Outlook for dairy remains strong

editorial image

World milk prices may start to strengthen somewhat over the coming months, given that international dairy markets have reached the bottom of their current supply: demand cycle.

This is the view of Torsten Hemme, managing director of the IFCN Dairy Research Network. He spoke at the recent Alltech One19 conference in Lexington, Kentucky.

According to Hemme, global demand for dairy products will continue to grow significantly over the coming years, adding: “This will be driven by a combination of increased global population growth and the fact that people in many countries are including higher levels of dairy in their diets.”

Hemme also highlighted the pivotal economic role played by the dairy farming sector around the world.

“Approximately one billion people are employed on dairy farms around the world,” he confirmed.

Today the dairy world is serving over seven billion consumers and providing livelihoods for approximately one billion people involved in the dairy chain.

“In the future, even more people will need to be served with dairy products. Indeed, the dairy sector with its complexity entails great challenges due to its high rate of significant changes, influenced by economic and political decisions and drivers.”

The IFCN representative also pointed out that global demand for milk has increased by 36% over the past 13 years.

“Up to 2030, the global population will increase by 16% to 8.7 billion people. As a consequence, 1.2 billion more consumers will demand milk products.

“Global per capita consumption will increase by 19 kg ME to 135 kg ME per person. The highest increase in per capita consumption will take place in South Asia. We are talking here of a figure in the region of plus 40% up to 196 kg ME per person.

“The main factors accounting for this increase in consumption are urbanisation, the preference for processed food and increasing purchasing power.”

According to Hemme, there will be 417m dairy animals in the world in 2030. This represents an increase of 12%, driven mainly by the two regions of South Asia and Africa.

Together they will house 66% of the total dairy animal population by 2030.

“Dairy animal numbers will level-off in Oceania,” he explained.

“However, in all other regions of the world we will see an increase in the number of dairy animals. The lowest growth in numbers will be observed in EU.

“The envisaged global surge in milk production will be driven more by the increase in global milk yield, coming in at 1.6%, rather than the increase in the number of dairy animals, which will amount to 0.9% per annum.”

Hemme also noted that the surge in milk prices, which took place back in 2016, was caused by a strengthening of demand for butter.

“No one had foreseen this happening,” he stressed.

“Consumers will always respond to what they regard are the right marketing signals. This is why it is so important for those involved in the dairy industry to be ready, willing and able to think outside the box when it comes to developing new ideas and meeting the needs of its customers in a more effective manner.”