This document discusses the demand and supply dynamics of the global dairy market. On the demand side, consumption is growing rapidly in emerging economies as incomes rise and diets shift towards higher protein options. Urbanization is also fueling demand as distribution and access to dairy products expands. While demand has been flat in developed nations, recovery is expected. Key growth regions are East and Southeast Asia as well as South America. Per capita consumption in these areas remains well below global averages, indicating further upside potential. Health benefits of dairy are also supporting consumption trends.
Agcapita is Canada's only RRSP and TFSA eligible farmland fund and is part of a family of funds with almost $100 million in assets under management. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for "food, feed and fuel" will continue to move crop prices higher over the long-term. Agcapita created the Farmland Investment Partnership to allow investors to add professionally managed farmland to their portfolios. Agcapita publishes a monthly Agriculture Brief which deals with agriculture specific investment issues along with big picture macro-economic issues.
Mafm the case for investment in grains and oilseedsJoanna T.
The document discusses grains and oilseeds, focusing on wheat, barley, corn, and soybeans. It provides background on the origins and major producers and consumers of each crop. Key points made include that wheat and barley have been grown for over 10,000 years, corn production is led by the US, and soybeans are high in protein and divided into meal and oil when processed. The document examines trends in global trade and demand drivers for each commodity.
The document provides an overview and outlook for several global food markets in 2015-2016 based on a report by the Food and Agriculture Organization of the United Nations (FAO). Key points include:
- Global cereal production is forecast to decline 1.5% in 2015 but remain above the past five-year average. Cereal utilization is projected to grow only 1% in 2015/16, and stocks are expected to draw down 2.9% to 626 million tonnes.
- World wheat production is forecast to fall 1.2% in 2015 but large opening stocks will keep markets well supplied. Trade is projected to decline marginally.
- Coarse grain production is forecast to fall below the 2014
The document discusses emerging macro trends in global agricultural production over the next decade for corn, soybeans, and cotton. It outlines how Monsanto is well positioned to capitalize on opportunities presented by these trends through solutions like nitrogen-utilization corn, drought-tolerant traits, and an improved-oils soybean platform. The summary also provides Monsanto's international growth priorities and outlook for 2010 in key areas like increasing Roundup Ready soybean penetration in Brazil and expanding cotton traits in India and Argentina.
A summary of OECD-FAO's agricultural outlook for 2024, this article observes agricultural commodities' projections for emerging nations vs. the developed world.
Much of the volatility witnessed in commodity markets in the previous decade is set to balance in the coming 10 years.
- Global coarse grain production in 2015 is forecast at 1,306 million tonnes, about 2% lower than 2014, mainly due to lower maize output in the US and EU.
- World coarse grain trade in 2015/16 is forecast at 169 million tonnes, down 3.6% from 2014/15. Maize trade is expected to fall to 126 million tonnes.
- Total coarse grain utilization is forecast to increase 0.8% to 1,303 million tonnes in 2015/16, with slower growth in feed and industrial use expected due to lower production.
Global food prices continue to rise in early 2011, driven by sharp increases in wheat, maize, sugar, and edible oil prices. The World Bank's food price index in January 2011 was 15% higher than in October 2010 and only 3% below its 2008 peak. Higher global wheat and maize prices have significantly increased domestic food costs in many countries. An estimated 44 million more people fell into extreme poverty as a result of food price rises between June-December 2010 alone. Mitigating the poverty and vulnerability impacts of volatile food prices requires measures to stabilize markets in the short-run as well as investments to boost sustainable agricultural productivity and develop risk management tools over the medium-term.
The document provides an outlook and analysis of agricultural commodity markets in 2020. It discusses:
1) The risk of a demand shock has quieted, and a supply shock is needed to change market sentiment as the major driver of demand growth over the past decade has ended.
2) South America dominates world grain and oilseed trade flows and supplies are currently adequate, with the U.S. acting as a price floor and transparent storage source.
3) The past decade saw unprecedented growth in global demand for corn, soybeans, wheat and vegetable oils driven by globalization, dietary shifts and biofuels, but this golden era of growth has ended.
Agcapita is Canada's only RRSP and TFSA eligible farmland fund and is part of a family of funds with almost $100 million in assets under management. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for "food, feed and fuel" will continue to move crop prices higher over the long-term. Agcapita created the Farmland Investment Partnership to allow investors to add professionally managed farmland to their portfolios. Agcapita publishes a monthly Agriculture Brief which deals with agriculture specific investment issues along with big picture macro-economic issues.
Mafm the case for investment in grains and oilseedsJoanna T.
The document discusses grains and oilseeds, focusing on wheat, barley, corn, and soybeans. It provides background on the origins and major producers and consumers of each crop. Key points made include that wheat and barley have been grown for over 10,000 years, corn production is led by the US, and soybeans are high in protein and divided into meal and oil when processed. The document examines trends in global trade and demand drivers for each commodity.
The document provides an overview and outlook for several global food markets in 2015-2016 based on a report by the Food and Agriculture Organization of the United Nations (FAO). Key points include:
- Global cereal production is forecast to decline 1.5% in 2015 but remain above the past five-year average. Cereal utilization is projected to grow only 1% in 2015/16, and stocks are expected to draw down 2.9% to 626 million tonnes.
- World wheat production is forecast to fall 1.2% in 2015 but large opening stocks will keep markets well supplied. Trade is projected to decline marginally.
- Coarse grain production is forecast to fall below the 2014
The document discusses emerging macro trends in global agricultural production over the next decade for corn, soybeans, and cotton. It outlines how Monsanto is well positioned to capitalize on opportunities presented by these trends through solutions like nitrogen-utilization corn, drought-tolerant traits, and an improved-oils soybean platform. The summary also provides Monsanto's international growth priorities and outlook for 2010 in key areas like increasing Roundup Ready soybean penetration in Brazil and expanding cotton traits in India and Argentina.
A summary of OECD-FAO's agricultural outlook for 2024, this article observes agricultural commodities' projections for emerging nations vs. the developed world.
Much of the volatility witnessed in commodity markets in the previous decade is set to balance in the coming 10 years.
- Global coarse grain production in 2015 is forecast at 1,306 million tonnes, about 2% lower than 2014, mainly due to lower maize output in the US and EU.
- World coarse grain trade in 2015/16 is forecast at 169 million tonnes, down 3.6% from 2014/15. Maize trade is expected to fall to 126 million tonnes.
- Total coarse grain utilization is forecast to increase 0.8% to 1,303 million tonnes in 2015/16, with slower growth in feed and industrial use expected due to lower production.
Global food prices continue to rise in early 2011, driven by sharp increases in wheat, maize, sugar, and edible oil prices. The World Bank's food price index in January 2011 was 15% higher than in October 2010 and only 3% below its 2008 peak. Higher global wheat and maize prices have significantly increased domestic food costs in many countries. An estimated 44 million more people fell into extreme poverty as a result of food price rises between June-December 2010 alone. Mitigating the poverty and vulnerability impacts of volatile food prices requires measures to stabilize markets in the short-run as well as investments to boost sustainable agricultural productivity and develop risk management tools over the medium-term.
The document provides an outlook and analysis of agricultural commodity markets in 2020. It discusses:
1) The risk of a demand shock has quieted, and a supply shock is needed to change market sentiment as the major driver of demand growth over the past decade has ended.
2) South America dominates world grain and oilseed trade flows and supplies are currently adequate, with the U.S. acting as a price floor and transparent storage source.
3) The past decade saw unprecedented growth in global demand for corn, soybeans, wheat and vegetable oils driven by globalization, dietary shifts and biofuels, but this golden era of growth has ended.
This document summarizes a research paper on the analysis of rising global food prices. It finds that food price increases from 2006-2008 were unprecedented in magnitude since the 1970s and affected many developing countries, causing political and social unrest. The summary identifies several key factors driving the price increases, including expansion of biofuels, high global food demand, climate change, and unfavorable government policies. It also notes that while farmers may benefit from higher prices, marketers and traders benefit most. The research aims to examine who is impacted by rising prices and how different countries have responded through policies.
Seminis is focused on developing new vegetable seed products, particularly in high-value crops like tomatoes, peppers, cucumbers, and melons. One key product is a raised head broccoli variety that enables mechanical harvesting, which can significantly reduce labor costs compared to traditional broccoli harvesting. Seminis is developing commercial raised head broccoli varieties and testing prototypes to prepare for product launches targeting major markets like the U.S., U.K., and Spain. The new variety is expected to bring the cost of harvesting into the value of the seed.
MLA_Impacts of low oil prices on American unconventional and offshore oil pro...Mohamed Lahjibi
The document summarizes the impacts of low oil prices on American unconventional and offshore oil projects. In the short term, low prices have stimulated oil demand in the US but jeopardized the bankability of shale oil projects. Tight oil producers have reduced rig counts and budgets. Long term impacts may include a stronger dollar threatening economic growth, adjustments by shale oil producers through cost cuts and technology improvements, and negative effects on the natural gas and LNG markets if low prices persist.
This document provides an executive summary and outlook for commodity prices in 2015 and 2016. It finds that broad-based weakness in commodity prices is expected to continue in 2015, with all nine key commodity price indices projected to decline for the year. Crude oil prices are expected to average $53/barrel in 2015, down 45% from 2014, due to ample supplies and OPEC's decision to abandon supply management. Agricultural prices are projected to decline almost 5% in 2015 given current good crop prospects. Metal prices are expected to fall 5.3% and fertilizer prices 2.1%. Downside risks include further weakening in global demand and changes in OPEC policy.
This document provides forward-looking statements and cautions readers that actual results may differ materially from expectations. It identifies 19 factors that could cause actual results to differ, including economic conditions, commodity costs, market conditions, operating efficiencies, commodity purchasing risks, access to foreign markets, disease outbreaks affecting livestock, labor availability and costs, food safety issues, consumer trends, loss of large customers, litigation results, weather impacts, leverage risks, regulatory changes, acquisition integration risks, IT security breaches, and advertising effectiveness. The presentation also introduces Tyson Foods' executive leadership team.
This undergraduate report analyzes the effects of changes in oil supply on crude oil prices. The author conducts a literature review on how factors like oil production, market share of producers, reserves and inventories, extraction capability, and income influence prices. A regression model is developed to test the relationship between quarterly WTI and Brent oil prices from 1990 to 2016 with variables for US and OPEC production, market shares, US inventory levels, oil rig counts, and US GDP per capita. The author aims to predict future oil price movements based on supply conditions.
Tyson Foods has focused on achieving consistent, profitable growth through a strategic plan implemented in 2012. The plan aims to aggressively grow international in-country production, expand prepared foods and value-added products in the US, and foster talent development. The company targets annual revenue growth of 3-4% and at least 10% EPS growth over time.
Long term projections for Potash demand are stable and likely to moderately increase year-over-year. The quantity of high-quality arable land is decreasing. Human population is expected to increase by 3 Billion people in the next 37 years. There are no precise substitutes for potash. It is proven to considerably increase yield quantity and quality on almost all crops. The cumulative effects of the above factors will drive demand.
anric blatt, lauralouise duffy, global fund exchange, earth wind & fire fund, investing in agriculture, investing in water, investing in the future of energy
The document discusses recent developments in global grain and feed markets over November-December 2012. It notes that while wheat prices rose sharply due to tight supplies, updated USDA crop estimates projected larger crops and higher stocks, lowering prices. Supplies from major exporters like Russia, Ukraine, and Argentina are expected to decline this season. Macroeconomic uncertainties like the Eurozone crisis and slowing Chinese growth may also impact markets. The outlook for 2013 crops and prices remains uncertain depending on winter weather conditions.
ABUK Model Update Re-initiation of Coverage - October 2016 (2)Ali Afifi
The document provides an analysis and valuation of Abu Qir Fertilizers Company (ABUK.CA) with a rating of "HOLD" and upside potential of 6.8%. It utilizes a discounted cash flow valuation model with assumptions such as a weighted average cost of capital of 19.0% and perpetual growth rate of 2.0% to arrive at a fair value of EGP 107.85 per share. The document also discusses risks such as unfavorable foreign exchange exposure due to natural gas prices and limits on Abu Qir's profitability from government pricing controls.
A Contrast of Market Driven versus Speculator Driven Vertical Agri Economy re...Roger Cunningham
This document discusses pressures for technological change in the US agricultural industry. It notes that US production of major crops like wheat, corn and soybeans has declined since 2005 due to falling global demand and prices. This is partly due to outdated industry practices where farmers have little flexibility and control over pricing and sales. The document argues that current speculator-driven models will continue squeezing small-to-medium farmers and reducing farmland unless the industry model is disrupted through new technologies that empower farmers to directly respond to global demand signals and market forces. Precedents in other industries suggest a transition to more decentralized, market-driven systems could make US agriculture more resilient and competitive globally.
The document provides forward-looking statements and associated risk factors for a company. It notes that actual results may differ materially from expectations for reasons including economic conditions, input costs, market conditions, operating efficiencies, commodity purchasing risks, livestock diseases, labor issues, food safety costs and recalls, consumer trends, large customer changes, litigation, and regulatory changes. The company aims to caution readers about relying unduly on forward-looking statements.
This research paper examines agricultural marketing in Jordan, focusing on the dairy company Almarai-Teeba and milk production. It provides background on agricultural marketing definitions, the agricultural sector and challenges in Jordan, and will analyze Almarai-Teeba's supply chain, competitors, and regulations regarding milk sales. Interviews will also be conducted with Almarai-Teeba's marketing manager to understand their strategies and perceptions of their competitors in the Jordanian dairy market.
Egg processing Market, by Product Type (Dried Egg Products, Liquid Egg Products and Frozen Egg Products), Application (Bakery & Confectionery, Dairy Products, Ready-to-Eat, Soups & Sauces and Others), and by Region (North America, Latin America, Asia Pacific, Europe, Middle East and Africa) - Size, Share, Outlook, and Opportunity Analysis, 2020 - 2027
Grains and oilseeds are essential foods that provide nourishment to families and livestock. However, factors like weather, customer needs, and new market participants can cause commodity prices like corn, wheat, and soybeans to fluctuate substantially. Futures markets help provide price stability for food even as ingredient prices vary, with the Chicago Board of Trade playing a key role in managing price swings and setting global benchmarks for grains and oilseeds prices.
The document discusses food security issues in East Africa and strategies to address them. It notes that while East African economies are growing rapidly, food security is still poorly protected due to factors like poor farming methods, lack of infrastructure, and drought. Industrialized farming using high-performance technology could help the region realize its agricultural potential and transition from subsistence farming. However, challenges include land ownership issues and engaging smallholder farmers. Overall, the region needs improved seed varieties, fertilizers, and other farm inputs to boost crop yields and meet the rising domestic demand for food and protein.
The document introduces an ancient world textbook that explores ancient cities and civilizations through questions about geography, history, culture, government, and economics. People in ancient cities lived in families, worked at markets and shops, and inventors created lasting technologies. Their beliefs and customs still influence the modern world, and the textbook uses maps, photos and charts to help discover answers about how geography shaped civilizations, their historical accomplishments, cultural beliefs, early systems of government and economics.
The document summarizes key aspects of the Ancient World, including the following:
1) The Ancient World encompassed the Mediterranean basin from 800 BCE to 400 CE, and the dominant languages were Hebrew, Greek, and Latin.
2) Two prominent city-states in ancient Greece were Athens and Sparta, who fought against Persian powers and each other, culminating in Athens' defeat in the Peloponnesian War in 404 BCE.
3) Important literary works from this period included the Hebrew Bible, Homer's Iliad and Odyssey, and Virgil's epic poem which was based on Homer but focused on Aeneas coming to Italy.
This document summarizes a research paper on the analysis of rising global food prices. It finds that food price increases from 2006-2008 were unprecedented in magnitude since the 1970s and affected many developing countries, causing political and social unrest. The summary identifies several key factors driving the price increases, including expansion of biofuels, high global food demand, climate change, and unfavorable government policies. It also notes that while farmers may benefit from higher prices, marketers and traders benefit most. The research aims to examine who is impacted by rising prices and how different countries have responded through policies.
Seminis is focused on developing new vegetable seed products, particularly in high-value crops like tomatoes, peppers, cucumbers, and melons. One key product is a raised head broccoli variety that enables mechanical harvesting, which can significantly reduce labor costs compared to traditional broccoli harvesting. Seminis is developing commercial raised head broccoli varieties and testing prototypes to prepare for product launches targeting major markets like the U.S., U.K., and Spain. The new variety is expected to bring the cost of harvesting into the value of the seed.
MLA_Impacts of low oil prices on American unconventional and offshore oil pro...Mohamed Lahjibi
The document summarizes the impacts of low oil prices on American unconventional and offshore oil projects. In the short term, low prices have stimulated oil demand in the US but jeopardized the bankability of shale oil projects. Tight oil producers have reduced rig counts and budgets. Long term impacts may include a stronger dollar threatening economic growth, adjustments by shale oil producers through cost cuts and technology improvements, and negative effects on the natural gas and LNG markets if low prices persist.
This document provides an executive summary and outlook for commodity prices in 2015 and 2016. It finds that broad-based weakness in commodity prices is expected to continue in 2015, with all nine key commodity price indices projected to decline for the year. Crude oil prices are expected to average $53/barrel in 2015, down 45% from 2014, due to ample supplies and OPEC's decision to abandon supply management. Agricultural prices are projected to decline almost 5% in 2015 given current good crop prospects. Metal prices are expected to fall 5.3% and fertilizer prices 2.1%. Downside risks include further weakening in global demand and changes in OPEC policy.
This document provides forward-looking statements and cautions readers that actual results may differ materially from expectations. It identifies 19 factors that could cause actual results to differ, including economic conditions, commodity costs, market conditions, operating efficiencies, commodity purchasing risks, access to foreign markets, disease outbreaks affecting livestock, labor availability and costs, food safety issues, consumer trends, loss of large customers, litigation results, weather impacts, leverage risks, regulatory changes, acquisition integration risks, IT security breaches, and advertising effectiveness. The presentation also introduces Tyson Foods' executive leadership team.
This undergraduate report analyzes the effects of changes in oil supply on crude oil prices. The author conducts a literature review on how factors like oil production, market share of producers, reserves and inventories, extraction capability, and income influence prices. A regression model is developed to test the relationship between quarterly WTI and Brent oil prices from 1990 to 2016 with variables for US and OPEC production, market shares, US inventory levels, oil rig counts, and US GDP per capita. The author aims to predict future oil price movements based on supply conditions.
Tyson Foods has focused on achieving consistent, profitable growth through a strategic plan implemented in 2012. The plan aims to aggressively grow international in-country production, expand prepared foods and value-added products in the US, and foster talent development. The company targets annual revenue growth of 3-4% and at least 10% EPS growth over time.
Long term projections for Potash demand are stable and likely to moderately increase year-over-year. The quantity of high-quality arable land is decreasing. Human population is expected to increase by 3 Billion people in the next 37 years. There are no precise substitutes for potash. It is proven to considerably increase yield quantity and quality on almost all crops. The cumulative effects of the above factors will drive demand.
anric blatt, lauralouise duffy, global fund exchange, earth wind & fire fund, investing in agriculture, investing in water, investing in the future of energy
The document discusses recent developments in global grain and feed markets over November-December 2012. It notes that while wheat prices rose sharply due to tight supplies, updated USDA crop estimates projected larger crops and higher stocks, lowering prices. Supplies from major exporters like Russia, Ukraine, and Argentina are expected to decline this season. Macroeconomic uncertainties like the Eurozone crisis and slowing Chinese growth may also impact markets. The outlook for 2013 crops and prices remains uncertain depending on winter weather conditions.
ABUK Model Update Re-initiation of Coverage - October 2016 (2)Ali Afifi
The document provides an analysis and valuation of Abu Qir Fertilizers Company (ABUK.CA) with a rating of "HOLD" and upside potential of 6.8%. It utilizes a discounted cash flow valuation model with assumptions such as a weighted average cost of capital of 19.0% and perpetual growth rate of 2.0% to arrive at a fair value of EGP 107.85 per share. The document also discusses risks such as unfavorable foreign exchange exposure due to natural gas prices and limits on Abu Qir's profitability from government pricing controls.
A Contrast of Market Driven versus Speculator Driven Vertical Agri Economy re...Roger Cunningham
This document discusses pressures for technological change in the US agricultural industry. It notes that US production of major crops like wheat, corn and soybeans has declined since 2005 due to falling global demand and prices. This is partly due to outdated industry practices where farmers have little flexibility and control over pricing and sales. The document argues that current speculator-driven models will continue squeezing small-to-medium farmers and reducing farmland unless the industry model is disrupted through new technologies that empower farmers to directly respond to global demand signals and market forces. Precedents in other industries suggest a transition to more decentralized, market-driven systems could make US agriculture more resilient and competitive globally.
The document provides forward-looking statements and associated risk factors for a company. It notes that actual results may differ materially from expectations for reasons including economic conditions, input costs, market conditions, operating efficiencies, commodity purchasing risks, livestock diseases, labor issues, food safety costs and recalls, consumer trends, large customer changes, litigation, and regulatory changes. The company aims to caution readers about relying unduly on forward-looking statements.
This research paper examines agricultural marketing in Jordan, focusing on the dairy company Almarai-Teeba and milk production. It provides background on agricultural marketing definitions, the agricultural sector and challenges in Jordan, and will analyze Almarai-Teeba's supply chain, competitors, and regulations regarding milk sales. Interviews will also be conducted with Almarai-Teeba's marketing manager to understand their strategies and perceptions of their competitors in the Jordanian dairy market.
Egg processing Market, by Product Type (Dried Egg Products, Liquid Egg Products and Frozen Egg Products), Application (Bakery & Confectionery, Dairy Products, Ready-to-Eat, Soups & Sauces and Others), and by Region (North America, Latin America, Asia Pacific, Europe, Middle East and Africa) - Size, Share, Outlook, and Opportunity Analysis, 2020 - 2027
Grains and oilseeds are essential foods that provide nourishment to families and livestock. However, factors like weather, customer needs, and new market participants can cause commodity prices like corn, wheat, and soybeans to fluctuate substantially. Futures markets help provide price stability for food even as ingredient prices vary, with the Chicago Board of Trade playing a key role in managing price swings and setting global benchmarks for grains and oilseeds prices.
The document discusses food security issues in East Africa and strategies to address them. It notes that while East African economies are growing rapidly, food security is still poorly protected due to factors like poor farming methods, lack of infrastructure, and drought. Industrialized farming using high-performance technology could help the region realize its agricultural potential and transition from subsistence farming. However, challenges include land ownership issues and engaging smallholder farmers. Overall, the region needs improved seed varieties, fertilizers, and other farm inputs to boost crop yields and meet the rising domestic demand for food and protein.
The document introduces an ancient world textbook that explores ancient cities and civilizations through questions about geography, history, culture, government, and economics. People in ancient cities lived in families, worked at markets and shops, and inventors created lasting technologies. Their beliefs and customs still influence the modern world, and the textbook uses maps, photos and charts to help discover answers about how geography shaped civilizations, their historical accomplishments, cultural beliefs, early systems of government and economics.
The document summarizes key aspects of the Ancient World, including the following:
1) The Ancient World encompassed the Mediterranean basin from 800 BCE to 400 CE, and the dominant languages were Hebrew, Greek, and Latin.
2) Two prominent city-states in ancient Greece were Athens and Sparta, who fought against Persian powers and each other, culminating in Athens' defeat in the Peloponnesian War in 404 BCE.
3) Important literary works from this period included the Hebrew Bible, Homer's Iliad and Odyssey, and Virgil's epic poem which was based on Homer but focused on Aeneas coming to Italy.
The Rotary Foundation's mission is to advance world understanding, goodwill, and peace through humanitarian projects. It is funded by voluntary contributions from Rotarians and friends. Through Foundation grants and programs, Rotarians can help fund clean water wells, environmental projects, and scholarships. The grants allow Rotarians to realize Rotary's goal of eradicating polio worldwide. The Future Vision plan focuses efforts in six areas to achieve greater impact. It introduces district and global grants to fund strategically focused, high-impact activities.
The document summarizes key aspects of the Ancient World from 800 BCE to 400 CE. It focuses on the Mediterranean region and the languages of Hebrew, Greek, and Latin. It provides an overview of important texts like the Hebrew Bible and works by Homer. It also discusses major civilizations like Greece and Rome as well as topics covered in Genesis like the creation story, Noah's ark, and the lives of biblical patriarchs.
Mafm the case for investing in agriculture (2010)Joanna T.
This document discusses the case for investing in agriculture. It notes that global population is growing and demand for food, feed, and fuel is increasing, while arable land and water resources are diminishing due to factors like urbanization and climate change. Supply is not keeping up with rising demand. Agricultural assets provide portfolio diversification benefits. Direct investment in farmland and farming operations provides the most exposure to the agricultural sector, while listed stocks and futures contracts offer more liquidity but are more correlated to other markets. Agricultural investments face risks from weather, pests, and commodity price volatility, but risks can be mitigated through diversification and good management practices.
The document discusses factors driving increased demand for agricultural commodities as an asset class. Population growth, urbanization, and changing diets are increasing global food consumption, especially for protein. Limited arable land and water supplies constrain production increases. Biofuel mandates also increase demand for grains. These long-term trends point to ongoing structural pressures on global food supply.
The document discusses factors driving increased demand for agricultural commodities as an asset class. Population and economic growth, especially in emerging markets, are increasing global food demand. Urbanization and rising incomes are shifting diets toward more meat and processed foods, placing additional demands on grain supplies. Limited arable land and slowing yield growth constrain the ability to increase food supplies. The rise of biofuels production is also competing for grain and oilseed crops. These long-term trends of population growth, diet changes, and biofuel demand against a constrained land and technology environment point to agriculture becoming an increasingly important asset class.
Greg Garret, Director of Food Fortification at GAINSUN_Movement
The document discusses food fortification efforts globally and the important role of the private sector. It provides three case studies on how private companies have successfully engaged in food fortification programs. A global summit on food fortification will take place in September 2015 in Tanzania to align stakeholders and forge a new strategy to strengthen fortification programs worldwide. The private sector is encouraged to participate and support continued efforts to combat malnutrition through fortification.
Global animal protein production faces ongoing challenges and uncertainties in 2023 that will impact growth opportunities. High costs along the entire supply chain from feed to transportation will continue due to elevated commodity prices and energy costs. Disease risks also remain for many regions. Companies will need to focus on cost management, efficiency, and adapting business models to navigate these difficulties and pursue opportunities for growth in a constrained environment.
GCC Dairy Market by Product Type, Distribution Channel, End User 2024-2032IMARC Group
The GCC dairy market size reached US$ 10.1 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 16.5 Billion by 2032, exhibiting a growth rate (CAGR) of 5.59% during 2024-2032.
More Info:- https://www.imarcgroup.com/gcc-dairy-market
This document summarizes trends in the global dairy industry as discussed at the 2009 Global Dairy Farmers congress in China. The main trends include:
1) Consolidation of dairy farms with farm sizes and productivity increasing as the number of dairy farms decreases in most major regions.
2) Influence of globalization, the shift from agricultural to rural policy, and sustainability issues like climate change on the dairy industry.
3) The need for dairy farmers to innovate their farming systems and engage more with the dairy supply chain to cope with challenges.
This document contains a marketing plan for Juhayna Juice. It includes a situational analysis with a SWOT analysis and PESTEL analysis identifying strengths, weaknesses, opportunities, and threats. It also includes a competitive analysis and market analysis. The marketing plan then outlines marketing objectives and strategies including segmentation, targeting, positioning, and a perceptual map. Finally, it discusses the marketing mix of product, price, place, and promotion strategies and includes a budget.
The document summarizes Justin Lin's remarks on preparing for the next global food price crisis. Some key points:
1) The recent food crisis had severe impacts on global poverty and development goals.
2) The World Bank has worked closely with partners to effectively respond through policy advice, funding, and other measures.
3) Long-term solutions require addressing the root causes, including market failures from speculation and collapsed confidence in grain markets.
4) Innovative coordination of national stockpiles and commitments could help restore market functioning and confidence to prevent future crises.
The global Aquafeed Market was projected at US$ 69.72 billion in 2014. The scope of the market is projected to touch US$ 133.1 billion by the completion of the year 2022.
US Dairy Markets – Digitalizing to address complexity and volatilityCTRM Center
The document discusses the complexity of the US dairy market and the need for digitalization. It notes that dairy production has unique characteristics that result in highly volatile prices. The US system of Federal Milk Marketing Orders adds further complexity by establishing pricing classes. Despite record milk prices in 2022, dairy farmers struggled with high costs. The document advocates for the use of futures and derivatives to manage price risk, but notes spreadsheet-based systems cannot adequately handle large hedging programs. It argues that digital platforms are needed to provide visibility, optimize decisions, and improve profitability in volatile markets.
This document provides an introduction and overview of the complex challenges facing the modern dairy industry. It discusses the various players in the dairy supply chain and then outlines several key areas of complexity, including external pricing systems (such as price supports, import restrictions/quotas, and marketing orders), evolving public policies, and shrinking margins due to high input costs and the milk-feed ratio. The document serves as a primer and baseline for further examining issues like domestic/global competition, processing complexity, and new technologies that could provide competitive advantages.
Benchmarking involves comparing key performance metrics of one's own farm to other similar farms. This allows farmers to identify areas for improvement and determine how their business compares. Benchmarking is becoming a more popular tool among UK dairy farmers as margins tighten. It provides a basis for improvement discussions and can motivate farmers when their performance is highlighted as good. To benchmark effectively, farmers must compare their results to a realistic sample of similar farms and ensure an "apples-to-apples" comparison of calculated metrics. Some farmers are finding benchmarking groups particularly useful for openly discussing issues and sharing successful practices.
Yeast is used as an additive in animal feed. It helps in improving animal health and increase productivity in cattle. Feed yeast products are not solely made from yeast cells, it is a yeast fermented product which is designed to provide fermented metabolites resulting from a specific fermentation process. The Feed yeast is nutritional yeast which are used as supplements in animal feeds as it contains high amount of protein and amino acid, energy, and micronutrient content as compared to common grains and oilseed meals when given to animals. The most common yeast used in dairy diets is Saccharomyces cerevisiae is also called brewers or bakery yeast. The yeast helps in increasing milk production, helps in improving digestive system of animals, increase platter size, helps in gaining weight particularly chicken, prevent from various diseases, improve gut health and performance of the farm animal.
This document discusses business strategies for strengthening food value chains and reducing poverty in developing countries. It outlines the opportunity for businesses to engage the "base of the pyramid" market of 3.7 billion people earning $8 or less per day, who spend $1.3 trillion annually on food. 70% of this population depends on the food value chain. The document presents innovative business models that companies are using to engage smallholder farmers and consumers, and empower entrepreneurs through improved access to markets, financing, and infrastructure. It provides design principles for successful models, including creating life-enhancing offerings and collaborating through non-traditional partnerships. Finally, it recommends actions like prioritizing initiatives and facilitating corporate engagement to scale up these approaches
Promoting agro-enterprises in the highlands of Ethiopia through improved inst...ILRI
Presentation by Berhanu Gebremedhin, Dirk Hoekstra and Azage Tegegne at the 28th triennial conference of the International association of Agricultural Economists (IAAE), Foz do Iguaçu, Brazil, 18-24 August 2012.
1. The document discusses corporate leadership in Kenya's dairy industry, specifically the role of the Kenya Dairy Board.
2. It notes that large processors have been buying out smaller ones, potentially leading to a monopoly, while the KDB has not ensured benefits for small farmers and processors.
3. The research aims to investigate the KDB's leadership and issues like production costs, milk quality, infrastructure, competition among processors, and the roles of the government, KDB, and KCC.
1) The document discusses corporate leadership in Kenya's dairy industry, specifically the role of the Kenya Dairy Board (KDB).
2) It notes that KDB has failed to ensure benefits for small farmers and processors from partnerships between the government and private sector, allowing large processors to dominate.
3) One problem is the trend of big processors buying out smaller ones, concentrating power in the industry, despite recommendations to empower producers.
This document summarizes the dairy value chain in Kenya. It finds that while Kenya produces an estimated 3.5 billion liters of milk annually, average yields per cow are only 564 kilograms per year according to FAO estimates, well below international standards. Smallholder farmers produce around 70-80% of the country's milk but on average sell only 3-5 liters per day, below the estimated 15 liters needed to lift a family out of poverty. The dairy industry is growing but remains fragmented with numerous informal players and concentrated formal processing.
This document provides an overview of the impacts of COVID-19 on the global food and nutrition industry. It discusses the economic outlook including a potential deep global recession. Key impacts discussed are shifts to in-store and online retail channels as foodservice declines, supply chain disruptions, and changes in consumer behavior like stockpiling and focus on health. Long term implications may include sustained online shopping, localization trends, and interest in functional foods. The document is a presentation from market research firm Euromonitor International analyzing trends across economics, supply chains, consumer behavior and potential long term effects of the pandemic.
Similar to Mafm the case for investing in dairy (2011) (20)
Enhancing Adoption of AI in Agri-food: IntroductionCor Verdouw
Introduction to the Panel on: Pathways and Challenges: AI-Driven Technology in Agri-Food, AI4Food, University of Guelph
“Enhancing Adoption of AI in Agri-food: a Path Forward”, 18 June 2024
High-Quality IPTV Monthly Subscription for $15advik4387
Experience high-quality entertainment with our IPTV monthly subscription for just $15. Access a vast array of live TV channels, movies, and on-demand shows with crystal-clear streaming. Our reliable service ensures smooth, uninterrupted viewing at an unbeatable price. Perfect for those seeking premium content without breaking the bank. Start streaming today!
https://rb.gy/f409dk
The Most Inspiring Entrepreneurs to Follow in 2024.pdfthesiliconleaders
In a world where the potential of youth innovation remains vastly untouched, there emerges a guiding light in the form of Norm Goldstein, the Founder and CEO of EduNetwork Partners. His dedication to this cause has earned him recognition as a Congressional Leadership Award recipient.
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART
𝐔𝐧𝐯𝐞𝐢𝐥 𝐭𝐡𝐞 𝐅𝐮𝐭𝐮𝐫𝐞 𝐨𝐟 𝐄𝐧𝐞𝐫𝐠𝐲 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲 𝐰𝐢𝐭𝐡 𝐍𝐄𝐖𝐍𝐓𝐈𝐃𝐄’𝐬 𝐋𝐚𝐭𝐞𝐬𝐭 𝐎𝐟𝐟𝐞𝐫𝐢𝐧𝐠𝐬
Explore the details in our newly released product manual, which showcases NEWNTIDE's advanced heat pump technologies. Delve into our energy-efficient and eco-friendly solutions tailored for diverse global markets.
The Steadfast and Reliable Bull: Taurus Zodiac Signmy Pandit
Explore the steadfast and reliable nature of the Taurus Zodiac Sign. Discover the personality traits, key dates, and horoscope insights that define the determined and practical Taurus, and learn how their grounded nature makes them the anchor of the zodiac.
Best Competitive Marble Pricing in Dubai - ☎ 9928909666Stone Art Hub
Stone Art Hub offers the best competitive Marble Pricing in Dubai, ensuring affordability without compromising quality. With a wide range of exquisite marble options to choose from, you can enhance your spaces with elegance and sophistication. For inquiries or orders, contact us at ☎ 9928909666. Experience luxury at unbeatable prices.
Prescriptive analytics BA4206 Anna University PPTFreelance
Business analysis - Prescriptive analytics Introduction to Prescriptive analytics
Prescriptive Modeling
Non Linear Optimization
Demonstrating Business Performance Improvement
The Role of White Label Bookkeeping Services in Supporting the Growth and Sca...YourLegal Accounting
Effective financial management is important for expansion and scalability in the ever-changing US business environment. White Label Bookkeeping services is an innovative solution that is becoming more and more popular among businesses. These services provide a special method for managing financial duties effectively, freeing up companies to concentrate on their main operations and growth plans. We’ll look at how White Label Bookkeeping can help US firms expand and develop in this blog.
Adani Group's Active Interest In Increasing Its Presence in the Cement Manufa...Adani case
Time and again, the business group has taken up new business ventures, each of which has allowed it to expand its horizons further and reach new heights. Even amidst the Adani CBI Investigation, the firm has always focused on improving its cement business.
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART
Tired of chasing down expiring contracts and drowning in paperwork? Mastering contract management can significantly enhance your business efficiency and productivity. This guide unveils expert secrets to streamline your contract management process. Learn how to save time, minimize risk, and achieve effortless contract management.
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART
Ellen Burstyn: From Detroit Dreamer to Hollywood Legend | CIO Women MagazineCIOWomenMagazine
In this article, we will dive into the extraordinary life of Ellen Burstyn, where the curtains rise on a story that's far more attractive than any script.
SATTA MATKA DPBOSS KALYAN MATKA RESULTS KALYAN CHART KALYAN MATKA MATKA RESULT KALYAN MATKA TIPS SATTA MATKA MATKA COM MATKA PANA JODI TODAY BATTA SATKA MATKA PATTI JODI NUMBER MATKA RESULTS MATKA CHART MATKA JODI SATTA COM INDIA SATTA MATKA MATKA TIPS MATKA WAPKA ALL MATKA RESULT LIVE ONLINE MATKA RESULT KALYAN MATKA RESULT DPBOSS MATKA 143 MAIN MATKA KALYAN MATKA RESULTS KALYAN CHART
Discover the Beauty and Functionality of The Expert Remodeling Serviceobriengroupinc04
Unlock your kitchen's true potential with expert remodeling services from O'Brien Group Inc. Transform your space into a functional, modern, and luxurious haven with their experienced professionals. From layout reconfiguration to high-end upgrades, they deliver stunning results tailored to your style and needs. Visit obriengroupinc.com to elevate your kitchen's beauty and functionality today.
2. Contents
Executive summary 03
Demand side 05
Supply 12
Where can the world expand dairy supply? 16
Conclusion 26
DISCLAIMER
Analyst Certification:
Some parts of this paper reflect the personal views of Macquarie analyst(s) about the subject matter and no part of the compensation of the analyst(s) was,
is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the
preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd ABN 94 122 169 279 (AFSL No. 318062) and its
related entities (the Macquarie Group) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.
This document does not constitute financial product advice and should not be relied upon as such. The information in this document is for discussion purposes
only and is not an offer or solicitation to purchase or sell any securities or financial product. None of the information in this document takes into account
any person’s personal objectives, financial situation or needs and you must determine whether the information is appropriate in terms of your particular
circumstances. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
The information contained in this document is strictly confidential. If you are not the intended recipient, you may not disclose or use the information in this
document in any way. No liability is accepted for any unauthorised use of the information contained in this document.
This document is not to be distributed to any person or corporation by the recipient. Macquarie Group Limited is the owner of the copyright material in this
document unless otherwise specified. Macquarie Group Limited and its worldwide affiliates and subsidiaries accept no liability whatsoever for any direct,
indirect, consequential or other loss arising from any use of this document and/or further communication in relation to this document.
This document has been prepared based on information believed to be accurate at the time of the preparation of this document. Subsequent changes in
circumstances may occur at any time and may impact the accuracy of the information in this document. Some of the information in this document and the
figures that have been quoted, and or used within it, have yet to be confirmed and finalised and consent has not been obtained from all relevant stakeholders.
It is important to note that to this extent the document may not be accurate or complete and some of the information could be subject to amendments.
Any forecasts contained in this document are predictive in character and therefore no undue reliance should be placed on the forecast information. Whilst
every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect
assumptions or by known or unknown risks and uncertainties. The actual results may differ substantially from the forecasts and some facts and opinions may
change without notice on the basis of changing market conditions.
Past performance is no indication of future performance.
Other than Macquarie Bank Limited ABN 46 008 583 542 (MBL), no Macquarie Group entity mentioned in this document is an authorised deposit-taking
institution for the purposes of the Banking Act 1959 (Cth) and their obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee
2 or otherwise provide assurance in respect of the obligations of the Macquarie Group entities mentioned in this document.
3. Executive summary
During the past three years, the grain, oilseed and outgrew demand and prices hit the floor. Where
meat markets have received a significant amount prices came to rest on this floor in 2009 is an
of attention. This can be attributed to accelerating important point to highlight in itself.
demand from the biofuel sector and a surge in
The new price ‘floor’ revealed in the aftermath
global food and feed demand from emerging
of the global financial crisis indicated that a
economies which led to an unprecedented
significant structural shift had taken place. No
increase in most agricultural prices. Similar
longer was the international dairy product price
structural changes can also be seen in the global
upside capped at just over $2,000/t, but this price
dairy markets. In rapidly developing countries,
level effectively became the new floor post-2007.
dairy products are facing unprecedented demand
pressures from the emerging middle classes. The structural changes within the global dairy
Throughout the developing world the emerging markets can be attributed to several important
middle class, higher incomes, urbanisation and factors, one of these being dairy demand in
access to dairy retail facilities have all had a emerging economies. Growing levels of disposable
profound impact on the world dairy markets and is incomes across emerging economies has led
likely to continue to do so for many years to come. to increased demand pressures on the available
global dairy supply. If more people are demanding
Oceania dairy product export prices dairy products, and are willing to pay for them,
higher prices are likely to follow. Additionally, rising
input costs across all major dairy production
regions have also contributed to a structural shift
in the global dairy markets. A combination of
higher feed grain, fuel, and land prices has led
to a constrained incremental demand growth
across the sector. It is also important to consider
that the recovery of global dairy prices by early
2010 indicated that the market had moved from
oversupply to balance.4
Throughout the global economic downturn poor
returns in many dairy regions contributed to a
significant decline in the global dairy herd. It
Source: United States Department of Agriculture (USDA), will take time and higher milk prices to recover
Macquarie production capacity lost over the duration of the
financial crisis and to re-build the global dairy
Global dairy markets have experienced many herd. It is anticipated that the return of dairy
extremes in recent years.1 In 2007/08 dairy demand growth in 2010 will continue, and in
prices rose to record highs, along with the fact there are already signs emerging of supply
majority of agricultural commodities. This rise constraints developing in the market.
in dairy product prices was a direct result of
Markets such as China and South East Asia are
growing global economic prosperity.2 Like in most
expected to provide significant opportunities
commodity cycles, while the price boom did lead
for dairy producers over the coming decades
to a surge in supplies it also acted as a natural
as per capita consumption of dairy products
brake on demand growth.3 Thus, when the
expands throughout the region. Additionally, the
global financial crisis hit at the end of 2008 the
vast majority of countries in the world have dairy
global dairy market, like many other commodity
supply deficits which bode well for increasing
markets, came under significant strain as supply
consumption growth and dairy trade in future.
1. Dairy Australia
2. International Dairy Federation
3. International Dairy Federation 4. Australian Bureau of Agricultural and Resource Economics (ABARE) 3
4. Executive summary
Most of the world faces a dairy supply deficit
Source: Food and Agriculture Organisation (FAO), Macquarie
4
5. Demand side
The global dairy markets cover an array of Demand in
products including cheese, dry powdered milk,
fluid milk, whey and yoghurts. This provides developed economies
diversification for the market as different countries During the last decade dairy demand has
and different economic situations provide multiple remained relatively stable in the major developed
layers of demand for dairy products. Our analysis economies. Dairy consumption trends have
of FAO data, which looked at which countries become entrenched with per capita usage which
consume what dairy products, revealed that the are already at very high levels. During the global
higher a country ranks on scales of economic financial crisis incremental fluid and dry milk
development, the higher both the volume and demand growth remained on trend. However,
the diversification of dairy consumption. Thus, it demand for butter and cheese products fell
can be inferred that with economic development slightly, as high unemployment rates, higher
comes not only more dairy consumption on a savings rates, and low consumer confidence led
volume basis but also more consumption of to a decline in higher-end food product demand.5
higher cost, higher value-add products such as
Total milk product demand is yet to fully recover
cheeses and yoghurts.
back to the growth trend seen pre-recession.6
Global milk product consumption – Once the Organisation for Economic
excluding fluid milk (tonnes) Cooperation and Development (OECD)
countries’ demand improves, a higher milk
price will receive further support. Currently high
demand from emerging economies, combined
with OECD demand recovery will put pressure
on recovering global dairy stocks.
Total EU/US/Oceania milk product demand
Source: USDA (2009)
Source: USDA, Macquarie Research (2010)
5. Dairy Australia
6. USDA 5
6. Demand side
The emerging economies are the key driver
In emerging markets dairy demand has grown significantly while continued high unemployment and an
unsteady economic recovery in the developed world has led to flat consumption growth in traditionally
strong dairy consuming regions.
Milk product consumption moves higher with GDP growth
Source: FAO, Macquarie (2007)
The strong economic performance of rapidly China's urban/rural dairy divide in 2008
developing economies, such as those in
South America and Asia, have provided
a solid underpinning to the global dairy
markets in 2010, a trend which appears to be
accelerating. The key areas of dairy demand
growth are centred in East Asia, South East
Asia, South America and the former Soviet
Union. The emerging middle classes in these
countries are becoming more health conscious
and with increased spending power are willing
to pay more for higher-end dairy products.
Source: USDA Attache, Macquarie Research, (January 2011)
6
7. It is anticipated that demand for milk will continue have higher bone density levels thus lowering
to rise in line with the growing global population risk of osteoporosis later in life
and the industrialisation and urbanisation process „ Immune protection – studies suggest milk’s
unfolding across the developing world. Across whey component provides glutamine and
emerging markets it is evident that a young, lactoferring, which studies show may offer
urbanised population is altering their dietary immune protection
patterns, demanding more higher-value food
„ Digestion – milk’s whey protein can help
products and moving from lower to higher-value
provide amino acid glutamine which, when
foods including dairy and meat products.7 In fact,
lacking, has been shown to cause upset
data available on the divide between urban and
rural per capita milk consumption in developing stomachs
economies clearly illustrates that rural populations „ Exercise recovery programs – scientists
lag far behind their urban counterparts.8 have demonstrated that dairy products such
as chocolate milk are an effective exercise
Per capita milk product consumption, 2010 recovery aid due to their combination of
carbohydrates and protein.
Dairy products are the richest and most effective
source of calcium in the diet and cannot easily be
substituted by other sources.10 According to the
United Nations (UN) World Health Organisation
(WHO), diets that are low in dairy products will
generally not provide sufficient calcium, which is
particularly vital for the proper development of young
children.11 The UN considers that milk consumption
is a key variable to combat malnutrition and has
committed significant resources to establishing
Source: Food and Agricultural Policy Research Institute school milk programs in developing countries.12
(FAPRI), USDA, Macquarie (2010) For adults milk consumption is routinely cited as a
key factor for the prevention of osteoporosis.
Health benefits of dairy
An increasingly urban world population boosts
Dairy products are an important source of several demand for milk products
key nutrients. Outlined below are several proven
health benefits of milk consumption9:
„ Essential nutrients – protein, carbohydrates,
fats, vitamins (A, B12, and riboflavins), and
minerals (calcium, phosophorus, magnesium,
potassium and zinc)
„ Blood pressure – milk products are high in
potassium, magnesium and calcium; minerals
which may help lower blood pressure
„ Healthy bones – dairy foods are the main
providers of calcium. Consumption of milk
products has been shown to improve bone
density and prevent osteoporosis. Studies
of children have shown that those who have Source: FAO Secretariat, Macquarie
consumed adequate amounts of milk products
7. UN Secretariat, Macquarie Research Economics 10. USDA, Dairy Australia, UK Food Standards Agency, National Dairy Council,
8. USDA FAS Attaché UN WHO, International Dairy Federation
9. USDA, Dairy Australia, UK Food Standards Agency, National Dairy Council, 11. UN WHO 7
UN WHO, International Dairy Federation 12. UN WHO
8. Demand side
The UN forecasts that the global population will reach Currently, China’s per capita dairy consumption
9.1 billion by 2050; a growth of 33 per cent from is 12.3kg/capita, 86 per cent below current
today’s population of 6.9 billion. The UN also predicts United States (US) per capita consumption.15
that an increasing proportion of the population will Over the next decade China’s per capita dairy
be situated in urban centres. Today the world’s consumption is expected to rise by 160 per
population is split roughly 50/50 between urban and cent.16 South East Asian countries such as
rural dwellers. However by 2050, the UN forecasts Indonesia and Vietnam have also been identified
this split will widen to 70 per cent urban 30 per cent as key consumption growth regions. Currently,
rural.13 As increased urbanisation and growing per capita consumption stands at 1.4kg/capita in
prosperity generates higher disposable incomes, Indonesia and 2 kg/capita in Vietnam. By 2019,
more protein and processed foods are anticipated to per capita consumption is expected to grow
be consumed. In fact, in many regions consumption by 76 per cent and 34 per cent respectively.17
of dairy products is still considered a luxury, however According to these figures, per capita
this is rapidly changing as milk products are consumption across the world, and particularly
becoming a dietary staple.14 Urbanisation allows for in South East Asia, still has tremendous upside
easier marketing and distribution of dairy products potential for the future.
to consumers as people have greater access to
distribution and cold storage, along with greater Three stages of accelerating milk
choice through large retailers and restaurant chains. consumption growth in emerging markets
Comparative consumption trends
In many developing countries per capita milk
consumption remains far below North America
and Europe. The graph, Comparison of per capita
milk consumption across the world, highlights
the growth potential inherent in the world’s dairy
markets. Countries such as Brazil, India and
Mexico are approximately mid-way up the demand
curve but have further upside growth potential over
the next decade. On the lower end of the scale
countries such as China, Venezuela and South
East Asia have only begun to consume increased
quantities of milk which could potentially lead to
large upside growth over the coming decades. Source: USDA, Macquarie
Comparison of per capita milk Total milk consumption (including all products) in
consumption across the world the three major dairy growth markets of South
America, South East Asia and East Asia has
been accelerating. The chart, Three stages of
accelerating milk consumption growth in emerging
markets, depicts three distinct growth phases.
First, from 1964 to 1981, milk consumption
growth was constrained by underdevelopment
in these economies. Consumption growth still
managed to surge 62 per cent but came from
an extremely low baseline. Second, from 1982
to 1993 many of these countries saw increased
rates of development with milk consumption
growth at 49 per cent over the period. The third
Source: FAPRI, USDA, FAO, Macquarie
and current stage running from 1994 to present
15. FAPRI
8 13. UN Secretariat 16. FAPRI
14. KPMG 17. FAPRI
9. has seen a 128 per cent surge in consumption as Indonesia is not the only country facing growing
the industrialisation process is undertaken.18 It is import requirements. In 2010 Russia’s drought
difficult to gauge how long this process of strong disaster diminished total grain production by over
linear year-on-year growth in demand will continue, 35 per cent from 2009.22 This led to soaring
however, judging from the comparative per capita domestic feed prices which in turn caused
consumption data across different countries, increasing livestock herd liquidations.23 Although
increasing prosperity will likely continue to act as a China will be the largest importer of fluid and
stimulant for increasing dairy consumption growth. dry milk, Russia will remain the world’s largest
importer of all milk products in 2010. Total
Indonesia’s dairy market is an example of the demand is expected to grow by 10 per cent
potential for dairy market growth in South in 2010 from 2009. This large dependency on
East Asia. Between 2000 and 2010, Indonesia imported milk products will take time to reduce
expanded milk production by 35 per cent, despite the Russian government’s current five-
producing 1.06mt by 2010.19 However, demand year plan to promote the development of the
growth also doubled over this period. In order domestic livestock and poultry industries.24
to meet this demand, major dairy exporters
Total dairy product importers
New Zealand and Australia have had to supply
(includes fluid/dry milk, cheese and butter)
much of the additional demand needs in the
form of dry milk powder.20 Indonesia’s whole
milk powder imports have surged 187 per
cent between 2000 and 2010, while non-fat
dry milk imports are up 170 per cent.21 Given
this, the outlook for Gross Domestic Product
(GDP) growth over the next decade coupled
with constraints on expanding domestic dairy
production – in line with demand growth –
means Indonesia will continue to be a significant
and growing net importer of milk products.
Indonesian milk consumption vs GDP growth
Source: USDA, Macquarie
China has become the world’s largest importer
of fluid and dry milk products and will continue to
be the dominant force in the global dairy markets.
Growth in China’s milk product demand presents
a significant opportunity for dairy producers. As
outlined in the subsection regarding China’s dairy
industry, strong import demand growth has been
fuelled by consumer mistrust of domestically
produced milk following the 2008 melamine-tainted
milk crisis. Imports reached 335mt in 2010, tripling
import levels in 2008.25 China simply cannot supply
Source: USDA, Macquarie
all of its milk product demand needs.
18. USDA 22. USDA
19. USDA 23. USDA FAS Attaché
20. USDA 24. USDA FAS Attaché 9
21. USDA 25. USDA, Macquarie
10. Demand side
Despite attempts by the Chinese Government
to encourage domestic dairy production, the
general view is more supportive for an increasing
China milk import demand program. Cash corn
prices in China are now at record highs having
increased 35 per cent between early 2009 and
late 2010.26 A surge of feed and industrial corn
demand in the absence of significant supply
growth has led to internal shortages and imports
of US corn for the first time in more than a
decade. With flat corn yield growth and limitations
on arable land expansions, it appears China will
continue to struggle to produce enough feed
grains domestically to support a growing dairy
herd, along with other livestock and poultry
supply growth. Soy meal prices have also
increased nearly 10 per cent between 2009 and
2010 as feed demand requirements continue to
significantly expand soybean imports.27 These
feed cost pressures, along with limitations on dairy
production expansion – due to disease and a lack
of water resources – should prove conducive to
continued milk import demand growth28.
Major dry/fluid milk importers
Source: USDA, Macquarie
26. Thompson Reuters
27. Thompson Reuters
10 28. USDA
11. China’s melamine crisis offers opportunities
to milk producers in exporting countries
It has been a slow road to recovery for China’s domestic dairy production industry following the 2008
melamine-tainted milk scandal. Immediately following the crisis, demand for domestically produced
milk products plummeted causing a 17 per cent reduction in the size of China’s dairy herd between
2008 and 2009. Total demand recovered quickly, however, consumption was then fuelled by dairy
imports, not local production. This caused total milk product imports to surge 210 per cent between
2008 and 2010. This import surge was led by dry milk powder products due to very strong demand
for infant formulas and it appears this trend will continue at least until the Chinese dairy herd size
makes a full recovery.
According to the USDA, China’s dairy herd size is increasing once again as demand for domestically
produced milk begins a slow turn-around. The government has adopted stringent melamine
contamination prevention measures while continuing to subsidise dairy production at the farm level.
The Government’s dairy plan sets a target for 48mt of milk production by 2013; nearly double current
production levels. However, this target may turn out to be optimistic due to continued consumer safety
concerns, extremely high feed costs, and a growing incidence of disease outbreaks such as Foot and
Mouth Disease (FMD). Therefore, although China’s dairy herd is projected to have grown seven per cent
between 2009 and 2010, dairy product import demand has grown at a much faster pace of 38 per cent
over the same period. It may take many more years for the domestic dairy sector to make a full recovery.
In the meantime it is highly likely China will remain the world’s largest market for dry milk powder exports.
Total dairy product importers Total dairy product importers
(includes fluid/dry milk, cheese and butter) (includes fluid/dry milk, cheese and butter)
Source: China Statistics Bureau Source: USDA
According to the China Statistics Bureau, monthly dairy product output (a good proxy for demand)
recovered back to pre-crisis levels by late 2010. Total output has already reached 15.6mt from January
through September 2010, up nine per cent from 2009. China’s dairy consumption growth is being
fuelled by higher disposable incomes, increasing health consciousness, and greater access to dairy
products at the retail level. Over the past decade China’s total milk product demand has increased
over 340 per cent29. However, on a per-capita basis, China’s total consumption still lags far behind
that of developed economies. Even more striking is the disparity in milk consumption between China’s
urban and rural populations. The graph, China’s urban / rural dairy divide in 2008 on page four, clearly
shows that per capita consumption of milk in rural areas is still only a fraction of what is currently
being consumed in urban areas. With China’s trend toward rapid urbanisation and an expanding
middle class, the scale of milk consumption growth potential is indeed significant. This means China’s
dairy market will continue to provide ample room for a solid growth in imports over the next several
decades. This highlights the great opportunity which exists for the world’s major dairy exporters to
continue gaining market share in China.
29. FAO, National Bureau of Statistics China 11
12. Supply
Global dairy production has remained on an Global dairy herd vs productivity
upward trend over recent decades and more
specifically over the last ten years to 2008;
global milk production has increased on average
by two per cent per annum.30 In contrast, for
decades dairy herds globally have been in
structural decline shrinking 28 per cent between
1984 and 2009. In fact, the global dairy herd
declined to 124.7m head by 2009 after a short-
term peak in cattle numbers in 2008 at 126.5m
head. In 2010 the dairy cattle supply stabilised
at 125.5m head, up 0.63 per cent from 2009
following a recovery in international dairy prices
and improving import demand.
Global milk production Source: USDA
It is also important to look at the dispersion of
dairy cattle herds globally. From the late 1990s
to 2010, the world’s major traditional dairy
exporters saw a 10 per cent decline in overall
herd numbers. Between 2009 and 2010, the
economic slowdown accelerated this trend
with dairy cattle numbers falling 1.6 per cent.
In 2009 and early 2010 slow demand growth in
developed countries, combined with weak export
markets, contributed to weak dairy producer
margins in Europe and the US, which in turn
led to herd reductions. Of this group, only New
Zealand realised herd growth over the 2008 to
2010 period with four per cent growth registered
Source: Macquarie Research (November 2010) between 2008 and 2009 and another 2.4 per
cent growth between 2009 and 2010.32
Productivity per animal has improved markedly
over the past few decades due to improvements
in dairy farming practices including more scientific
feed rations, industry consolidation (economies of
scale) and improvements in dairy health. In 1965
the world average milk produced per cow in one
year stood at 2.1 tonnes per year improving 13.4
per cent to 2.48 tonnes by 1985. By 2010 the
average was 3.5 tonnes, a total increase of 60 per
cent from the 1965 level.31 The boost in efficiency
and productivity has contributed, in part, to the
decline in the total world herd size while keeping
total milk production on a steady uptrend.
30. USDA, FAO
12 31. USDA 32. USDA
13. Major milk exporters’ dairy herds shrinking In terms of overall dairy production, Europe and
North America are the largest dairy producing
regions, making up over 50 per cent of the total
world production.34 Due to the high population
base in the US and European Union (EU), these
dairy markets are focused mainly on internal
market dynamics. Dairy is a thinly traded
agricultural commodity as many countries are
focused on maintaining internal balance with only
a few major players involved in export markets.
Only between seven and eight per cent of total
global milk production is traded internationally.35
World milk production by region in 2010
Source: USDA
Beyond the traditional dairy exporters, dairy herds
have also been increasing in South America, and
more specifically Brazil. Although dairy exports
have been increasing from South America,
strong rates on internal milk consumption have
prevented South America from becoming a major
player in the world milk trade.33 Although there
will be many constraints on dairy herd expansion
moving forward, global dairy herd numbers are
predicted to begin stabilising into 2011 and may
even gradually increase. Source: USDA (2010)
Global dairy herd Fresh milk is a highly perishable good which
means most countries with high levels of dairy
Million head 2005 2006 2007 2008 2009 2010
consumption also have high levels of dairy
India 38.00 38.00 38.00 38.50 38.00 38.50
production. Thus, international dairy trade is
EU 25.36 24.94 24.18 24.18 24.19 23.66
dominated by products with a longer shelf-life
Brazil 15.10 15.29 15.93 16.70 17.20 17.60
such as powdered milk products, primarily skim-
FSU12 14.53 13.74 13.13 12.90 12.39 12.17
milk powder (SMP) or whole milk powder (WMP).
United
Combined, these products make up the bulk of
States 9.05 9.14 9.19 9.32 9.20 9.12
international dairy trade at 21 per cent and 26 per
China 6.80 7.90 8.76 8.58 7.12 7.63
cent respectively. Cheese and butter products
New
comprise the balance at 25 per cent and 21 per
Zealand 3.97 4.10 4.16 4.20 4.37 4.47
cent respectively. Fluid milk exports, however,
Argentina 2.10 2.15 2.15 2.15 2.10 2.10
only account for seven per cent of global dairy
Australia 2.04 1.87 1.80 1.64 1.68 1.60
product trade.
Canada 1.07 1.02 1.00 0.99 0.98 0.98
Source: USDA
34. USDA
33. Dairy Australia 35. Fonterra 13
14. Supply
World dairy product exports by type in 2010 Total dairy exports and production have been
steadily increasing as regions which lack dairy
production capacity have seen the strongest
demand growth. Long-term trends in dairy
exports from the three major exporting regions
of the US, EU, and Oceania suggest that a solid
upward trend remains intact. Total net exports
from these three major exporting regions have
increased on an average of one per cent per
year over the past decade leading into 2010.
Looking ahead, FAPRI estimates that net-export
growth from the top three exporting regions will
accelerate with average yearly increases of two
per cent per annum over the next decade.37
Source: USDA (2010)
Total net milk product exports
Australia and New Zealand (Oceania) only account
for six per cent of total world milk production
however, these two countries provide over half
of global dairy trade.36 Efficient, export-oriented
production models, coupled with low domestic
populations and proximity to key markets in Asia
means this region has become the pivotal dairy
supplier to world markets. The EU is the second
largest dairy exporting region, accounting for
31 per cent of global dairy trade in 2010.
World dairy exports by region as proportion of
total world dairy trade
Source: FAPRI, USDA (201)
FAPRI’s data highlights another important trend
in regards to export market share. Due to the
competitive dairy production models in Australia
and New Zealand, and proximity to key import
markets in Asia, the share of Oceania milk
product exports as a proportion of total net trade
among the major exporting regions is expected to
increase over the next ten years.
Source: USDA
14 36. USDA 37. FAPRI
15. Per cent share of export market
Source: Macquarie Research, January 2011
This will likely come at the expense of the higher-
cost producers in Europe and the US. Australia is
expected to experience the greatest increase in
the share of total net trade, climbing 15 per cent
by 2019 compared to an 11 per cent share in
2010. New Zealand’s share of dairy export trade
is also expected to increase to 48 per cent from
a current 46 per cent. In contrast, it is anticipated
that EU market share will decrease to 21 per cent
by 2019 compared to nearly 30 per cent in 2010.
US market share is expected to remain relatively
steady near eight per cent, increasing only slightly
from a current share of approximately 7.5 per cent.
These projections suggest that the countries
which already have established export-oriented,
deregulated dairy industries will be able to benefit
most from emerging market demand. Australia,
with a recently deregulated market, is expected to
receive a much greater share of the new import
demand emerging from Asia.
15
16. Where can the
world expand dairy supply?
Regional supply focus Average producer milk prices 2009 ($US/cwt)
Growth in global milk supply can come about
in two ways – either by increasing the global
dairy herd and/or increasing productivity per
cow. Increasing herd sizes requires significant
investments at the farm level while increasing
productivity per cow generally involves higher
feed and management costs. Thus, there is
usually a time lag between when additional supply
is needed by the market and when producers will
be able to increase production.
Europe
The European dairy production model can be Source: International Dairy Federation (2009)
described as highly policy-oriented. Since World
War II most major dairy producing countries in The EU also makes use of intervention purchasing
Europe and now the EU forged a dairy industry programs to ease market surpluses. The common
reliant on a complex government support reference to “lakes of milk” and “mountains of butter”
program utilising subsidies, quotas, intervention in discussions over the EU’s Common Agricultural
purchasing, and high tariffs.38 This has meant Policy (CAP) describes the EU historical policy of
that internal EU milk prices have generally trended storing large amounts of these products as a price
higher than international equivalent prices over support mechanism. This policy still exists but has
much of this post-war period.39 evolved into more of a safety-net than a price support
program with predetermined limits set on prices and
These measures were implemented at various quantities offered into the intervention program.42
times in order to preserve internal market balance.
The EU’s milk quota system was introduced In recent times the EU has again used the
in 1984 to restrict milk production and control intervention program to ease excess milk supplies
surpluses.40 However, the policy is expected which temporarily developed during the global
to expire in 2015 which means the EU dairy financial crisis. Although EU intervention dairy
industry faces considerable liberalisation over the stocks reached the highest level since 2003 by
next decade. The likely restructuring of the EU the early months of 2010, stocks have decreased
dairy sector is anticipated to align EU milk prices significantly as supplies are absorbed by the export
closer to international prices over time (which and domestic markets. The EU Government’s dairy
could translate to lower prices in the EU). While stocks continue to have an impact on wholesale
the number of dairy farms will likely decrease, milk prices in the EU. With low butter stocks,
farm sizes will increase to take advantage of wholesale butter prices have rebounded much
economies of scale.41 However, because of the stronger than SMP prices. The gap between
high-cost model of dairy production in the EU, it these two prices has in fact widened showing that
is far from certain whether this liberalisation will the EU’s support programs continue to have a
provide a situation which will lead to a significant direct impact on prices. Dutch butter prices have
increase in total EU milk production. rebounded 83 per cent from the lows seen in 2009
to the highs in 2010 while SMP prices have only
increased 40 per cent over the same period.43
38. Dairy Australia
39. DIN Consultancy
40. EAAE Seminar paper: Agri-Food and Biosciences Institute Northern Ireland,
FAPRI, Queen’s University Belfast 42. Joint AES and SFER Conference ‘The Common Agricultural Policy Post 2013’
41. EAAE Seminar paper: Agricultural Economics and Rural Policy Group, Paper presented by Alan Matthews, Trinity College Dublin
16 Wageningen University 43. DIN Consultancy
17. EU dairy wholesale prices Thus, even though the EU’s dairy herd is
expected to continue declining over the next
decade, increasing productivity will support slow
incremental supply growth. FAPRI data suggests
EU milk production should continue its slow
incremental growth of 0.30 percent over the next
decade, roughly in line with incremental demand
growth.45
EU dairy balance
Source: DIN Consultancy
As highlighted in the table, Global dairy herd, the EU’s
dairy herd has shrunk significantly over the past five
years; declining 6.7 per cent or 1.7m head between
2005 and 2010. Poor returns due to weak demand
growth domestically and high feed prices has
contributed to the decline over the past five years.
However, like most other major dairy producing Source: USDA, FAPRI
regions, the EU is experiencing consolidation in the
industry as the number of farms shrinks while at the The EU dairy market could remain relatively
same time the sector is experiencing an expansion static, as a result of incremental supply growth,
in farm sizes. Efficiency gains are driving this process over the medium term due to existing entry
of consolidation. In the EU 4,723kg of milk were barriers (quotas), the distortionary impact of
produced per cow in 1999 but this has increased various price intervention measures, and the
1,000kg/cow or nearly 20 per cent by 2010.44 high costs associated with production. In the
medium-term, increasing market liberalisation
EU herd decreasing along with in the EU will provide efficient producers with
productivity gains an opportunity to expand production. However,
there could be an extended period of adjustment
to this liberalisation and to the higher feed grain
price plateau which could result in temporary
contraction and consolidation before the industry
would be in a position to expand once again.
However, at this point, the length and severity of
the adjustment process is highly uncertain.
Source: FAPRI
44. FAPRI 45. FAPRI 17
18. Where can the
world expand dairy supply?
The United States
The US dairy production system is highly intensive and heavily exposed to increasing feed costs.
Milk is predominantly produced in consolidated feedlot operations which utilise large amounts of feed
grains and protein meals. This milk production system can take advantage of economies of scale while
the high-intensity feeding rations mean productivity per cow is much higher than the world average. In
2010 the average milk produced per cow in the US stood at 9.5t/year, this compares to 5.75t/year in
Australia; 5.6t/year in the EU; and only 3.7t/year in New Zealand.46
US dairy farm concentration
Source: USDA
However, the major inhibitor to US dairy production growth going forward is cost. Whereas Australia
and New Zealand can take advantage of a relatively warm climate and pasture-feeding year-round,
much of US dairy production occurs in states such as Wisconsin which experience cold winters. Thus,
the average US dairy operation is much more input-intensive, requiring more buildings, equipment, and
feed as well as labour.47
46. USDA
18 47. University of Wisconsin-Madison
19. Productivity per cow US dairy production margins
Source: USDA
Source: USDA
Feed costs alone account for approximately 70 per
cent of total dairy operating costs in Wisconsin.48 A key determinant of dairy producer profitability
According to USDA data dairy feed prices have in the US is the milk to feed price ratio. The milk
increased 69 per cent between 2003 and 2010. to feed price ratio trend has grown increasingly
The drought in Russia during the summer of 2010 negative for US dairy farmers over the past decade.
combined with disappointing US corn yields are a The following graph depicts the milk to feed price
reminder that significant grain price volatility may ratio since 1985 as well as an indicative range
persist in the future. Accelerating feed grain and between which US dairy farmers typically begin to
protein demand from Asia and biofuel use worldwide, expand production. It suggests that since late 2007
has proved difficult for livestock producers in the US there has been little incentive to expand dairy herds
to keep up with, due to heightened competition for significantly. It also illustrates that the current recovery
available supplies. This has pushed grain prices well in milk prices relative to feed prices still does not
above historical averages. indicate a solid milk supply expansion is imminent.49
The unfavourable milk to feed ratio will likely mean
Feed prices increasing in the US that the US dairy herd will struggle to grow over the
medium-term. To turn this situation around the US
dairy market would need to see either a structural
shift higher in milk prices internationally or a structural
shift lower in feed prices.
Source: Thompson Reuters
48. USDA 49. USDA 19
20. Where can the
world expand dairy supply?
US milk:feed price ratio US monthly dairy cow slaughter rates
Source: USDA
Source: USDA
Similar to the trend in all major dairy producing
US dairy herd size falling; productivity growing regions, the US dairy herd has decreased
over the past few years while productivity has
increased. US dairy cow productivity is highly
seasonal with peaks in the spring and troughs
into the autumn. Average production per cow
per month in the US has increased eight per
cent between 2005 and 2010. Thus, despite the
record monthly dairy cow slaughter rates brought
about by the herd liquidations in 2009 and the
early months of 2010 (shown above), total milk
production did not fall significantly owing to these
productivity gains.50
It is also important to remember that the US dairy
industry operates alongside various government
intervention programs including direct subsidies and
Source: USDA
intervention stock purchasing programs. The 2008
Farm Bill included even greater potential support
These economic dynamics have had clear
than previously existed for dairy farmers by providing
implications for the size of the US dairy herd. US
greater protection against decreases in milk prices
dairy herd had previously posted consistent growth
or feed cost increases.51 The dairy intervention stock
rates, increasing by four per cent or 351,000 head
program has receded somewhat in importance if
between January 2004 and December 2008. By
looked at from the basis of stocks (government and
December 2009 the US dairy herd had peaked
private combined) as a proportion of total domestic
at 9.33m head. The herd decline has bottomed
consumption. Compared to the heavy stock-build
out near 9.1m head by late 2009 due to the poor
seen in the early 2000s, the increase in dairy product
margins outlined above. High dairy slaughter
stocks through 2008 and 2009 never surpassed
rates through 2009 and 2010 have reduced the
15 per cent proportion per total domestic demand,
dairy herd by 2.3 per cent between 2008 and the
compared to 20-25 per cent in the early 2000s.
end of 2010. Improving margins into 2010 has
led to a stabilisation of the dairy herd at 9.18m
head. However, with the unfavourable milk to feed
ratios it is unlikely that the herd size will increase
50. USDA
20 significantly over the medium or even longer term. 51. ABARE
21. US dairy product stocks This matching of production growth (roughly four
per cent over the past five years) and consumption
growth (also at four per cent) will very likely limit
South American milk product export growth until
the region’s per capita consumption rates begin to
level off.55 This may take many years due to the
high population in Brazil and other South American
countries coupled with per capita consumption
rates only half that of countries such as Australia
and Canada.
Balanced dairy market in South America
provides little room for exports
Source: USDA
Although the US dairy industry retains expansion
capacity through herd or productivity growth,
higher costs of production and relatively high
internal dairy stocks will continue to constrain
expansion over the medium term. This will be
an important factor that may provide other dairy
producing regions, which are not as heavily
exposed to grain prices, a key advantage to
attain a greater share of demand growth in
emerging markets.
Source: USDA
South America
One possible region which can sustain long-term New Zealand
dairy production growth is South America. South Along with Australia, New Zealand dairy
America is endowed with generally ample feed production can be characterised as a
grain and oilseed supplies, low labour costs, deregulated, export-oriented, grass-fed
and vast grasslands which can support larger production system. In fact, New Zealand is the
and more productive dairy herds. In fact South dominant milk exporter in the world market
American countries, like Brazil, are increasing per accounting for 34 per cent of world dairy trade in
capita dairy consumption at a rapid pace. 2010.56 New Zealand has been one of the only
The South American dairy markets are largely countries in the world to expand milk production
balanced with production increasing to supply throughout the global financial crisis of 2008-
the fast growth pace of domestic milk demand.52 2009 thereby continuing to entrench its dominant
This leaves little room for exports.53 Total dairy position in global dairy trade.
product exports from South America reached
296,000 tonnes in 2009; only a fraction of the
2.6mt of combined New Zealand and Australia
dairy exports54.
52. Dairy Australia
53. Dairy Australia 55. USDA
54. USDA 56. USDA 21
22. Where can the
world expand dairy supply?
Concentration of New Zealand Herd size and overall production moving higher
dairy production
Source: Dairy New Zealand, USDA
The structure of the New Zealand dairy industry
has evolved quickly into a highly consolidated
system. Average herd size per farm has increased
from only 154 head in 1988 to 366 head by
2008, an increase of 137 per cent. The number
of herds in production in New Zealand has
Source: Dairy New Zealand (2009)
meanwhile remained on a steady downtrend,
declining 21 per cent between 1988 and 2008.58
New Zealand dairy herd growth has remained
on a steady uptrend for many years. Between Increasing consolidation and
2000 and 2010 New Zealand expanded its dairy efficiency gains in New Zealand
cattle herd by 28 per cent to a record high 4.5m
head.57 Milk production has also remained on a
steady uptrend increasing 36 per cent over the
same period. Although New Zealand’s annual
milk production per cow remains low compared
to other major dairy production regions at only
3.7t/head compared to the world average at 3.5t/
head and the US at 9.5t/head, New Zealand’s
dairy sector is still highly competitive. Its low-cost
grass feeding production system has effectively
insulated the industry to a large degree from
swings in global grain prices over history.
Source: Dairy New Zealand
These industry dynamics, within the context
of a deregulated, export-led dairy market have
produced efficient economies of scale and
allowed New Zealand dairy farmers to secure a
place among the world’s largest milk exporters.
22 57. USDA 58. Dairy New Zealand
23. New Zealand’s total dairy product exports In Australia the dairy industry comprises a large
slumped in 2008 and 2009 from the all-time proportion of the rural economy. Measured in
record highs established in 2007. Export volumes value of production, dairy comprises roughly 10
declined 11 per cent between 2007 and 2008 per cent of the agricultural sector in Australia,
but quickly stabilised into 2009 with a growth or $A3.8 billion in 2009.59 Dairy production is
rate of eight per cent year-on-year. For the 2010 centred in the southeast corner of Australia, in the
season, New Zealand dairy exports rose to states of Victoria, Tasmania, and South Australia.
2.1mt, up 21 per cent over 2009. The trajectory These areas combined comprise 80 per cent
of consolidation and improving productivity per of national dairy output.60 Dairy production is
cow will mean New Zealand will likely maintain concentrated in these coastal regions as these
solid production and export growth over the areas generally received higher amounts of
foreseeable future. natural rainfall.
New Zealand dairy product exports Dairy producing regions of Australia
Source: USDA
Australia
Despite producing a small proportion of the world’s
total milk supply, Australia is among the world’s
major players in global dairy trade. This role as Source: ABARE (2010)
major dairy supplier to the world is expected
to increase over the coming decades. Dairy Due to the warm climate and abundance of pasture
farmers in export-oriented regions have generally lands, Australia is well suited for dairy farming. This
fared better during world economic slowdown favourable combination of natural resources means
compared to regions focused on maintaining an that the Australian dairy industry is predominantly
internal dairy supply and demand balance. The pasture-based which results in an efficient, low-
deregulated dairy industry in Australia has enabled cost milk production model when compared to
greater flexibility to adapt to changing global many other major dairy producing countries (EU
market dynamics and capitalise on growing import and US).61 Only two per cent of the Australian dairy
demand from Asia. Certainly the geographical sector operates as complete feedlots while over
proximity to these major import markets is a key 75 per cent utilise some proportion of both pasture
reason for this competitiveness. Australia is also and supplementary feeding.62
less exposed to high international grain prices due
to a low-cost production model based on a high
proportion of grass-feeding operations.
59. ABARE
60. Dairy Australia
61. Diary Australia
62. Dairy Australia 23
24. Where can the
world expand dairy supply?
The dairy industry is a significant contributor Total Australia milk production
to overall Australian agricultural earnings
Source: ABARE
Source: Australian Bureau of Statistics
Australian milk production peaked in 2001 at 11.3
The Australian dairy market has been gradually billion litres shortly after the market deregulation
deregulated since July 2000 leading to a program was initiated. Drought and market
rationalisation and consolidation of the sector over consolidation since then have led to a decline in
the past decade.63 This has aligned international milk production into 2009. Australia’s dairy herd
dairy prices with those received by the Australian fell by 26 per cent between 2001 and 2009 with
farmers and has resulted in a highly cost-efficient total milk production declining 20.5 per cent over
production system geared toward the export this period. Poor pasture conditions and high
markets. This has decreased the number of farms feed costs contributed to this herd liquidation
but increased farm size and efficiency.64 Indeed, however, improving productivity also played a
the structure of the Australian dairy industry is role. Through consolidation and efficiency gains,
changing rapidly. The number of dairy farms Australian producers have been able to steadily
operated by a single person only or with a partner push up milk yields per cow. In 2000, the average
(typical family farm) has fallen rapidly from 43 per milk yield per cow stood at only 4,800 litres/
cent in 2007 to 28 per cent by 2009.65 Between cow, but has since increased 15 per cent to just
1991 and 2007 the number of dairy farms in under 5,700 litres/cow by 2010.67 This means
Australia declined by approximately one third.66 that through flexibility in supplementary feeding
Over the same period, the number of cows per rations producers have been able to increase milk
farm also increased significantly. production in 2010 despite no significant increase
in dairy herd numbers.
Providing there is a return of ample rainfall across
eastern Australia in the 2010 season the dairy herd
size should begin to stabilise and slowly increase in
2011. Additionally, ample feed supplies should also
allow milk output to make steady gains. Over the
longer term, Australian dairy producers still have
room to increase productivity per cow. Average
annual milk produced per cow in Australia by 2009
had reached 5.8t/head compared to 3.8t/head in
1990.68 This suggests that Australian producers
have managed to increase productivity rates at one
63. Dairy Australia
64. ABARE
24 65. Dairy Australia 67. ABARE. USDA
66. ABARE 68. USDA
25. of the fastest rates of any major dairy producing are expected to increase another 3.6 per cent
region. Thus, even though Australia maintains a in 2011, and thereafter maintain a solid uptrend
grass-based production system, productivity is into the end of the decade.71 Indeed, Australia is
increasing very quickly through improvements expected to be one of the principal beneficiaries of
in herd management and strategic use of feed growing milk product demand throughout Asia.
supplements. Clearly, if the economics work for
feeding more high protein feeds as supplement to Total value of Australian milk exports
pastures, the Australian dairy sector can continue
to boost productivity levels going forward.
Australia dairy herd declining into 2009, but
productivity continues higher
Source: ABARE
Judging from the demand analysis provided in this
report incremental supply growth from Australia
will be required longer term. With the slowdown in
milk production throughout most major producing
countries into 2010, higher feed prices and
potential for market liberalisation, it is important
Source: ABARE for Australia to provide efficient supply growth. As
milk demand continues to recover in the developed
Australia also has the advantage of well economies and accelerates in developing countries,
developed export markets throughout Asia. Japan Australian dairy producers are well placed to seize
remains the largest buyer of Australian dairy the opportunities that will arise.
products accounting for 51 per cent of Australia’s
cheese exports and four per cent of SMP exports Australia dairy product net trade
in the 2008/09 season.69 Other major buyers of
Australian dairy products (SMP, WMP, cheese
and butter) include China, Malaysia, Philippines,
Singapore, Thailand and Saudi Arabia.
Australia’s milk product exports have declined
over the last decade along with the drought-
induced dairy herd reduction. Total net-trade of
dairy products in Australia declined 40 per cent
between 1999 and 2008.70 However, there are
signs that this trend is beginning to turn around.
According to FAPRI’s latest figures net dairy trade
increased 5.8 per cent into 2009 and another
seven per cent in 2010. Projected net exports
Source: USDA, FAPRI forecasts
69. ABARE 25
70. FAPRI 71. FAPRI
26. Conclusion
Demand for dairy is expected to grow due to increasing population, rising gross domestic product
(GDP), income growth and increased urbanisation. These factors are leading to changes in diets and
increased consumption of dairy products. In addition, the nutritional benefits of dairy are also driving
demand as consumers and governments in developing countries are becoming increasingly aware
of these benefits and are starting to promote the consumption of these products. Export focussed
countries, such as Australia, are well placed to benefit from this increased demand, in particular the
growing demand from South East Asia.
While there are a range of factors driving demand for dairy products, supply must increase to meet this
demand. Supply challenges include the increased cost of production, quality of products, few surplus
producing countries surplus producers and reduction of herd sizes.
The majority of countries have dairy supply deficits with only a handful of countries being surplus
producers including Australia and New Zealand. Australia has the benefit of a mature, well established
dairy industry, trade relationships with key growing markets and is also recognised as a reliable source
of quality products.
The structural changes occurring in global dairy markets have seen international dairy product prices
break through $2,000/t, with this price level effectively becoming the new floor post-2007. It is
anticipated that the return of dairy demand growth will continue, in turn leading to growth in supply
constraints to the global market and enabling surplus producers to take advantage of these conditions.
Global dairy production cost comparison
26
27. Contents about Macquarie Agricultural Funds
For more information
Management, please contact:
Tim Hornibrook,
Co-Head, Macquarie Agricultural Funds Management
P: +61 2 82320579
F: +61 2 82329999
E: tim.hornibrook@macquarie.com
Macquarie Agricultural Funds Management
Macquarie Group Limited
1 Shelley Street, Sydney NSW 2000
Australia
27