Even though global milk production rose a collective 2.9% this past year, dairy demand kept pace with the growth. Dairy product consumption in emerging markets was largely responsible for the new sales.
“Demand growth also kept up thanks to the positive image of dairy as a healthy product in many parts of the world, especially in South and Southeast Asia,” wrote a quartet of economists working at the IFCN group in Kiel, Germany. “Some emerging markets in Africa also benefitted from higher milk availability due to stronger production in comparison to 2019.”
This analysis is part of a larger report titled, “Dairy Report 2021.” The comprehensive report combines the expertise from economists and researchers located in 100-plus countries around the globe.
Dairy is a global product
While demand was up in many areas, China has strong dairy import demand throughout 2020 and into 2021. On the farm front, the collective global milk price was off just 1.8%.
“The slight decline can be interpreted as the consequence of strong milk supply in 2020 coupled with jittery markets and concerns over milk demand holding up in light of the COVID-19 crisis,” wrote Alice Diepenbrock, Phillip Goetz, Lukasz Wyrzykowski, and Milica Kocic in their paper, Impact of the COVID-19 crisis on the dairy sector.
As for the current year, “Still, 2021 points to a slight slowdown in milk production growth compared to 2020. Feed prices increased by more than 50% during the first half of 2021, caused by climatic conditions and strong demand,” wrote the IFCN economists. “This puts further pressure on farmers’ margins that have been either stable or decreased for the most part in recent years.”