1. Weekly News

Global

Global Milk Production Costs Rose in 2024

From 2019 to 2024, global milk production costs rose by 14%, driven by higher labor and feed expenses, regulatory pressures, climate change, and rising interest rates. The most significant increases occurred in Argentina, Australia, New Zealand, China, Ireland, and the Netherlands, with over 70% of the cost surge happening since 2021. Oceania maintained the lowest production costs, while the United States (US) producers faced challenges due to a stronger dollar. Moving forward, operational expenses will likely remain high and volatile, making cost efficiency crucial for dairy farmers, especially in regions with production limitations.

Indonesia

Indonesian Farmers Protest Cheap Milk Imports

Indonesian dairy farmers are protesting the influx of duty-free, cheap skim milk from Australia and New Zealand, which has reduced demand for local milk. In response, the government has promised stricter regulations to ensure more local milk is processed, suspending imports until this is enforced.

Japan

Japan Sets Import Quotas for Butter and Skim Milk Powder for FY 2025

The Ministry of Agriculture, Forestry, and Fisheries of Japan has established import quotas for butter and skim milk powder for fiscal year (FY) 2025, setting butter imports between 8,000 to 10,000 tons and skim milk powder imports at a maximum of 750 tons. Despite low demand for skim milk powder used in products like yogurt, butter demand remains stable, particularly in the foodservice industry. The Ministry will manage these quotas through monthly butter and demand-based skim milk powder auctions, ensuring compliance with WTO commitments.

Netherlands

Cattle Mortality Increased in 2024 Due to Bluetongue

In 2024, Dutch dairy farms reported 13,503 more cattle deaths than in 2020/22, exceeding the 9,500 excess deaths recorded in 2023. Bluetongue outbreaks increased, with 4,176 cases reported by October 17, compared to 2,273 in 2023. Over 64% of dairy farms showed virus exposure, as indicated by tank milk antibody analysis. Vaccination reduced mortality, but delays in administration left 60% of vaccinated farms unprotected in time. Farms without prior infections or vaccinations saw 1.6 times higher mortality rates. For calves, proper vaccination effectively prevented excess mortality. By early 2025, a combination of immunity from prior infections and vaccination is expected to provide strong protection.

Russia

Russia's Milk Production Reached 26.3 Million Tons in 2024

According to Rosselkhozbank's preliminary data, Russia's milk production grew by 2% in 2024, reaching 26.3 million tons. This increase is largely driven by a rising demand for dairy products, with per capita consumption reaching a record 250 kilograms (kg). The demand for milk and milk-based products, including cheeses and butter, has surged, prompting growth in related production. Russia is meeting its internal needs while expanding its export potential, with milk product exports expected to exceed 1 million tons by the end of 2024, a 22% increase from the previous year. The growing demand for milk has fostered investment in both production and processing, supporting further growth in the sector over the next year.

Russia Increased Dairy Industry Support Amid Economic Challenges

In 2024, Russia allocated USD 777 million (RUB 80 billion) to boost domestic dairy production, 1.5 times more than in 2023. The Deputy Prime Minister announced continued low-interest loans and subsidies for dairy farmers, including reimbursement of up to 42% of dairy plant construction costs. The government aims to raise milk production to 38.5 million tons by 2030, up from 34 million tons in 2023. Despite economic tightening, agricultural subsidies will remain in 2025 but decrease by 24% to USD 4.96 billion (RUB 507.4 billion). Additional funds will support machinery leasing, railway

Ukraine

Ukraine's Milk Prices Declined Amid Surplus and Lower Demand in Jan-24

In late Jan-24, Ukraine's milk procurement prices decreased due to an oversupply of raw milk and weaker demand. Extra-grade milk averaged USD 0.50/kg (UAH 18.40/kg), higher-grade milk dropped to USD 0.49/kg (UAH 18.05/kg), and first-grade milk averaged USD 0.46/kg (UAH 16.95/kg). The overall price fell to USD 0.49/kg (UAH 17.80/kg). This drop is linked to lower global butter prices, reducing the demand for raw milk. However, milk prices could rise again if butter prices increase.

United States

US Milk Production Declined in Dec-24

US milk production fell by 0.5% in Dec-24 compared to the previous year, totaling 18.747 billion pounds (lbs). While cow numbers increased by 3,000, milk output per cow declined by 10 lbs. Production was boosted in states like Texas and Idaho but decreased significantly in California, Arizona, and Oregon due to various regional factors.

2. Weekly Pricing

Weekly Powdered Milk Pricing Important Exporters (USD/kg)

Yearly Change in Powdered Milk Pricing Important Exporters (W5 2024 to W5 2025)

Germany

Milk prices in Germany continued to rise, reaching USD 4.61/kg in W5, marking a 2.22% week-on-week (WoW), 72.66% month-on-month (MoM), and 58.97% year-on-year (YoY) increase. The sharp price surge is driven by adverse weather conditions, a 3.3% YoY decline in the dairy cow population, and disruptions caused by Foot-and-Mouth Disease (FMD) and African Swine Fever (ASF) outbreaks, impacting both milk production and processing. Additionally, rising global milk production costs have further contributed to price inflation. Given these factors, upward pressure on milk prices is expected to persist.

Belgium

Milk prices in Belgium stood at USD 3.74/kg in W5, showing a minor 0.53% WoW decline, with a more noticeable drop of 3.86% MoM and 24.90% YoY. This downward trend reflects stabilization after the high prices in late 2024, which were driven by supply constraints. The decline can also be attributed to weakened demand and increased milk supply as winter progresses, with cows producing more milk in cooler conditions. If supply remains steady and demand does not increase, prices may continue to face downward pressure.

Netherlands

Milk prices in the Netherlands fell sharply by 40.55% WoW to USD 2.17/kg in W5, returning to normal levels after a sharp surge in W3. The latest prices indicate market stabilization, with MoM changes showing only a minor 0.46% decline. Despite recent drops, prices remain 4.33% higher YoY, as supply this season is lower than last year, while local and international demand remains strong.

France

Milk prices in France rose by 6.83% WoW to USD 3.13/kg, marking a market adjustment after declines in the previous two weeks. MoM prices also increased by 2.62%, signaling a short-term correction. However, YoY prices remain 3.69% lower, reflecting France’s expanding milk production, which grew 1.5% YoY in the first eleven months of 2024. With a stable supply, prices are expected to remain relatively low in the coming weeks.

Poland

Milk prices in Poland fell by 12.07% WoW to USD 2.84/kg in W5, correcting after a sharp increase in W3. Despite this drop, MoM prices surged by 20.34%, and YoY prices rose by 1.43%, reflecting a tightening milk supply across Europe. Outbreaks of FMD and ASF have disrupted production and processing, leading to supply constraints and increased demand for Polish milk, keeping overall price trends upward.

3. Actionable Recommendations

Develop Long-Term Disease Mitigation Strategies in Europe

Europe is facing disruptions due to animal disease outbreaks, affecting supply and pricing. Dairy producers should implement biosecurity measures, diversify sourcing regions, and invest in vaccination programs to reduce production losses. Governments and industry stakeholders should incentivize disease control to maintain stable supply levels and prevent price shocks.

Increase Dairy Processing Investments in Russia

Russia’s dairy production growth, increased domestic subsidies, and rising consumer demand create an opportunity for investment. Dairy processors and agribusiness investors should establish joint ventures or expand existing processing facilities in Russia to capture the growing demand for milk-based products. With government subsidies available for plant construction, early movers can benefit from reduced capital costs.

Sources: Tridge, Agri News RU, Agro Forum, AG Proud, Agro Portal UA, Dairy Business, Maff, Milk News, Veeteelt