In W43 in the dairy landscape, the National Interprofessional Center for Dairy Economy (CNIEL) expects global raw milk production to increase by 2.1% year-on-year (YoY) to 956 million metric tons (mmt) in 2023. Notable YoY expansions are anticipated in Belarus at 6%, Turkey at 3.6%, New Zealand at 2.6%, the European Union (EU) at 0.7%, and the United States (US) at 0.5%. France’s raw milk production is poised to grow by 3.5% YoY. These gains are attributed to high livestock productivity and the adoption of new technologies, particularly in the US and Europe. However, the EU and the US may see relatively lower increases due to reaching their production capacity limits. Conversely, raw milk production decreases are anticipated in Chile at -4.7% YoY, Japan at -4.3% YoY, Australia at -1.7% YoY, and Argentina at -0.3% YoY. These YoY declines are potentially due to issues such as drought and technical production problems affecting green feed for livestock.
The average raw milk price in Ukraine has increased by USD 0.013 over the past month, reaching USD 0.36 per kilogram (kg) without value-added tax (VAT) for extra-grade milk as of October 24. Extra-grade milk prices have risen by USD 0.015 since late Sep-23 and by USD 0.0036 from early Oct-23. The farm-gate price range for extra-grade milk has expanded, varying from USD 0.34 to USD 0.37/kg, with a USD 0.016 increase at the lower limit and a USD 0.014 rise at the upper limit in the last month. Currently, higher-grade milk averages USD 0.35/kg without VAT, while premium milk is priced between USD 0.33 and 0.35/kg without VAT. First-grade milk commands an average price of USD 0.33/kg without VAT. The price hikes are attributed to reduced milk supplies to processing facilities, likely linked to decreased cow productivity due to hot weather in Jul-23 and Aug-23. Increasing consumer demand and the shift to processing extra-grade milk also contribute to these price increases. However, competition from European imports may limit further price growth as Ukrainian purchase prices approach EU levels. The Association of Milk Producers advocates for a reduced VAT rate on milk and dairy products to support the domestic industry and consumers.
The National Bureau of Statistics reports that China's milk production soared by 7.5% YoY to 17.94 mmt in H1-2023, while dairy product output grew by 3.6% YoY to 20.9 mmt. However, dairy processing increased by 3.6%, indicating a decline in dairy consumption. This trend is largely driven by intense price competition in the dairy market leading to overproduction, with distribution stores engaging in discount events. Consequently, dairy product imports reached 2.02 mmt, valued at USD 8.8 billion as of Aug-23, an 11.8% YoY drop in volume and a decrease of 8.3% YoY in value. Among these, powdered milk products dropped by 7.8% YoY to 1.48 mmt while value shrank by 9.1% YoY to USD 7.7 billion. Milk imports reached 542 thousand metric tons (mt) worth USD 1.1 billion, a drop of 21.1% YoY in volume and a decrease of 1.9% YoY in value.
Lastly, Brazil's dairy industry faces a severe crisis as milk prices plummet, compelling many farmers to consider exiting the sector for more profitable alternatives such as grain cultivation. The price farmers receive for their milk has dropped significantly, causing income losses. The dairy import surge, particularly from Mercosur countries, has intensified competition, leading to declining prices. These challenges are exacerbated by extreme weather events such as droughts and floods. This situation poses a significant threat to the dairy sector's future, potentially impacting both production and prices. Despite recent government measures to support the dairy industry, farmers are calling for more substantial assistance and changes in import regulations to protect domestic producers. Brazil's dairy industry future remains uncertain, with potential consequences for both farmers and consumers.