Global milk production achieved a new record in 2022 with a 1.1% increase, but for the seventh year in a row there was a decline in the growth of dairy production in cheese-producing countries.
Two major causes were outlined during a session on the global outlook and marketing trends for dairy at the 2023 World Dairy Summit.
“Sharp increases in production costs, energy, animal feed, fertilisers and so on,” Le Centre National Interprofessionnel de l’Economie Laitière (CNIEL) director Kean-Marc Chaumet said.
“And another compounding factor is the challenging weather. Adverse weather has been hitting many parts of the world.”
CNIEL is based in France and represents milk producers, dairy co-operatives and private dairy companies.
Its mission is to support collaboration across the dairy sector to promote economic development. It facilitates farmer and processor relationships and promotes milk and dairy products.
Chaumet highlighted the challenges around the world and their impacts on dairy. He spoke of the covid crisis creating a strong increase in demand for dairy products.
And some of the pre-covid consumer trends have increased recently, such as climate change concerns, animal welfare and demand for local products, he said.
Climate change and consumer demand for sustainability are becoming more urgent and the sector needs to be agile and innovative to address those concerns.
Inflation is causing a lot of uncertainty and the Russia-Ukraine war has become an even bigger problem.
As for global market share, Chaumet said India now accounts for 24% of global milk production and it is trying to get to 30%.
The most impressive growth has been in Asia, which hit 12.5% in 2022. Africa also had good growth.
Dairy products are expected to have the largest rate of consumption growth among all food categories over the next decade, according to the Food and Agriculture Organisaton and the Organisation for Economic Co-operation and Development.
However, CNIEL CEO Laurent Damiens said there are four risks the dairy sector needs to be aware of:
• The war in Ukraine remains the primary downside risk to the global economy. Russia’s termination of the Black Sea Grain Initiative, for example, could severely threaten global food security and reinforce price pressures.
• Economic scenarios, including that China, the United States and Europe are highly vulnerable to further shocks in the real estate market, financial instability and energy security. Downside scenarios in any of these major economies would have severe global spillover effects.
• Debt distress is another risk, with global debt rapidly surging in recent years, impacting emerging countries in particular. The risk of debt distress with negative spillover effects on economic activity and overall stability has increased substantially as borrowing costs hit new highs.
• And climate change, the increasing frequency of extreme weather events present multiple long-term economic risks.
Despite all of this, CNIEL remains optimistic for the future of dairy.
“Overall, the long-term prospect for milk and the dairy sector is optimistic even though some economic and political conflicts and issues remain a big concern for the near future,” Damiens said.
This article first appeared in our sister publication, Dairy Farmer.
