Opinion

Global Cheese Trade: A Tridge Overview

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Australia
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The global dairy industry is fragmented into regions, and the trade of dairy products often happens within regional segments. While milk is mostly traded within the regional market, products like skim milk powder (SMP) and cheese have some intra-regional trade. The European Union (EU) and Oceania countries are the main exporters of dairy commodity products, with the EU and the US being the biggest cheese exporters. China, Saudi Arabia, the UK, the US, Japan, and Mexico are major importers of cheese. The cheese market is expected to grow to $323.75 billion in 2027, driven by increasing demand for local, sustainable, and organic food production.

The global dairy industry is fragmented into regions such as Europe, the United States (US), Oceania, Asia, South America, and Africa. The trade of dairy products often happens within regional segments. Due to its high perishability, milk is mostly traded within the regional market, with only 5% of global cow milk production traded on the international market. However, for products with longer shelf life, such as skim milk powder (SMP) and cheese, there is some intra-regional trade. The European Union (EU) and the Oceania countries of Australia and New Zealand are the main exporters of dairy commodity products.

Cheese is a type of fermented product made from milk by removing its water content, making transport easier and giving it a longer shelf life. The product comes in many forms, colours, and varieties. Examples of the different types of cheeses are processed cheese, salty cheese (e.g., Edam, Gouda), stretchy cheese (e.g., Mozzarella), and dry salt cheese (e.g., Cheddar, Colby).

The cheese trade is mostly concentrated regionally and its markets are segmented. However, over the years, increased demand from domestic populations and the demand for cheese classes meant that it’s been incumbent to import from major producers to feed those that demand it. The EU – Germany, Netherlands, France, Belgium, Italy – and the US are the biggest cheese exporters by value, accounting for more than half of the global cheese exports in 2021 alone. The market for cheese has thus grown over time to meet the ever-growing demand for it. From 2020 to 2021 alone, the value of cheese exports rose by 10% to $36.6 billion.

China, Saudi Arabia, the United Kingdom (UK), the US, Japan, and Mexico are the major importers of cheese in recent years. In terms of production, the EU and the US are the biggest producers, with Russia, Brazil, and others producing only a fraction of what the EU and the US produce. In 2022, according to data from Statisca, the EU produced 10.55 million mt (mmt) of cheese, followed by the US, which churned out 6.35 mmt of cheese.

According to data from the World Integrated Trade Solutions, in the calendar year 2021, the EU combined topped global cheese exports by shipping out 143 million kg at a value of 697 million dollars. From the Food and Agriculture Organisation 2022 dairy market review report, the global cheese export trade is expected to remain unchanged from the 2021 trend. The reports further forecast that world cheese exports would remain unchanged in 2023 at 3.5 mmt. This is driven by import demand declines in China, Japan, and in Australia.

On the other hand, the fall in imports will be offset by a demand uptick from the UK, Mexico, and Saudi Arabia. In the case of Saudi Arabia, a fall in domestic milk production is pushing its import demand up. In the UK, easing border restrictions will stimulate its recovery in cheese exports.

Where do cheese exports end up? US cheese exports, about 35% of which, go to its neighbour Mexico. EU exports are mostly destined for the US and Japan. Moreover, there is a robust cheese trade among the EU countries and the UK.

The market for cheese exports is so huge that the cheese market is expected to grow to $323.75 billion in 2027 at a CAGR of 6.7%. The increasing demand for local, sustainable, and organic food production is driving the growth of the cheese market.

In conclusion, although dairy commodity markets are segmented regionally, there is still a market for exportable products like cheese and SMP. Retail service demand has been strong and continues to grow over the years, while food services demand as well is pushing bulk cheese purchases up and keeping it brisk. The trade of Cheddar on the Global Dairy Trade Auction highlights the importance of cheese in the global dairy commodity trade. It has also been a good indicator for followers of the product, likewise buyers and sellers, for those even not in the Oceania region.

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