1. Weekly News

Turkey

Challenges in Turkey's Dairy Industry

Turkey's dairy industry faces rising production costs and shrinking profit margins. A surplus of milk and milk powder has forced breeders to send their dairy cows to slaughter. Decreased export demand has further aggravated the situation.. Problems in the agriculture and livestock sectors have negatively impacted local producers and consumers.

Germany

Germany’s Milk Prices Declined in Jun-24

In Jun-24, the average milk price in Germany was USD 49.63 (EUR 45.53) per 100 kilograms (kg) of standard milk, an increase of USD 0.49/100 kg (EUR 0.45/100 kg) from May-24. The organic milk price also rose, increasing by USD 0.20/100 kg (EUR 0.18/100 kg) to an average of USD 61.30/100 kg (EUR 56.24/100 kg) in Jun-24. Conventional raw milk prices in Germany have risen since Sep-23, following their lowest point in Aug-23. Similarly, organic milk prices have maintained an upward trajectory after hitting their lowest point in Jul-23, with only a brief dip in Apr-24.

United States

Concerns Rise Over Underreporting of Bird Flu Cases in US Dairy Farms

Concerns are growing about the underreporting of bird flu cases on dairy farms in the United States (US), as many farms are reluctant to report due to fears of financial loss.

The United States Department of Agriculture (USDA) has documented the virus in 190 dairy herds across 13 states, but experts believe the actual number is higher. Farmers are reluctant to test due to fears of economic repercussions, leading to the potential virus spread among humans. So far, Michigan and Colorado have implemented more stringent testing measures to address this issue.

Vietnam

Vietnam's Animal Feed Imports Increased in 2024

In the first seven months of 2024, Vietnam's animal feed and raw material imports increased by 2.2% year-on-year (YoY), totaling USD 2.91 billion. This increase is driven by foreign direct investment enterprises, which imported USD 1.22 billion, marking a 5% YoY increase. Domestic enterprises also contributed to the growth, importing USD 1.69 billion, a slight increase of 0.1% YoY. Argentina emerged as the largest supplier of these products to Vietnam, followed by the US and Brazil. This import increase is due to the growth in Vietnam's livestock industry, which has the world's fifth-largest herd number of pigs and the largest in poultry. In addition, the country's raw milk production ranks fourth in the Association of Southeast Asian Nations (ASEAN) region.

Russia

Russia’s Processed Milk and Cheese Production Increased in H1-2024

In the first half of 2024, Russia's processed milk and cheese production increased by 4.3% and 11.9% YoY, respectively. The country's self-sufficiency in dairy products is over 98%, and this demand is met through domestic production and imports from Belarus. Milk and cheese retail prices have seen minimal increases in line with inflation. The Russian Ministry of Agriculture does not anticipate a significant increase in dairy product prices despite rising production costs and the Central Bank's key rate. The ministry attributes this to increased raw milk and finished product production and government support measures.

China

China's Infant Formula Market Faces Challenges

China's infant formula market faces challenges due to declining population numbers, shifting consumer preferences, and stricter regulations. The country’s population is estimated at 1.419 billion in 2024, reflecting a 0.23% YoY decline, impacting the demand for infant formula. The imports have decreased as domestic production ramps up to reduce reliance on foreign products. New regulations have further reshaped the industry by enforcing stricter safety and quality standards, leading to the exit of small and medium-sized firms and allowing larger companies to expand their market share. Despite these challenges, the demand for premium and organic products remains strong, driven by increasing health awareness among Chinese parents. As the market evolves, manufacturers are encouraged to focus on innovation, introducing products that offer additional health benefits to remain competitive.

2. Weekly Pricing

Weekly Powdered Milk Pricing Important Exporters (USD/kg)

Yearly Change in Powdered Milk Pricing Important Exporters (W33 2023 to W33 2024)

Germany

Germany’s powdered milk prices increased by 9.09% week-on-week (WoW) to USD 3.24/kg in W33 2024. Prices also observed a similar trend, rising 9.09% month-on-month (MoM) from USD 2.97/kg in W30 2024 and 2.53% YoY from USD 3.16/kg in W33 2023. Germany’s milk prices have been on an upward trend since the middle of 2023 due to increasing production costs and heat stress. In addition, the high fat and protein content has increased the value of raw milk price, further contributing to this increase.

Belgium

In W33, powdered whole milk prices in Belgium decreased by 0.54% WoW to USD 3.70/kg from USD 3.72/kg in W32. No change in MoM prices was observed. On August 1, 2024, the Ministry of Agriculture and Food of Belarus increased the minimum prices for dairy products exported to the Russian market, potentially impacting exports to Russia negatively. Furthermore, starting August 9, 2024, the government has mandated that companies sell whole milk powder and butter through the Belarusian Universal Commodity Exchange (BUCE). This decision is expected to impact production and prices.

Netherlands

Skimmed milk powder prices in the Netherlands increased by 16.88% WoW to USD 2.7/kg in W33 compared to USD 2.31/kg in W32, reflecting a 13.46% MoM and 11.57% YoY rise due to declined raw milk production. Western Europe’s milk production declined in H1-2024 due to extreme heat and wet weather in leading dairy production countries, including the Netherlands, Denmark, Ireland, and Britain. This has led to a shortage of cream and raw materials for cheese production, affecting export markets and demand.

France

In W33, France's semi-skimmed milk powder prices increased by 4.8% WoW to USD 3.93/kg compared to 3.75/kg in W32. The MoM price increased by 4.25%, and the YoY prices increased significantly by 68.67%. The price increase is due to the reduced raw milk production and the increasing demand for cheese during the tourist season. France's dairy industry faces challenges from Bluetongue serotype three and Epizootic hemorrhagic disease (EHD) outbreaks. Two temporary vaccines for serotype 3 are available, and the government is providing these free of charge to farmers in the regulated zone. However, there is no compensation for economic losses from the measures or the disease. There is currently no vaccine for EHD, but one is in development.

Poland

In Poland, skimmed milk powder prices decreased by 4.21% WoW to USD 2.50/kg in W33. The monthly price change was more significant, dropping by 14.38% MoM from USD 3.92/kg in W30, reflecting a weak powder market due to low demand. Poland’s milk powder exports declined due to decreasing demand from China, negatively affecting local production and prices. Consequently, many milk processing factories in Poland are cutting milk powder production to avoid losses.

3.Actionable Recommendations

Managing Dairy Production Growth

Russia should manage its dairy production growth by closely monitoring production levels and adjusting subsidies based on market demand to prevent oversupply and maintain stable prices. Expanding export markets for milk and cheese, particularly in regions with growing demand, will capitalize on increased production. Supporting innovation in dairy processing and product development can help Russian producers differentiate themselves domestically and internationally.

Stabilizing the Dairy Industry

Turkey should address its dairy industry challenges by developing strategic export partnerships to stabilize prices and prevent further losses. Immediate financial aid, including subsidies and low-interest loans, is crucial to support dairy farmers and avoid the widespread slaughter of dairy cows. Additionally, Turkish producers should invest in value-added dairy products, such as cheese and yogurt, to improve profit margins and attract higher-paying markets.

Enhancing Disease Management in Dairy Farms

France's dairy industry should enhance disease management by improving Bluetongue and EHD vaccination strategies. Collaborating with government agencies on rapid vaccine development and distribution is crucial for managing outbreaks, ensuring the stability of milk production, and supporting the dairy sector's overall health.

Sources: Tridge, Sondakika, Nieuwe Oogst, Noticias Agricolas, AgroInfo.vn, Milk News, Agroberichten Buitenland