Words by: Chris McCullugh
About 14 million dairy farms will cease production around the world by 2030, according to global outlook predictions.
However, it is also predicted world milk production would grow by an average 35% to supply the demands of a population of about 8.7 billion people by that time.
Changes coming to export markets will see smaller countries become potential bigger players.
Dairy experts suggest the current top three dairy exporting regions in the world will remain in pole position but some surprises could also climb the leader board in this period.
The European Union, New Zealand and the United States are the top three dairy exporting regions, however, a number of countries that are major importers of dairy products, have the potential to become bigger producers and therefore bigger exporters in the future.
Global demand for dairy produce is set to increase in line with the increase in population and rising incomes. However, the rate of increase will be much slower than experienced over the past ten years.
The dairy industry provides food for the current world population of seven billion consumers and supports one billion people with employment.
By 2030 the global population will have grown by 16% to 8.7b.
EXPORTS
The world export market for dairy produce totalled US$27.5 billion in 2017, with NZ supplying 20.4% of this.
The EU says it could supply ‘close to 35% of global demand by 2030’ focusing more extensively on value-added products such as organic products or those with protected geographical indications.
EU exports of cheese, butter, skimmed milk powder, whole milk powder and whey powder are expected to grow on average by around 330,000 tonnes of milk equivalent per year.
As for the EU market, close to 900,000t of additional milk per year would be needed to satisfy its growth for traditional dairy products, which is mainly cheese. By contrast, European liquid milk consumption is expected to continue declining.
EU milk production should experience a modest increase from 2018 to 2030 at 0.8% a year on average. Production is estimated at 167 million tonnes in 2018, and should reach 182 million tonnes by 2030.
Finally, milk yield should also increase by 2030, 17% above the level of 2017. However, it will be at a slower pace than in proceeding decades due to environmental constraints.
OUTLOOK
In the past the traditional dairy exporting countries have shown steady growth. However, countries that have traditionally been viewed as importers, are likely to become major producers with the help of large-scale external investments.
Post-Soviet countries and states of Asia which have significant potential for development in future will be able to compete with the present global players of the dairy market.
According to the German dairy research body, IFCN, milk production will increase by 304 million tonnes by 2030, and per farm by 54%.
Milk consumption is set to increase by about 16% per capita and the average milk yield per cow will rise by 23%.
IFCN see South Asia as the region with the greatest potential to grow and suggest it will increase production by 64%.
Next on the list is Africa with a capability of 36% growth, followed by Latin America at 33%, Near and Middle East at 27% and North America at 26%. Western Europe has a 14% capacity to grow.
IFCN also predicts the number of dairy farms will decrease by 14 million to 104 million by 2030 influenced by supply and demand as well as political decisions and succession issues.
One of the major surprises is that Syria is forecast become a major player in dairy export markets.
Ghassan Sayegh, a dairy expert from Lebanon, says Syria has a new-found potential to emerge as a stronger dairy producer with the help of financial investment from Russia.
China produced 36.55 million tonnes of milk in 2017, down 2.1% from the level reached in 2008.
In 2017, China’s total imports of dairy products was 2.45 million tonnes, equivalent to 14.27 million tonnes of raw milk, 4.5 times that of 2008. NZ is the most important source for China’s dairy imports.
About 92% of whole milk powder is imported from NZ, along with 47% of skim milk powder and 86% of its butter. In addition, 55% of milk whey powder is imported from the US, and 36% of fresh milk is imported from Germany.
Over the next 10 years, China’s dairy industry will change from an adjustment period to a steady growth period.
China says by 2027 the proportion of farms with more than 100 cows will reach 80% and the yield per cow per year will reach an average of nine tonnes.
Output is expected to reach 43.8 million tonnes.
The average annual growth rate of milk production in the next 10 years is expected to be 1.8%, significantly higher than the average annual growth rate of 0.4% in the past decade.
An increase in the incomes of around 250 million to 300 million middle-class consumers in China will be the main driving force for an increase in dairy consumption.
It is estimated China’s per capita dairy consumption will be 40.5kg in 2027, up 22% from 2017. In the same timeframe the total consumption of dairy products will be 63.61 million tonnes, up 25% from 2017, with an average annual growth rate of 3.2%, which maintains the same rate of the past 10 years.
