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Archive for global milk production

New Zealand Milk Price Soars to $11.76: The Shocking Truth Behind 2025’s Dairy Market Extremes

Thursday, March 6th, 2025

NZ dairy hits $11.76/kgMS despite Chinese retreat. Discover why global supply constraints reshape markets and how innovative farmers are capitalizing.

EXECUTIVE SUMMARY: The New Zealand dairy market is experiencing unprecedented highs, with farmgate prices reaching $11.76 per kgMS despite reduced Chinese participation. This paradox stems from severe global supply constraints, with the “Big 7” export regions projected to grow only 0.8% in 2025. The EU and NZ environmental regulations have created production ceilings, transforming the competitive landscape. Fonterra and Rabobank’s conservative $10.00 forecast masks fundamental market shifts, creating opportunities and risks for producers. Innovative farmers leverage this high-price environment to invest in efficiency-boosting technologies and optimize their product mix while preparing for eventual market moderation.

KEY TAKEAWAYS:

  • Global milk supply growth is constrained to just 0.8% in 2025, driving high prices despite reduced Chinese demand.
  • The gap between current returns ($11.76/kgMS) and Fonterra’s forecast ($10.00/kgMS) offers a strategic buffer for farm investments.
  • Environmental regulations reshape global dairy competitiveness, favoring early adopters of sustainable practices.
  • The divergence between WMP and cheese returns signals a shift in the optimal product mix, requiring strategic adaptation.
  • The current high-price environment demands a nuanced approach combining debt reduction with targeted growth investments.
New Zealand dairy prices, global milk production, Fonterra forecast, dairy market trends, farmgate milk price

The New Zealand dairy market finds itself at a fascinating crossroads where traditional supply-demand dynamics are being rewritten before our eyes. With farmgate prices hitting a remarkable $11.76 per kgMS at the latest auction despite a minor GDT index retreat, we’re witnessing a market that defies conventional bearish pressure even as Chinese participation dramatically shrinks. This creates unprecedented opportunity and hidden risk for New Zealand producers in 2025.

Warning! Are You Missing These Crucial Market Signals?

The latest Global Dairy Trade auction presents a deceptively simple narrative that masks more profound market disruptions. While the headline 0.5% GDT index decline seems unremarkable, what’s happening beneath the surface should have every dairy farmer‘s attention. WMP prices fell 2.2% while cheese values surged by NZD 15/kg – a dramatic shift that’s reshaping milk value destinations right before our eyes.

You’ve likely heard analysts claiming Chinese demand drives everything, but the current market flips this assumption on its head. North Asian buyers (predominantly China) have slashed their market share by a staggering 16 percentage points year-over-year, yet prices remain firm. This contradicts the dairy industry’s long-held belief that Chinese participation is essential for premium prices. What’s happening? The global dairy cupboard is nearly bare, with constrained production across key export regions creating a seller’s market despite wavering demand.

The calculated auction return of $11.76 per kgMS has pushed the season-to-date average to $10.39, significantly outpacing Fonterra’s forecasted payout of $10.00. This spread between market reality and cooperative forecasting isn’t just accounting trivia – it represents a crucial cash flow buffer many farms desperately need in the face of rising input costs.

U.S. Dairy Trade CategoryFY 2025 ProjectionChange from 2024
Exports$8.4 billion+$400 million
Imports$5.7 billion+$300 million
Trade Balance+$2.7 billion+$100 million

The Surprising Truth About Supply Constraints Driving Record Prices

The remarkable constraint on global milk supply truly supports these elevated prices. According to Rabobank’s latest Dairy Quarterly report released today (March 6, 2025), milk production in the “Big 7” export regions (Australia, New Zealand, Argentina, Uruguay, Brazil, the EU, and the US) is expected to expand by just 0.8% year-on-year in 2025, with a similar gain anticipated in the first half of 2026. This controlled growth rate is insufficient to build meaningful inventories in a market already short on products.

Production Period“Big 7” Export Regions GrowthMarket Context
Second half of 2024+0.5% year-over-yearReversing previous 0.5% decline
Forecast for 2025+0.8% year-over-yearFirst growth across all regions since 2020
Q1 2025 vs. Q2-Q4 20250.5% vs. 0.9%Stronger growth in latter part of year

The contrast between regions couldn’t be more stark. Rabobank projects total milk production from the Big 7 will reach 325.8 million metric tonnes in 2025, up from 323.2 million mt last year. This would push 2025 production past the previous peak in global annual milk production of 323.7 million mt in 2021. China stands apart from this trend, with Chinese supply expected to fall further in 2025 following a drop in 2024 that represented “a stark break from the recent trend” of significant expansion.

Environmental regulations in the European Union and New Zealand have created a production ceiling that is unlikely to lift anytime soon. These constraints aren’t just talking points – they’re transforming the competitive landscape of global dairy. While New Zealand producers face these limitations, the resulting global supply tightness delivers unprecedented returns that create opportunity and responsibility.

Revealed: What Fonterra and Rabobank Don’t Want You to Know

Fonterra and Rabobank have landed at a $10.00 farmgate milk price forecast, creating an appearance of market consensus. Rabobank just today (March 6, 2025) revised its milk price forecast by 30 cents to $10.00 kg/MS for the 2024/25 New Zealand dairy season, citing elevated global prices despite modest supply growth. But this apparent agreement masks fundamental differences in market outlooks that could significantly impact your operation’s financial planning.

Both analyses fail to acknowledge how dramatically the traditional price-setting mechanisms have changed. Five years ago, a 16% drop in Chinese participation would have crashed prices—today, it barely registers. Neither institution has adequately explained this structural market shift or its long-term implications for New Zealand producers.

Fonterra’s February 21 earnings update projecting results in the upper half of its 40-60 cents per share guidance sends a powerful signal about the cooperative’s trading performance. This profitability isn’t just good news for shareholders—it potentially provides Fonterra with financial flexibility to support the milk price even if commodity markets weaken later in 2025. Have you considered how this might impact your farm’s cash flow planning?

7 Secrets Behind Fonterra’s Conservative Forecasting Strategy

Fonterra’s seemingly conservative $10.00 forecast despite $11.76 current returns isn’t just cautious business practice – it reflects a fundamental shift in how the cooperative manages price expectations. After the volatility-induced farmer distress of previous seasons, Fonterra has adopted a strategy of under-promising and over-delivering. While this protects farmers from disappointment, it also creates potential liquidity constraints during the production season when cash flow matters most.

Forecast SourceCurrent ForecastMarket CalculationGapStrategic Approach
Fonterra$10.00 per kgMS$11.76 per kgMS$1.76Conservative, risk-averse
Rabobank$10.00 per kgMSNot specifiedUnknownRecently revised upward by 30 cents
Season-to-date$10.39 per kgMSBased on actual returnsN/ATrending above forecasts

We Analyzed Global Dairy Production: Here’s What No One’s Talking About

Annual milk production in the European Union and New Zealand was expected to decline slightly in 2024, while Australia showed minimal growth. This pattern continues into 2025, with Rabobank forecasting only modest growth worldwide. The U.S. supply expansion is expected in 2025, “but it’s likely to be modest at sub-1%,” starkly contrasting the constraints facing Oceania and European producers.

What limits this growth even in favorable price environments? The answer lies partly in genetics and replacement challenges. As U.S. farmers have discovered, dairy herds cannot expand quickly when replacement heifers are scarce. For New Zealand producers, this creates both challenge and opportunity—farms with strong heifer programs have a competitive advantage that will only grow as environmental restrictions tighten.

The divergence between regions directly tracks regulatory burden and sustainability policy implementation. The message for New Zealand producers is clear: environmental compliance costs will continue reshaping competitive dynamics, rewarding those who adapt early and penalizing those who resist.

Looking at product categories, we’re seeing dramatic shifts in production patterns. Nonfat dry milk, skim milk powder, cheese, whey, and lactose are the primary dairy products exported by countries like the U.S., while butter and cheese remain the top two dairy products imported. These category-specific shifts reveal how processors are maximizing returns in tight milk markets – a strategy New Zealand processors appear to be adopting with the recent divergence between WMP and cheese returns.

5 Proven Strategies Smart Dairy Farmers Are Using Right Now

Current market conditions for New Zealand dairy farmers present a rare strategic window that demands action. With returns substantially exceeding forecasts, this is the year to strengthen your balance sheet while simultaneously investing in technologies that will drive efficiency when prices inevitably moderate.

Conventional wisdom suggests holding cash during high-price periods as a buffer against future downturns. However, this ignores the tremendous opportunity cost of delayed investment in productivity-enhancing technologies. Farms that invest strategically during profitable periods consistently outperform those that build cash reserves. Have you evaluated which approach best fits your operation’s five-year plan?

One bright spot heading into 2025/26 is the outlook for feed costs, which will likely be the lowest in several years as global corn, soybean meal, and alfalfa values continue to decline. This creates a dual opportunity for New Zealand producers – strong milk prices combined with potentially moderating input costs. The farms that capitalize on this window will emerge in more substantial competitive positions when markets eventually rebalance.

The Ultimate Guide: How to Maximize Your Dairy Farm’s Potential in 2025

The current $11.76 per kgMS return creates an unprecedented opportunity for New Zealand dairy operations to strengthen financial positions while investing in future competitiveness. The gap between current returns and Fonterra’s $10.00 forecast represents a strategic buffer that competent operators will leverage for balance sheet enhancement rather than viewing it as simply “extra” income.

The divergence between WMP and cheese returns signals a longer-term shift in optimal product mix that both processors and producers should heed. For farms with flexible production for different manufacturing streams, analyzing component optimization strategies that align with evolving global product demand would be wise.

Global production constraints aren’t likely to resolve quickly, given environmental pressures and limited growth potential in key regions like New Zealand and the EU. Rabobank’s forecast of only 0.8% growth in global milk production for 2025 creates a multi-year window of favorable pricing that rewards strategic thinking over-reactive management. Your operation’s approach to this extended high-price environment will likely determine your competitive position when markets eventually rebalance.

Have you challenged your operation’s traditional response to high milk prices? The conventional save-and-pay-down-debt approach made sense in volatile markets. Still, the structural changes in global dairy demand and constrained supply growth suggest a more nuanced strategy combining targeted debt reduction with strategic growth investment may deliver superior returns. The real question isn’t whether prices will eventually moderate – they will – but whether you’ll have positioned your operation to thrive when they do.

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Mega-Dairy Revolution: Inside the World’s 10 Largest Dairy Farms

Wednesday, March 5th, 2025

Dive into the world of mega-dairies, where a single farm can fill an Olympic pool with milk daily. Discover how these giants are reshaping global dairy production.

EXECUTIVE SUMMARY: This article explores the world’s top 10 largest dairy farms, revealing how these mega-operations transform the global dairy industry. From Saudi Arabia’s desert-defying Almarai to China’s distributed Modern Dairy, these farms produce staggering volumes of milk, with some exceeding 1 million tonnes annually. The analysis highlights the geographic shift in dairy production, with China dominating the list, followed by the United States. Key factors driving their success include economies of scale, advanced technologies, and innovative management practices. The article also examines farm productivity differences, showcasing how efficiency varies across regions and operational models. While these mega-dairies represent the future of large-scale milk production, they also face unique challenges in sustainability, animal welfare, and community relations.

KEY TAKEAWAYS

  • The world’s 10 largest dairy farms account for 1.1% of global milk output, with individual farms producing up to 1.47 million tonnes annually.
  • China leads with five of the top 10 farms, reflecting its strategic push for domestic milk production and food security.
  • Productivity per cow varies significantly, with Saudi Arabian and U.S. farms achieving higher efficiency than their Chinese and Russian counterparts.
  • Mega-dairies leverage advanced technologies, vertical integration, and strategic locations to maximize production and efficiency.
  • While offering lessons in scale and efficiency, these operations also face unique challenges in waste management, animal welfare, and environmental impact.

What if a single dairy farm could produce enough milk to fill an Olympic-sized swimming pool daily? Welcome to the world of mega-dairies, where scale defies imagination and efficiency reaches new heights.

These mammoth enterprises are reshaping our understanding of dairy production, pushing the boundaries of what’s possible, and setting new standards for an industry that feeds billions worldwide.

The Billion-Liter Club: Meet the Dairy Giants Transforming Global Production

The trend towards more significant, concentrated dairy operations has been gaining momentum for decades. According to the International Farm Comparison Network (IFCN), the world’s ten largest dairy farming companies account for approximately 1.1% of global milk output.

While this may seem small, it represents a significant concentration of production capability and highlights the growing importance of large-scale operations in meeting global dairy demand.

Dr. Torsten Hemme, Managing Director of the IFCN, explains: “The economies of scale in dairy farming are undeniable. Larger operations can invest in advanced technologies, implement more efficient management practices, and negotiate better prices for inputs and outputs.”

As we examine the world’s dairy giants, the following table provides a comprehensive overview of these operations, allowing for a direct comparison of their scale, geographic distribution, and distinctive characteristics. These numbers tell a powerful story about how milk production is evolving in the 21st century.

RankFarm NameCountryAnnual Milk Production (million tonnes)Herd SizeKey Feature
1AlmaraiSaudi Arabia1.47105,000Desert dairy success
2Modern DairyChina1.28134,315Distributed across 26 locations
3RockviewUnited States1.18100,000Vertical integration
4RiverviewUnited States1.0095,000Diversified operations
5Faria BrothersUnited States1.0095,000Texas-based efficiency
6EkoNivaRussia0.8093,000Europe’s largest, fastest growing
7Huishan DairyChina0.77100,000Complete supply chain control
8ShengmuChina0.6672,773Organic focus
9SaikexingChina0.6269,000Strategic Inner Mongolia location
10Yili YouranChina0.5355,000Processor-owned operation

China’s Dairy Dominance: How the East is Reshaping Global Milk Production

Interestingly, the geographic distribution of these mega-farms reflects regional differences in approaches to dairy production. China dominates the list with five of the world’s ten most extensive dairy farming operations, while the remainder are spread across Saudi Arabia, the United States, and Russia.

Dr. Jennifer Spencer, Extension Dairy Specialist at Texas A&M University, offers insight into this distribution: “China’s heavy investment in large-scale dairy farms is part of a broader strategy to increase domestic milk production and reduce reliance on imports. In contrast, countries like the United States have a mix of large operations and smaller family farms, reflecting different agricultural traditions and market structures.”

Inside the Milk Machines: The World’s Dairy Goliaths

Let’s dive into the details of these dairy giants, exploring what makes each unique and how they’ve achieved their impressive scale.

Almarai: The Desert Dairy Miracle That Tops the Global Charts

Almarai, the Saudi Arabian dairy powerhouse founded in 1977, is at the top of the list. With an annual production of 1.47 million tonnes of raw milk and a herd of approximately 105,000 dairy cows, Almarai has established itself as the world’s largest dairy farm by milk volume.

Almarai’s success in a desert environment not naturally conducive to dairy farming is particularly remarkable. To overcome these challenges, the company has invested heavily in advanced cooling systems, water conservation technologies, and feed production.

Abdullah Al-Otaibi, Almarai’s Head of Dairy Operations, explains: “Our success is built on a combination of cutting-edge technology, stringent quality control, and a deep understanding of our unique operating environment. We’ve turned the challenges of desert farming into opportunities for innovation.”

Modern Dairy: China’s Distributed Dairy Giant with the World’s Largest Herd

While ranking second in milk production with 1.28 million tonnes annually, Modern Dairy boasts the world’s largest dairy herd, with 134,315 cows spread across 26 locations in seven Chinese provinces.

Dr. Li Wei, an agricultural economist at China Agricultural University, notes: “Modern Dairy’s distributed model allows them to optimize logistics and market access across China’s vast geography. This strategy is particularly well-suited to China’s rapidly expanding dairy market.”

Rockview: America’s Vertically Integrated Dairy Pioneer

California-based Rockview, owned by the DeGroot family, produces approximately 1.18 million tonnes of raw milk annually from its herd of about 100,000 dairy cows. Founded in 1927, Rockview Family Farms has distinguished itself as one of the last dairies in Southern California to maintain control over all stages of production, from the cow to the customer.

Ted DeGroot, CEO of Rockview, emphasizes the importance of vertical integration: “By controlling every step of the process, we can ensure the highest quality standards while also adapting quickly to market changes. It’s a model that’s served us well for nearly a century.”

Riverview: Minnesota’s Multi-Species Agricultural Powerhouse

Based in Minnesota, Riverview is owned by the Fehr family and produces approximately 1.00 million tonnes of raw milk annually from its 95,000 dairy cows. The operation has expanded beyond dairy to include beef and crop production and milk processing facilities.

Dr. Marin Bozic, Associate Professor in Dairy Foods Marketing Economics at the University of Minnesota, comments on Riverview’s diversified approach: “By integrating dairy, beef, and crop production, Riverview has created a more resilient business model. This diversification helps manage risk and maximize resource utilization.”

Faria Brothers: Texas-Sized Efficiency in Dairy Production

Texas-based Faria Brothers matches Riverview with 1.00 million tonnes of annual milk production and approximately 95,000 dairy cows. The Faria family has built this operation into one of America’s largest dairy farms, benefiting from Texas’s favorable conditions for large-scale agricultural operations.

Dr. Jennifer Spencer of Texas A&M University notes: “The Faria Brothers’ success demonstrates the advantages of scale in modern dairy farming. Their size allows them to implement advanced technologies and management practices that would be cost-prohibitive for smaller operations.”

EkoNiva: Russia’s Rapidly Growing Dairy Revolution

Founded by Stefan Dürr, EkoNiva is Europe’s largest raw milk producer and the fastest-growing company on the top 10 list. Based in Russia’s Voronezh region, the operation produces approximately 0.80 million tonnes of raw milk annually from its 93,000 dairy cows.

Dürr attributes EkoNiva’s rapid growth to several factors: “We’ve benefited from Russia’s push for agricultural self-sufficiency, coupled with our focus on efficiency and vertical integration. Our goal is to control quality at every stage of production.”

Huishan Dairy: China’s Supply Chain Control Specialists

Cows are seen at farm houses at an independent dairy farm in Shenyang, Liaoning province, China, March 30, 2017. REUTERS/Jake Spring

Led by Yang Kai, Huishan Dairy operates primarily in China. Its herd of approximately 100,000 dairy cows produces 0.77 million tonnes of raw milk annually. The company has expanded its operations to include feedstuff production and liquid milk and milk powder manufacturing.

Dr. Jiaqi Wang, a researcher at the Chinese Academy of Agricultural Sciences, explains the significance of Huishan’s vertical integration: “After several food safety incidents in China’s dairy industry, companies like Huishan have prioritized controlling the entire supply chain. This approach helps ensure quality and rebuild consumer trust.”

Shengmu: Proving Organic Can Scale in China’s Dairy Industry

Based in Deng Kou County, China, and founded by Tongshan Yao, Shengmu focuses on organic dairy production. With approximately 72,773 dairy cows, the operation produces 0.66 million tonnes of raw milk annually.

Yao explains the company’s organic focus: “We recognized growing demand for organic dairy products early on, even in emerging markets like China. By operating at scale, we can make organic production more efficient and accessible.”

Saikexing: Leveraging Inner Mongolia’s Natural Advantages

Yang Wenjun serves as Board Chairman of Saikexing, Which operates in Inner Mongolia, China. The farm produces approximately 0.62 million tonnes of raw milk annually from its herd of 69,000 dairy cows.

Dr. Yuelai Lu, a researcher at the UK-China Sustainable Agriculture Innovation Network, comments on Saikexing’s location strategy: “By situating their operations in Inner Mongolia, Saikexing takes advantage of the region’s extensive grasslands and relatively favorable conditions for dairy farming within China. It’s a smart approach to resource management.”

Yili Youran: How Processors Are Becoming Producers

Rounding out the top 10 is Yili Youran, led by Board Chairman Pan Gang. This Chinese operation produces approximately 0.53 million tonnes of raw milk annually from its 55,000 dairy cows.

As part of the larger Yili Group, which ranks among the world’s largest dairy companies by revenue, Yili Youran represents the integrated approach many Chinese dairy processors have taken to secure their supply chains.

Dr. Shengli Li, Professor of Animal Science at China Agricultural University, explains: “Yili’s investment in its farming operations reflects a broader trend in China’s dairy industry. By controlling milk production, processing companies can better manage quality and supply stability.”

Production Champions: Who Produces the Most Milk Per Cow?

Looking beyond raw production numbers, the efficiency of these operations tells another important story. The following table breaks down productivity per cow across the top 10 farms, revealing significant variations in efficiency that often correlate with management practices, technology adoption, and regional conditions.

Note how the highest productivity doesn’t always align with the most significant total production.

Farm NameCountryMilk Production (tonnes)Herd SizeProductivity (tonnes/cow/year)
AlmaraiSaudi Arabia1,470,000105,00014.00
RockviewUnited States1,180,000100,00011.80
RiverviewUnited States1,000,00095,00010.53
Faria BrothersUnited States1,000,00095,00010.53
EkoNivaRussia800,00093,0008.60
Modern DairyChina1,280,000134,3159.53
Huishan DairyChina770,000100,0007.70
ShengmuChina660,00072,7739.07
SaikexingChina620,00069,0008.99
Yili YouranChina530,00055,0009.64

The productivity data reveals a fascinating pattern: farms in Saudi Arabia and the United States consistently achieve higher output per cow than their counterparts in China and Russia.

This disparity reflects differences in feeding regimes, genetic selection, management practices, and technological implementation—all factors dairy producers worldwide can learn from when seeking to improve their operations.

The Unstoppable Growth: Will Mega-Dairies Dominate Tomorrow’s Milk Market?

As we look to the future, the trend towards more significant, more efficient dairy operations shows no signs of slowing. Dr. Torsten Hemme of the IFCN predicts: “We expect to see continued consolidation in the dairy industry, with the most efficient operators growing larger and potentially new entrants disrupting the market with innovative approaches.”

However, this trend is not without its challenges. Dr. Jennifer Spencer of Texas A&M University cautions: “While large-scale operations can achieve impressive efficiencies, they also face unique challenges in waste management, animal welfare, and community relations. Successful mega-dairies will need to address these issues proactively.”

Scaling Success: What Every Dairy Producer Can Learn from the World’s Largest Farms

The world’s largest dairy farms represent a significant evolution in global food production. They showcase how scale and efficiency can help meet the nutritional needs of a growing population.

From Almarai’s desert-defying success in Saudi Arabia to Modern Dairy’s massive herd spread across multiple Chinese provinces, these operations demonstrate different approaches to the common challenge of large-scale milk production.

As the global dairy industry evolves, these leading operations will likely remain at the forefront of innovation and productivity. Their influence extends far beyond their direct output, shaping industry practices, driving technology adoption, and setting new standards for efficiency.

The rise of mega-farms offers both challenges and opportunities for dairy farmers worldwide. While competing directly with operations of this scale may not be feasible for many, valuable lessons about efficiency, technology adoption, and strategic planning can benefit farms of all sizes.

As we progress, the key for all dairy operations, regardless of size, will be to focus on sustainability, efficiency, and adaptability. By embracing innovation while respecting the timeless principles of good animal husbandry and environmental stewardship, the dairy industry can continue to thrive and meet the world’s growing demand for nutritious dairy products.

LEARN MORE

Join the Revolution!

Join over 30,000 successful dairy professionals who rely on Bullvine Daily for their competitive edge. Delivered directly to your inbox each week, our exclusive industry insights help you make smarter decisions while saving precious hours every week. Never miss critical updates on milk production trends, breakthrough technologies, and profit-boosting strategies that top producers are already implementing. Subscribe now to transform your dairy operation’s efficiency and profitability—your future success is just one click away.

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Global Dairy Market in 2025: Production Shifts, Demand Fluctuations, and Trade Dynamics

Thursday, January 23rd, 2025

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.
dairy industry trends, organic dairy products, sustainable dairy practices, global milk production, dairy market resilience

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.
YearProjected Milk Production (Billion Pounds)
2025227.2
2026229.0
2027231.1
2028233.5
2029235.8
2030238.1
  • 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.
Region2024 Production (MMT)2025 Forecast (MMT)% Change
EU-27149.6149.4-0.13%
USA228.0227.2-0.35%
ChinaData not availableMarginal growthN/A
New ZealandData not available21.3N/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.
YearAll-Milk Price Forecast (USD/cwt)
202519.20
202619.00
202719.10
202819.30
202919.50
203019.70

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.
Product2024 Imports2025 ForecastTrend
Whole Milk Powder2.0 million tons2.1 million tonsUpward
Skim Milk Powder1.5 million tons1.55 million tonsUpward
Cheese0.5 million tons0.51 million tonsUpward
Butter0.3 million tons0.31 million tonsUpward
  • 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

  1. Environmental Regulations: Dairy farmers, particularly in the EU, face increasing pressure from environmental regulations, which may limit production growth.
  2. Economic Pressures: Tight margins and economic uncertainties challenge dairy farmers globally, leading to industry consolidation in some regions.
  3. Market Diversification: With changing global demand patterns, producers and exporters may need to explore new markets or niche opportunities.
  4. Technology Adoption: Investments in technology and sustainable practices are helping some farmers improve yields while managing costs.
  5. 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.

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USDA Predicts US Leads Global Milk Production Growth Despite European Challenges in 2025

Tuesday, December 31st, 2024

USDA’s 2025 milk forecast: Can the US drive global growth despite Europe’s hurdles? Uncover key insights for dairy farmers.

Summary:

As 2024 wraps up, the dairy industry’s gaze shifts to the year ahead, anticipating modest global milk production growth. The USDA’s latest report projects a 0.4% increase among the top-five milk exporting countries, led by a 0.7% rise in the United States. This trend reflects economic and environmental changes affecting milk markets worldwide—from North America to Oceania, with Europe struggling due to regulatory and cost challenges, while Argentina shows optimism. Advanced robotic milking systems and selective breeding drive the predicted growth, influencing global dairy supply chains, farm profits, and international trade. Yet, high expenses and stringent environmental regulations in Europe could impede progress. Oceania’s milk production is set to rise by 1.1%, with long-term hurdles like climate change, whereas New Zealand’s sees a 0.9% increase. Argentina’s sector shows resilience with a forecasted 4.7% growth amid Europe’s struggles with costs and investment. This collective output is vital, aligning with rising worldwide demand from population growth and improved economic conditions.

Key Takeaways:

  • The global milk production is set to grow by 0.4% in 2025, with the U.S. leading the way.
  • Environmental regulations and high costs hinder growth in the European dairy industry.
  • Oceania shows promising growth, although structural challenges may impact long-term potential.
  • Argentina’s improved macroeconomic conditions boost its dairy sector’s recovery.
  • Growing world population and better economic conditions will drive global dairy demand.
  • Global trade dynamics and pricing might shift due to regional production disparities.
  • Stakeholders need to plan strategically for the evolving dairy market landscape 2025.
global milk production, robotic milking systems, dairy supply chains, U.S. milk production, environmental regulations, Oceania milk production, sustainable farming practices, dairy industry challenges, Argentina dairy sector growth, technological advancements in dairy

As the end of 2024 approaches, dairy farmers and industry leaders cautiously look forward to 2025. The United States Department of Agriculture (USDA) expects global milk production to grow by 0.4% among the top five milk-exporting countries. The United States is expected to lead this growth due to the implementation of advanced robotic milking systems, such as automated milking robots, and selective breeding practices focusing on genetic enhancements for higher milk yield. Implementing advanced robotic milking systems, such as automated milking robots and selective breeding practices, focusing on genetic enhancements for higher milk yield, is projected to increase milk production by 0.7%, further securing the United States’ position in the dairy market. In Europe, high costs and strict environmental regulations could hinder production progress. 

These forecasts indicate significant growth opportunities and challenges for dairy farmers beyond numbers. The expected rise in production could change global dairy supply chains, affecting everything from farm profits to international trade. The USDA’s forecast provides valuable insights by highlighting emerging market trends, identifying potential growth areas, and suggesting strategic development opportunities for dairy farmers in the coming year. As the global dairy market prepares for these changes, it’s vital for everyone involved to stay updated and ready for what’s ahead. The increase in U.S. milk production is expected to ripple effect on the global dairy market, potentially influencing prices and trade dynamics.

Region2024 Milk Production (Billion Pounds)2025 Projected Increase (%)2025 Projected Milk Production (Billion Pounds)
United States226.410.7%228
Australia20.61.1%20.82
New Zealand21.10.9%21.29
Europe150.5-0.2%150.2
Argentina11.74.7%12.25

Driving Factors of the 0.7% Rise in U.S. Milk Production for 2025: Opportunities and Concerns

The predicted 0.7% rise in U.S. milk production for 2025 is a testament to the potential for growth in the dairy industry. Improved profit margins from increased milk prices motivate farmers to boost their production. As a result, many farms are increasing the size of their herds, selecting high-yield breeds, and improving herd quality, significantly boosting production levels. 

Technological advancements and improved feeding methods are significantly improving milk quality. These improvements, such as enhanced nutritional value from fortified feed and decreased bacterial contamination due to strict hygiene practices, significantly improve dairy production processes. This improved quality allows farmers to produce a broader range of dairy products from the same quantity of milk, ultimately increasing overall output. 

While the dairy industry has made positive developments, it’s essential to acknowledge growth challenges. As big farms grow and invest in technology, smaller farms might find it hard to compete, possibly increasing inequality in the industry. Larger dairy farms have a more significant environmental impact, creating challenges like better managing waste and reducing greenhouse gas emissions. Relying on advanced technologies can also lead to higher energy use and more resources. These are essential issues to remember as the dairy sector grows and changes.

Oceania’s Positive Outlook 

In 2025, Australia’s milk production is predicted to rise by 1.1%, while New Zealand’s is expected to increase by 0.9%. This growth is mainly due to high milk prices and good weather, creating a hopeful future for farmers. 

But why are these numbers significant? High milk prices give dairy businesses the money they need to continue operating. This money allows them to invest in their farms, improve work practices, and use new technology. Good weather helps keep animals healthy and improves pasture quality, allowing cows to produce more milk. 

However, before moving forward, it is crucial to consider the long-term challenges ahead. One big issue is climate change. While 2025 might bring good weather, unpredictable changes could affect production in the future. The dairy industry in Oceania needs to be prepared for potential disruptions and consider strategies for adapting to a changing climate, such as investing in drought-resistant crops or implementing water conservation measures. 

Oceania also needs to balance growth with caring for the environment. Farmers feel pressure to adopt eco-friendly practices as the world becomes more focused on reducing environmental impact. This often requires a lot of money, which can be challenging for smaller farms. 

This constraint makes it difficult for dairy farmers in Oceania to expand their operations and meet increasing demands. Since dairy farming requires a lot of land, insufficient land can limit farmers’ growth. 

To overcome these challenges, Oceania must focus on implementing sustainable farming practices, investing in innovative technologies, and collaborating with environmental agencies to ensure long-term viability. The dairy industry must use new technologies and creative farming methods to ensure continued growth. One such technology is precision agriculture, which uses data-driven solutions like automated monitoring tools and precision irrigation systems to optimize resource utilization and reduce risks from unpredictable weather. These technologies could significantly boost productivity and cut environmental impact in the dairy industry. At the same time, following global market trends, such as the rising demand for plant-based alternatives, could create new revenue streams and broaden options. Embracing sustainability is crucial; methods like cutting greenhouse gas emissions and conserving water can protect the future of the Oceania dairy industry. By combining tradition with innovation, the sector can face challenges and thrive in a fast-changing global market.

European Dairy Industry at a Crossroads: Navigating Multifaceted Challenges

The European dairy industry is at a critical juncture. It is grappling with challenges such as high input costs, stringent environmental regulations, and inadequate investment, which pose significant threats to its prominent global milk production position. The USDA’s prediction of a 0.2% decrease in 2025 highlights these problems mainly due to high input costs, strict environmental rules, and a noticeable lack of investment. 

High input costs, such as rising feed, energy, labor, and fuel expenses, continue to burden dairy farmers in Europe, reducing profitability and operational constraints. For example, the feed cost has increased dramatically in Germany, squeezing profits and forcing many farmers to reconsider their production plans. Feed, energy, labor, and fuel have also become more expensive. This financial pressure has led some farmers to cut their herd sizes, directly affecting milk output. 

Strict environmental regulations are another major hurdle. The Netherlands is a clear example, where limits on nitrogen emissions have forced dairy farmers to make expensive changes. Adhering to these rules often requires substantial financial investments, whether through adopting costly new technologies or purchasing emission rights, which poses financial challenges for dairy farmers. This leaves the industry struggling to balance environmental responsibilities with financial stability. 

A general lack of investment in the industry exacerbates this situation. Italy, for instance, has received little financial support to update its dairy farms, partly due to economic uncertainties and changing milk prices. This stagnation acts as a roadblock to innovation, preventing potential improvements in productivity and competitiveness on the global stage. 

While northern European countries like Denmark have strict environmental policies, southern countries like Spain face more serious financial issues worsened by limited subsidies and support.  Tackling high input costs, following regulations, and encouraging investment will be crucial for Europe to hold its position in the global dairy market.

Argentina’s Dairy Sector: A Beacon of Resilience in Uncertain Times 

Amid global uncertainty, Argentina shines as a source of potential and resilience in the dairy industry, with forecasts showing a 4.7% growth in milk production for 2025. After a rough 2024, marked by economic troubles and harsh farming conditions, things are starting to look up for Argentine dairy farmers. 

The improved economic outlook in Argentina significantly contributes to restoring confidence and encouraging investment in the dairy sector. As inflation stabilizes and exchange rates balance, obtaining capital has become easier. This economic change reassures current investors and draws new ones who want to explore the growing potential of Argentina’s dairy farms. 

Take the example of Diego Alvarez, a third-generation dairy farmer with his family farm in Santa Fe. Diego and his family struggled with rising costs and unpredictable profits for years. However, with recent economic stability, Diego has noticed a positive shift. His farm has started investing in modern milking technologies, boosting efficiency and output. The optimism is apparent as workers, once worried about their jobs, now engage in lively talks about future expansions and innovations. 

This comeback isn’t just a win for Diego. It shows the significant change happening in rural Argentina, where dairy farms are getting back on their feet. Diego’s journey epitomizes a broader narrative within the Argentine dairy sector, serving as a testament to resilience and progress. In a time when news often focuses on economic stats and production numbers, the grit and flexibility of farmers like Diego push the story forward. His success, despite challenging times, using better investment options and a revived dairy market, connects deeply with the shared experience of many who make up this key industry. The grit and determination of these individuals are key to achieving success in the dairy industry. Dairy farmers worldwide face unpredictable weather, evolving market demands, and stringent environmental regulations. However, their firm resolve and innovative thinking often turn challenges into opportunities. Resilient farmers adjust by using new technology, adopting sustainable methods, and diversifying their operations to fit changing consumer tastes. Their perseverance not only sustains their livelihoods but also fosters the growth and resilience of the industry. These stories demonstrate the vital connection between human dedication and industry achievements, highlighting the human element alongside the economic aspects.

Global Dairy Demand: Navigating Through Population Growth and Economic Shifts 

Several changing factors influence the global demand for dairy products. First, the growing population plays a significant role. As the world’s population approaches 8 billion, the need for healthy foods like dairy increases. Also, better economic conditions in many places give people more money to spend and lead them to eat more animal-based products, including dairy. 

You may wonder about these trends: How will the international dairy trade evolve? The different growth rates in milk production worldwide could change trade patterns. For example, with their expected production increases, the U.S. and Oceania could fill gaps caused by reduced European production. But will these supply and demand changes balance out, or will significant disruptions exist? 

Pricing will also be essential to watch. Rising demand with various production levels might push dairy prices up. However, how might political issues, changing input costs, and climate change affect these prices? Finding the right balance between gaining market advantage and not pushing prices too high for some consumers can be tricky. 

How prepared is the industry to manage future fluctuations? Which strategies, like investing in sustainable practices or diversifying product offerings, could optimize these changes for growth and development in the global dairy industry? Thinking about these questions could help businesses navigate the uncertain future and drive innovative solutions that meet changing market needs. 

The industry must closely track these trends and adjust its practices to meet changing demands. 

The Bottom Line

The global dairy industry faces a pivotal year in 2025, with milk production expected to rise by 0.4% among the top five dairy exporters, potentially reshaping supply chains and influencing international trade dynamics. The United States leads with a 0.7% increase, driven by better profit margins and an expanded herd in the herd. Oceania is also on a growth path but must address long-term challenges. Nevertheless, Europe’s high costs and stringent environmental regulations decrease production, highlighting the imperative for strategic adjustments. Meanwhile, Argentina shows promise with a projected 4.7% increase, aided by a stronger economy. 

Dairy farmers must adjust to regional differences as they operate in a changing global market influenced by growing demand due to population growth and strong economies. Each region has distinct conditions affecting dairy operations, including favorable economic conditions in the U.S., environmental challenges in Oceania, and European financial constraints. These conditions directly impact profitability and sustainability. 

Regional milk production varies due to economic conditions, environmental considerations, and policy influences. The U.S. sees more demand for dairy and favorable economic conditions, promoting herd expansion despite rising costs. Oceania enjoys good weather and high prices but faces sustainability issues, requiring a balance between economic gain and environmental impact. Meanwhile, Europe’s dairy sector struggles with high costs, strict regulations, and limited investment, pushing for innovative, cost-effective solutions. With a more stable macroeconomic environment, Argentina shows resilience by achieving a significant 4.7% increase in production, showcasing the positive effect of economic conditions on the dairy sector’s growth. 

Dairy farmers should comprehend global dynamics, adopt innovation, and prioritize strategic planning to enhance their operations. Consider how these regional changes will impact your dairy operations as you progress. 

Learn more:

Join the Revolution!

Bullvine Daily is your essential e-zine for staying ahead in the dairy industry. With over 30,000 subscribers, we bring you the week’s top news, helping you manage tasks efficiently. Stay informed about milk production, tech adoption, and more, so you can concentrate on your dairy operations. 

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