Friday, July 8, 2022

US dairy exports to increase

The US will significantly increase the volume of dairy products it exports in the coming decade according to a new report published by the OECD and FAO.  The OECD-FAO Agricultural Outlook 2013-2022 projects the US will increase their skim milk powder exports by 63%, compared with the base period of 2010-12.  

Global milk production is expected to increase at a slower rate in the next decade.  Milk supply growth is expected to be constrained as feed-based dairy operations struggle with high feed costs, while pasture based systems face land competition and water shortages.  World milk production is projected to increase by 168 Mt in 2022 when compared to the base years (2010-12), the majority of which (74%) is anticipated to come from developing countries. India alone accounts for 29% of the change in global milk supplies. The average growth rate for the projection period is estimated at 1.8% which is below the 2.3% witnessed in the last decade. The slowdown in growth reflects growing shortages of water and suitable land among developing countries.

India alone accounts for 29% of the change in global milk supplies.

Consumption of dairy products in milk equivalent in developing countries is expected to increase on average at around 2% p.a. The expansion in demand reflects robust income growth, expanding populations, further westernisation of diets and greater access to refrigeration facilities. By contrast, consumption in the developed world is projected to increase on average by less than 1% p.a. 

An upswing in international dairy prices is underway.  Nominal prices in general are expected to continue firming throughout the projection period but in real terms will ease from 2014 especially for butter. The outlook for the next decade sees real prices averaging significantly higher than over the 2003-12 period.  New Zealand is forecast to continue to increase its dominance of the globally traded whole milk powder (WMP) market.  The report expects New Zealand to contribute 56.2% of world WMP exports, an increase from 47.6% in the base period (2010-12).  

A general expansion of trade in dairy products is expected over the coming decade. Of the main products, butter, cheese and skim milk powder (SMP) are likely to show average annual increases between 1.6-2.1% per annum. The vast bulk of this growth will be satisfied by expanded exports from the United States, the European Union, New Zealand, Australia and Argentina. This Outlook expects a major expansion in US dairy exports of butter (54%), cheese (35%), SMP (63%), and whey powder (29%) from the 2010-12 base period.

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