Dairy has a bright future over the next decade.

That’s the short story from a report produced by the Food and Agriculture Organization of the United Nations.

“Strong growth in per capita consumption of proteins is expected in upper and middle-income countries, by 6% and 8%, respectively; with about 60% of additional proteins being provide by animal products,” wrote the authors of OECD-FAO Agricultural Outlook 2022-2031. “This will bring average per capita consumption of proteins in the upper-middle income countries close to the levels of high-income countries by 2031.”

While animal proteins may not grow as fast in other lower income countries, dairy will still play a leading role. “Despite significant growth in per capita consumption of animal protein . . . mainly dairy . . . in the lower middle-income countries, their consumption levels will remain well below those of upper middle and high-income countries given their low base level.”

The fastest growing livestock sector

“Dairy is expected to be the fastest expanding livestock sector over the next decade, with global milk supply projected to increase by 23%,” continued the authors. While the futurists went on to project India and Pakistan as the largest growth markets mainly due to fresh milk sale, projections were also made about the well-established markets.

“Growth in the European Union, the second largest milk producer globally, is expected to remain limited, constrained by policies on sustainable production and the lower yielding expansion of organic and pasture-based production systems,” the authors projected of the next decade. “Growth in the United States, the third largest milk producer, is expected to be stronger than the European Union, as a result of yield increases. Milk production growth rates in New Zealand, a key dairy exporter, are expected to be similar to the European Union, with herds expected to decline by around 5%.”

The big three will get bigger

New Zealand, the European Union, and the United States rank first, second, and third, respectively, in dairy exports. That is expected to continue.

“Dairy exports are also expected to become more concentrated, with growing dominance from key suppliers in high-income countries,” wrote the authors in the 363-page document that looked at all foods. “For cheese and butter, the export share of the top-five exporters is projected to rise from 74% to 79% and from 85% to 87%, respectively, mainly driven by strong export growth in the European Union.

“The five-country export concentration of skim milk powder (SMP) is also projected to increase, mainly due to strong growth in exports from the United States. The latter is projected to account for 35% of global SMP exports in 2031, up from 32% in 2019 to 2021,” they detailed. “The five-country export concentration ratio of whole milk powder (WMP) is projected to stabilize at 86%.

“Only about 7% of world milk production is traded internationally, primarily due to its perishability and high water content (85%). Despite that projection, growth will still take place.

“World dairy trade is projected to expand over the next decade to reach 14.2 metric tons in 2031, 15% higher than during the based period,” they said of 2021 sales totals. “Most of the growth will be met by increased exports from the United States, the European Union, and New Zealand. These countries are projected to jointly account for around 65% of cheese, 71% of WMP, 74% of butter, and 80%of SMP exports in 2031.”

Click here to review the entire 363-page report, OECD-FAO Agricultural Outlook 2022-2023

To comment, email your remarks to intel@hoards.com.
(c) Hoard's Dairyman Intel 2022
July 14, 2022
Subscribe to Hoard's Dairyman Intel by clicking the button below