such as cheese, yogurt, and butter. These items often offer larger profit margins and may provide new market possibilities.
Using these methods, you will be better prepared to deal with increased protectionism uncertainties while protecting your dairy industry. Stay proactive, aware, and engaged; your farm’s future relies on it.
The Bottom Line
Understanding the repercussions of increasing protectionism is critical for dairy producers today. We’ve looked at how significant actors like China and Colombia are challenging the current quo in the global dairy trade, with the potential to reshape markets. As trade obstacles and government subsidies are reviewed, balancing local interests and international trade fairness becomes more critical.
Keeping up with these changes might help you make more competent judgments and navigate this tumultuous world. Diversifying markets, forming cooperatives, and harnessing technology are just a few options. The future of global dairy commerce remains uncertain—will protectionism stifle development or usher in a new age of fair competition? It’s an issue that every dairy farmer must consider as they navigate this ever-changing global economy.
Find out how global dairy market shifts affect U.S. and Indian farmers. What do these changes mean for your dairy business? Keep reading to learn more.
Summary: Have you ever wondered how global dairy markets are evolving and what it means for you as a dairy farmer? The Idele conference in Paris highlighted industry trends, from growth and consumption to varied pricing across regions. Key insights revealed that Asia drives much of the global production growth, while Europe and North America see modest increases. India stands out for its massive milk production yet remains complicated in market dynamics. Meanwhile, economic challenges in China add layers of uncertainty to the global picture. “Growth in milk production has stopped in Europe and the United States, with demand showing signs of weakness in China and milk margins still offering few incentives in surplus areas,” said Gérard You from Idele. In 2023, global dairy experienced a moderate growth of 1.3% to 950 million tonnes, with Asia being the most significant contributor. The EU-27 saw a 0.3% increase in milk output, China experienced a 7.1% growth, and India climbed by 2.5%. However, milk production is slowing in Europe and the United States, while demand weakens.
Global milk production increased by 1.3% in 2023, reaching 950 million tonnes, with Asia contributing the most to this growth.
EU-27 saw a minimal increase in milk output by only 0.3%, while China and India experienced significant growth of 7.1% and 2.5% respectively.
Milk prices varied significantly across regions, with France seeing an increase, while New Zealand and the US experienced sharp declines.
International dairy trade slightly decreased to 88 million TEL in 2023, with the EU-27, New Zealand, and the US being the top exporters.
India remains the leading global milk producer, with its production largely divided among self-consumption, informal markets, and industrial collection.
The global dairy market outlook for 2024 is marked by uncertain demand, particularly due to economic challenges in China and stagnant production in Europe and the US.
India’s dairy sector faces significant political and environmental challenges, yet there’s a strong drive to increase exports, which might require opening borders to imports.
Despite being a significant player, China’s dairy market is dealing with economic instability, overproduction, and declining demand post-COVID-19 pandemic.
Imagine waking up to discover that the rules of the dairy game had radically altered overnight. Have you ever considered how your farm is part of a more extensive, interconnected system of global dairy production? These surprising developments are not just a matter of curiosity; they have the potential to significantly impact your agricultural choices and success. Let’s delve into what’s going on and why it’s crucial for you to stay informed and adapt to these global trends.
Global Dairy Market: Surprising Shifts and Key Insights from the Idele Conference
As addressed at the Idele conference, milk output in the global dairy industry has grown moderately, by 1.3%, to 950 million tonnes in 2023. Asia was the most significant contributor, accounting for 10 million tons, followed by Europe and North America. However, production patterns differed by country; the EU-27 had a 0.3% increase, while China saw a significant 7.1% growth, and India climbed by 2.5%. This diversified environment emphasizes the many characteristics of the global dairy market.
Regional Dynamics: The Complex Interplay of Global Milk Production
When reviewing production patterns in key dairy-producing regions, it is evident that some are undergoing considerable changes. Let’s start with China and India, which have seen significant growth in milk output. In 2023, China’s milk output increased by an astonishing 7.1%. This expansion is consistent with the country’s continuous attempts to increase food self-sufficiency, as Jean-Marc Chaumet of CNIEL reported. He highlighted that China’s agricultural output increased by 5% 2023 over the previous year.
India, the world’s largest milk producer, is also experiencing a steady increase. With more than 200 million tons of milk produced by 70-80 million farmers, India’s output is set to rise by 2.5% in 2023. The country’s gradual development underscores its potential to play a significant and positive role in the global dairy industry. As Marion Cassagnou of ATLA points out, ‘There is a strong political will to export, but the country will have to open its borders to imports, potential game-changer for the global dairy market.’
In comparison, milk output in the EU-27 increased just 0.3% in 2023. This tiny increase suggests a more stable market in Europe, where production has hit a plateau. According to Gérard You from Idele, milk production has slowed in Europe and the United States while demand is weakening.
Furthermore, output stability is visible in the six primary exporting basins: Belarus, Argentina, Australia, New Zealand, the United States, and the EU-27. These areas enjoyed 0.9% growth in the first half of 2023 but decreased in the second half, resulting in a flat yearly collection with just a 0.2% rise over 2022. This stability implies that some areas increase fast while others maintain output levels, indicating a diversified and reassuringly stable global dairy market environment.
And Now: What’s the Deal with Milk Prices? A Rollercoaster Ride for Dairy Farmers!
Price variations keep dairy producers on their toes—when you believe you understand what to anticipate, the market shifts—sometimes dramatically. Let’s look at producer milk pricing in various nations in 2023.
In France, dairy producers may have sighed with relief when prices rose. The producer price rose to €471 per kilogram, a 6% rise over the previous year. This rise may be seen as a much-needed boost in a tumultuous market.
Meanwhile, things were not looking so good on the other side. In New Zealand, the producer price fell to €344 per kilogram, a 22% drop from 2022. The United States followed suit, with prices plummeting to €430 per kilogram, a 22% reduction.
However, the narrative still needs to finish there. The drop was not restricted to particular nations; it affected the price of dairy components globally. For example, the cost of butter fell by 22%, while low-fat powdered milk fell by 31%. These developments have far-reaching consequences for farmers and everyone else engaged in the dairy industry.
Understanding these swings and being updated is critical for dairy professionals. Are you prepared for what could happen next?
World Dairy Trade: Who’s In and Who’s Out in 2023?
Regarding international commerce, dairy products have recently experienced some promising developments. Despite being an essential item, trade volume fell marginally in 2023. The worldwide trade in dairy products was projected at 88 million tonnes of milk equivalent (TEL), down by around 1 million TEL from 2022.
Three significant actors dominate this trade: the EU-27, New Zealand, and the United States. These export powerhouses account for 68% of the worldwide dairy trade. The EU-27 continues to dominate, with its share growing to 26 million TEL, closely followed by New Zealand with 20 million TEL. Conversely, the United States had a modest drop, exporting 13 million TEL.
China, Mexico, and Algeria are the biggest importers, accounting for approximately 25% of total commerce. Asia dominates the worldwide dairy trade, accounting for 56% of the total. The region’s ravenous thirst for dairy emphasizes its importance in the business.
Gérard, you accurately stated, “In 2024, the global dairy market is mainly marked by uncertain global demand.” Market instability is apparent, with a 9% reduction in the value of worldwide commerce, reaching €73 billion in 2023, mainly owing to falling dairy commodity prices such as butter and milk powder.
2024 and Beyond Navigating the Uncertainty of the Global Dairy Market
As we approach 2024, the global dairy market remains to be seen. Critical variables such as stalled milk production growth in Europe and the United States contrast sharply with China’s sluggish demand signals. Gérard You of Idele highlights that the global dairy scene is entangled in a web of uncertainty, with market volatility tempering cautious optimism.
Milk production growth, which was previously strong, has slowed significantly. Both typically robust dairy markets, Europe and the United States, suffer stagnation. Production levels have plateaued, posing possible issues for farmers and industry partners. The current downturn may indicate a long-term trend unless market circumstances change significantly.
Meanwhile, China’s appetite for dairy goods, which formerly supported global markets, shows weakness. A slow economy, significant young unemployment, and altering consumer preferences after COVID-19 have all impacted dairy demand. The penetration rate and purchase frequency have declined, resulting in a supply excess that the market is straining to absorb.
According to You, the dominant emotion for 2024 is one of careful watchfulness. “Growth in milk production has stopped in Europe and the United States, with demand showing signs of weakness in China and milk margins still offering few incentives in surplus areas,” he says. His assessment of a “moderately quiet” year reflects a global market on the verge of turmoil, with supply and demand remaining precariously balanced.
India: A Complex Giant in the Global Dairy Market
India’s involvement in the global dairy sector is extensive and complicated. Did you know India is the world’s largest producer of milk? With over 200 million tons generated by 70-80 million producers, this quantity alone is astonishing. But let’s explore what this implies for the nation and the globe.
First, India’s milk production is separated into three primary markets: self-consumption, informal, and collecting. Marion Cassagnou states that these divisions are critical to the dairy sector’s operations. Self-consumption accounts for 46% of output, translating to around 95 million tons. The informal market accounts for 29%, or 60 million tons, while the collection market, which includes private industrials and cooperatives, contributes 25%, or 52 million tonnes.
This divided market system poses issues, particularly for small-scale producers. Around 75% of breeders have just 1-2 cows yet contribute considerably to livestock, accounting for 40% of the total. Most of these farmers are landless and have little access to water, making their livelihoods very fragile. Cassagnou said that “54% of India faces high to extremely high water stress,” highlighting the challenges these small-scale growers encounter.
It’s fascinating to compare the dynamics of huge and small farms. While more giant farms with more than 200 cows have begun to appear since 2000, they still account for a small percentage of the entire sector. Small dairy operators with 3-20 cows and farming crops and fodder account for a larger market share.
Despite these problems, milk consumption in India is gradually growing, owing to a youthful population, urbanization, and rising earnings. This expansion is mirrored in the predictions, which indicate that output might reach 321 million tons by 2032 under favorable circumstances, as underlined by Cassagnou.
However, India’s contribution to exports could be more extensive and irregular. While a solid political resolve exists to increase exports, India must open its borders to imports to assist with this development. The nation remains strongly protectionist, with state-supported dairy cooperatives limiting the opportunities for private producers and foreign corporations.
So, what is the takeaway? India’s dairy industry is a powerhouse with enormous potential, but it confronts severe challenges, particularly for small-scale farmers. With changing market dynamics and rising demand, the future may provide both possibilities and difficulties for this critical industry.
China’s Dairy Market: Wrestling with Economic Storms Post-COVID
China’s economic environment has been unstable, significantly influencing the dairy sector. Lower customer demand has proven to be a key concern after Covid-19. Jean-Marc Chaumet of CNIEL identified the weakening real estate industry, high young unemployment, and shrinking GDP as the causes of the lower average price, purchase frequency, and penetration rate of dairy products.
Despite this, China’s agricultural output increased by 5% in 2023 compared to 2022, with beef production growing by 22% between 2016 and 2023. Dairy output increased 36% from 2018 to 2023, with a 6.7% increase between 2022 and 2023. This spike is primarily due to the expansion of enormous farms.
Between 2020 and 2022, China constructed or planned 562 new dairy farms with a total capacity of more than 3.77 million heads. Seventy percent of these farms are enormous, with over 10,000 heads. By 2023, 164 new projects had employed 980,000 employees, underscoring the size of these activities.
However, vast farms have issues. Since 2022, rising production costs and falling milk prices have imposed economic strain on farmers. “In 2023 and 2024, large dairy farms lost money, and the construction of new farms slowed down,” Chaumet told me. Furthermore, half of China’s dairy cows now live on farms with more than 1,000 heads, leading smaller farms to perish. Concurrently, Chinese dairy imports have fallen since 2022, indicating a troubling market trend.
The Bottom Line
The worldwide dairy market environment is dynamic and complicated, influenced by regional production patterns, shifting pricing, and unexpected demand. From Asian nations’ substantial impact on milk production growth to the unpredictable milk prices farmers face in New Zealand and the United States, there are numerous challenges and opportunities. The main actors in international commerce emphasize high-value dairy products, but the economic challenges of emerging giants like India and China suggest that the future is far from assured. Staying current on global trends is critical for dairy farmers, especially those in the United States and India, and the lessons from the Idele conference highlight the need for adapting agricultural techniques to these evolving trends. In a continually changing market, proactive flexibility may be key to success in the coming years.
Asia is taking the lead in global milk production. Will India and China continue their rapid growth and transform the dairy industry? Keep reading to learn more.
Summary: Asia is swiftly emerging as the core of global milk production growth. With China and India spearheading the movement, the region is on track to achieve unprecedented increases in output this year. According to the FAO’s Food Outlook, global milk production will climb by 1.4% to 979 million tonnes in 2023, with Asia contributing nearly half of this total. This historic expansion, driven by record-breaking outputs from China and India, underscores new opportunities and challenges for dairy producers worldwide. Robust economic development, rising consumer demand, favorable government policies, and modernization of agricultural practices are pivotal factors fueling this growth.
Global milk production is projected to rise by 1.4% to 979 million tonnes in 2023.
Almost half of this growth comes from Asian countries, with China and India leading the charge.
China alone is expected to produce 45.5 million tonnes of milk, a 4.8% increase from last year.
India, as the world’s largest milk producer, will see its production grow by 2.8% to nearly 243 million tonnes.
Other significant contributors in Asia include Pakistan, with a projected 2.5% increase in milk production.
The region’s rapid growth is attributed to economic development, increased consumer demand, supportive government policies, and modernized farming practices.
In an unprecedented surge, Asia is spearheading the global milk production drive, reshaping dairy markets worldwide. With record-breaking production levels from major players like China and India, the region is reclaiming its position as the leading milk-producing powerhouse. This remarkable expansion, contributing to a 1.4% increase in global milk output to 979 million tons this year, unveils new potential and challenges. Dairy producers worldwide must navigate this evolving landscape because Asia accounts for approximately half of global milk production. Understanding these dynamics is crucial for seizing new market opportunities and maintaining competitiveness in a constantly changing industry.
Region
2023 Milk Production (Million Tonnes)
2024 Expected Milk Production (Million Tonnes)
Growth Rate (%)
Asia
438.0
457.9
4.6%
China
43.4
45.5
4.8%
India
236.7
242.9
2.8%
Pakistan
48.3
49.5
2.5%
Europe
159.3
160.0
0.4%
USA
102.6
103.0
0.4%
Oceania
29.8
29.8
0.0%
Asia’s Milk Production is on a Meteoric Rise, Significantly Outpacing Other Regions
Asia’s milk supply is rapidly increasing, exceeding other areas. This quick development might be ascribed to China’s unprecedented 4.8% increase in milk output, which reached 45.5 million tons this year. This increase emphasizes the development of dairy farming operations and represents improved efficiency and technical improvements in the industry.
China’s significant expansion helps the global milk production landscape by increasing output to new highs. With global milk output projected to grow by 1.4% to 979 million tons, Asia’s contribution is critical. The area currently produces about half of the world’s milk, totaling 458 million tons.
Global milk output is expected to increase by 1.4% this year to 979 million tons. Asia primarily fuels this expansion, with China and India leading the way. China’s milk output is projected to increase by 4.8%. At the same time, India, the world’s biggest producer, is set to grow by 2.8% to about 243 million tons. Asian countries are increasing their production despite moderate growth rates in Europe and the United States, each expecting a 0.4% gain. Asia’s dominance in the dairy business significantly impacts global market dynamics.
Unpacking the Factors Driving Asia’s Explosive Milk Production Growth
Several key factors are fueling Asia’s substantial growth in milk production. Foremost among these is the robust economic development across the continent, which has boosted disposable incomes and, consequently, the demand for high-quality food, including dairy. This rising consumer demand significantly drives the increasing milk production rates. Moreover, both urban and rural populations are considerably increasing their dairy consumption. As awareness of the nutritional benefits of milk grows in Asian communities, so does per capita spending, particularly in rapidly urbanizing areas with emerging sophisticated retail systems and supply chains.
Government policies and efforts play a crucial role in bolstering the dairy business. Many Asian governments have put in place favorable regulations, recognizing the potential of the dairy sector to enhance food security and rural incomes. These policies include subsidies for dairy farmers, infrastructural investments, and measures to promote modern agricultural practices and technology. A concerted effort to modernize dairy production is another significant factor. Investments in modern agricultural equipment, improved breeding procedures, and better animal health management contribute to increased milk output and quality. For instance, China’s drive to modernize dairy farms has led to significant growth rates.
Finally, the mix of economic success, rising consumer demand, supporting government regulations, and innovations in agricultural methods offer a suitable climate for significant milk production expansion throughout Asia. This multimodal strategy guarantees the continent’s dairy business thrives and sets new output milestones yearly.
India’s Dairy Sector Continues to Cement Its Position as the Global Leader
India’s dairy industry is expected to grow milk output by 2.8% this year, bringing the total to about 243 million tons. This expansion is driven by the country’s growing cattle population and the continuous modernization of dairy farms. According to the FAO’s Food Outlook prediction, these developments are allowing India to extend its advantage over other areas in milk production. Combining higher animal numbers and enhanced farm technology gives a solid foundation for long-term growth, keeping India at the forefront of the global dairy sector.
Other vital Asian players contribute to the region’s growing milk output. For example, Pakistan expects a 2.5% increase in its milk production. This increase is mainly caused by low input-output crop-based systems that are getting more efficient. Meanwhile, China is forecast to outperform many other nations with a 4.8% growth, pushing total milk output to a record 45.5 million tons. This increase is due to the development of the dairy sector and the upgrading of agricultural techniques.
The implications of these increases for the global dairy industry are significant. Asia, which already produces almost half of the world’s milk—an estimated 458 million tonnes—is reshaping global supply dynamics. The rise in milk supply in China and Pakistan, combined with a 1.4% increase in global milk output to an expected 979 million tonnes this year, is helping to stabilize the international market. This stability offers ample opportunities for complementary businesses to thrive, including feed production and dairy equipment manufacture.
Other Regions Struggle to Keep Pace with Asia’s Milk Boom
Despite the promising estimates from Asia, other regions are experiencing slower growth rates. Europe, for instance, is expected to produce around 160 million tons of milk this year, representing a moderate growth rate of 0.4%. This slow pace is attributed to various factors, including economic uncertainty, climate legislation, and a general trend toward more sustainable agricultural techniques, all of which tend to limit rapid development.
Similarly, the United States is predicted to produce more than 103 million tons, with an incremental growth rate of 0.4%. The dairy business in the United States faces challenges such as increased feed prices, labor shortages, and environmental laws limiting production capacity.
Oceania’s milk output is expected to remain steady at 29.8 million tonnes, with just minor changes. Australia and New Zealand have distinct problems, with Australia recovering from a severe drought. New Zealand is under environmental pressure to reduce dairy farming expansions in favor of regenerative agriculture approaches. These results contrast sharply with Asia’s fast rise, highlighting the region’s growing prominence in the global dairy industry. The momentum in Asia is both an inspiration and a wake-up call for global dairy producers.
The Bottom Line
The fast increase in Asian milk production, led by China and India, represents a significant change in the global dairy landscape. Dairy production growth rates are moderate or stable outside Asia, including Europe and Oceania, reflecting regional disparities. For dairy producers, this shift offers both benefits and problems. The rising Asian market may provide new opportunities for cooperation and export. Still, it also offers more competition and the need to develop constantly. As Asian nations improve their milk production capacities, dairy producers must remain flexible and adaptable. These shifting tendencies will determine the future of the global dairy industry, raising an important question: How can dairy producers capitalize on these transitions while reducing possible risks? The solution includes strategic planning, investment in sustainable practices, and active participation in growing markets.
Learn how global food prices stayed steady in June, even with higher costs for sugar and vegetable oils. What might this mean for future food security?
The global stage of food commodities is often unpredictable, yet June saw a rare calm. The latest Food Price Index report from the Food and Agriculture Organization of the United Nations (FAO) revealed reassuring stability in international food commodity prices. The FAO Food Price Index remained at 120.6 points, unchanged from May. This stability resulted from increased vegetable oils, sugar, and dairy products balanced by declining cereal prices.
Due to this equilibrium, the benchmark for world food commodity prices remained unchanged. Specifically, the FAO Cereal Price Index dropped by 3% from May, driven by better production forecasts in major exporting countries. In contrast, the FAO Vegetable Oil Price Index rose 3.1%, fueled by global import demands and a strong biofuel sector. Hence, other declines offset the surge in some commodities, keeping the index stable.
Month
FAO Food Price Index
FAO Cereal Price Index
FAO Vegetable Oil Price Index
FAO Sugar Price Index
FAO Dairy Price Index
FAO Meat Price Index
January 2024
118.2
117.6
126.5
103.4
111.9
109.8
February 2024
118.9
117.9
127.3
104.1
112.7
110.1
March 2024
119.5
118.3
128.2
104.6
113.4
110.5
April 2024
120.1
118.5
129.0
105.2
114.1
111.0
May 2024
120.6
117.0
132.4
108.1
115.9
111.5
June 2024
120.6
113.6
136.5
110.2
117.3
111.6
FAO Food Price Index: Stability Amid Volatility in Global Food Markets
The FAO Food Price Index remains a vital tool for monitoring the international prices of key traded food commodities, empowering policymakers to make informed decisions that impact global food security and economic stability. In June, the index averaged 120.6 points, unchanged from May, showing a 2.1 percent decrease from last year’s time and a significant 24.8 percent drop from its peak in March 2022. This equilibrium highlights the balancing influence of various commodities; rises in vegetable oils, sugar, and dairy prices were offset by declines in cereal prices. Such data is crucial for policymakers and stakeholders in the global food supply chain, aiding in understanding and addressing the complexities of food pricing.
FAO Cereal Price Index: Favorable Harvest Prospects Drive Down Prices
The FAO Cereal Price Index , a key player in stabilizing the global cereal market, saw a significant 3.0 percent drop in June from May. This drop was driven by improved production prospects in key exporting countries. Enhanced harvest outlooks in Argentina, Brazil, Türkiye, and Ukraine have exerted downward pressure on prices. Favorable weather conditions in these areas boosted yield expectations for coarse grains, wheat, and rice, mitigating supply chain uncertainties and stabilizing the cereal market.
Surging Demand Propels FAO Vegetable Oil Price Index Upward
The FAO Vegetable Oil Price Index surged by 3.1 percent in June, primarily due to reviving global import demand for palm oil and robust biofuel sector needs in the Americas. This surge, a direct result of the growing demand, particularly from the biofuel industry, highlights the increasing influence of the vegetable oil sector on global markets. The biofuel industry’s strong demand for soy and sunflower oils further pushed prices up, reflecting a greater reliance on vegetable oils for sustainable energy.
Monsoons and Market Tensions: FAO Sugar Price Index Rebounds Amid Climatic Challenges
In June, the FAO Sugar Price Index climbed by 1.9 percent, ending a streak of three monthly declines. This rise is driven by adverse weather and monsoon disruptions impacting sugar production in Brazil and India. In Brazil, unexpected weather patterns have raised concerns about harvest outcomes, while irregular monsoons in India threaten production cycles. These climatic challenges have amplified market fears, pushing sugar prices higher and highlighting the fragile global food supply and demand balance.
FAO Dairy Price Index: Robust Demand and Shrinking Supplies Drive June Increase
The FAO Dairy Price Index climbed 1.2% in June. This rise was fueled by a robust global demand for butter, which reached a 24-month high due to strong retail sales and the need for immediate deliveries. Western Europe’s seasonal drop in milk production and low inventory levels in Oceania further tightened supplies, driving prices upward. These factors highlight a complex interaction between growing demand and limited supply, increasing dairy prices.
FAO Meat Price Index: A Study in Stability Amid Global Market Fluctuations
The FAO Meat Price Index held steady in June, as small increases in ovine, pig, and bovine meat prices balanced a drop in poultry prices. This delicate balance underscores the intricate dynamics of the global meat market, where diverse pressures and demands converge to maintain overall price stability.
Record-High Global Cereal Production Forecast for 2024 Driven by Enhanced Harvests in Key Regions
The global cereal production forecast for 2024 has been revised to a record 2,854 million tonnes, driven by better harvest prospects in critical regions. Improved maize yields in Argentina, Brazil, Türkiye, and Ukraine offset declines in Indonesia, Pakistan, and Southern Africa. Wheat production forecasts have risen due to favorable conditions in Asia, particularly in Pakistan, despite initial setbacks in the Russian Federation. Global wheat and rice outputs are expected to reach new highs, supporting this optimistic forecast.
Global Cereal Utilization and Stock Expansion: Balancing Rising Demand and Food Security
World cereal utilization is set to reach 2,856 million tonnes in the 2024/25 season, up 0.5 percent from last year. This growth is mainly due to increased consumption of rice and coarse grains, driven by population growth and changing dietary patterns globally. Simultaneously, global cereal stocks are projected to rise 1.3 percent by 2025, providing a stable buffer against supply disruptions. The cereal stocks-to-use ratio is expected to stay around 30.8 percent, indicating a balanced supply-demand dynamic. These insights highlight FAO’s expectation of improved stability in the global cereal market despite ongoing challenges.
FAO’s International Cereal Trade Forecast: Navigating Challenges to Ensure Global Food Security
FAO’s forecast for international trade in total cereals remains pivotal for global food security. Pegged at 481 million tonnes, this marks a 3.0 percent drop from 2023/24. The decline points to challenges such as geopolitical tensions, adverse weather, and changing trade policies among critical nations. This reduction affects global food availability, potentially causing ripple effects on price stability and accessibility, especially in regions dependent on cereal imports. Balancing global production, consumption, and trade demands vigilance and adaptive strategies. FAO’s monitoring and forecasting are crucial for providing insights and helping governments and stakeholders devise policies to maintain resilient food systems amid changing market conditions.
Compounded Crises: Conflict and Climate Extremes Aggravate Food Insecurity in Vulnerable Regions
The confluence of conflicts and climatic adversities has exacerbated food insecurity in regions grappling with poverty. In Yemen, prolonged hostilities have decimated agricultural infrastructure, leaving nearly 6 million people in acute food insecurity. This dire situation places Yemen among the countries with the most critical humanitarian needs.
The Gaza Strip, besieged and economically suffocated, faces a grave food security outlook. Persistent conflict and blockade have limited access to food, medical supplies, and essential services. This has put a significant portion of the population at imminent risk of famine, necessitating urgent intervention.
Similarly, Sudan’s volatile political landscape and recurring conflicts have escalated food insecurity. These factors and erratic weather have imperiled food production and accessibility. The population’s growing vulnerability underscores the urgent need for sustained international support and strategic initiatives.
These regions exemplify a broader pattern where conflict and climate extremes heighten food insecurity, compelling a global response focused on immediate relief and long-term resilience strategies.
GIEWS Report: Uneven Growth in Global Cereal Production Amidst Escalating Hunger Trends
The latest Crop Prospects and Food Situation report by FAO’s Global Information and Early Warning System (GIEWS) offers an in-depth look at hunger trends in 45 countries needing external food assistance. The report highlights an uneven growth in cereal production across Low-Income Food Deficit Countries. Southern Africa faces a nearly 20 percent drop in total cereal production due to severe drought, leading to a dependency on imports more than double the past five-year average. Zambia, usually a maize exporter, is forecasted to import nearly one million tonnes in 2024 despite an ample global supply of yellow maize. However, white maize, a staple in the region, remains scarce.
Beyond Southern Africa, regions like Yemen, the Gaza Strip, and Sudan are grappling with severe acute food insecurity, with millions at risk of famine due to ongoing conflicts and extreme weather conditions. The report calls for urgent international assistance to address these escalating humanitarian crises.
The Bottom Line
Amid fluctuating global markets, the FAO’s latest June data reveal a stable FAO Food Price Index, balancing international food commodity prices. While vegetable oils and sugar saw increases, cereals experienced a decline, leading to overall stability.
The FAO Cereal Price Index dropped due to favorable production forecasts in crucial exporting nations, while vegetable oils rose from renewed import demands. The Sugar Price Index rebounded, driven by climatic concerns in major production areas. The Dairy Price Index increased with robust global demand for butter, and meat prices remained stable.
Despite a record-high global cereal production forecast for 2024, vulnerable regions face severe food insecurity due to conflicts and climate extremes. This is particularly evident in Southern Africa, where projected cereal production declines will intensify import needs, especially for staple foods like white maize, which are in short supply globally.
Addressing these challenges requires enhancing international cooperation and leveraging technological advancements in agriculture to strengthen supply chains and improve productivity. Collective efforts are crucial for creating a resilient, sustainable, and equitable global food system.
Key Takeaways:
The FAO Food Price Index averaged 120.6 points in June, unchanged from May but 2.1% lower than June of the previous year.
Increases in vegetable oil, sugar, and dairy prices counterbalanced a decline in cereal prices.
The FAO Cereal Price Index dropped by 3.0% due to improved harvest prospects in major export nations.
The FAO Vegetable Oil Price Index rose by 3.1%, driven by global demand for palm, soy, and sunflower oils.
FAO Sugar Price Index increased by 1.9% following concerns over adverse weather impacts in Brazil and India.
International butter prices reached a 24-month high, pushing the FAO Dairy Price Index up by 1.2%.
The FAO Meat Price Index remained virtually unchanged, with a slight rise in ovine, pig, and bovine meat prices balanced by a decline in poultry prices.
Summary:
The Food and Agriculture Organization of the United Nations (FAO) has reported a rare calm in the global food commodity market, with the FAO Food Price Index remaining at 120.6 points. This stability is due to increased vegetable oils, sugar, and dairy products balanced by declining cereal prices. The benchmark for world food commodity prices remained unchanged, with the FAO Cereal Price Index dropping by 3% from May due to better production forecasts in major exporting countries. The FAO Vegetable Oil Price Index rose 3.1%, driven by global import demands and a strong biofuel sector. The FAO Food Price Index remains a vital tool for monitoring international prices of key traded food commodities, empowering policymakers to make informed decisions that impact global food security and economic stability. The global cereal production forecast for 2024 has been revised to a record 2,854 million tonnes, driven by improved harvest prospects in critical regions. World cereal utilization is set to reach 2,856 million tonnes in the 2024/25 season, up 0.5% from last year. FAO’s international cereal trade forecast remains pivotal for global food security, with a 3.0% drop from 2023/24.
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