Milk production is going to increase considerably

Milk production will increase by 10% in the next 22 years, according to the FAO and the OECD in their agricultural forecasts. The cause is rising consumption, which will lead to price increases in the medium term.

In 2016, milk prices started to rise from the second quarter. This was mainly due to the better butter and cheese prices. The increase in those prices was due to the collapse of production in Australia and New Zealand, Argentina and the EU. This while the worldwide demand for butterfat and cheese actually increased.

Extra milk production
Compared to the reference period 2014-2016, a rising milk production of 178 million tons, or 22%, is expected. About three quarters of the increase in production is said to be attributable to developing countries. Pakistan and India will account for almost a third of this.

The worldwide production of whole milk powder will grow by 1,9% per year. The production of butter and skimmed milk powder will grow faster, at 2% and 2,5% per year respectively. Cheese production is expected to increase by 1,4 % per year.

Increase in consumption of dairy products
In Western countries, consumers prefer butter and milk fat rather than substitute vegetable products. In developing countries, higher incomes and population growth will lead to an increase in the consumption of dairy products. The consumption of dairy products increases on average to 20,2 kilos of milk per capita. For the West this means a consumption of 21,4 kilos in 2026. In developing countries, 13,2 kilos per inhabitant is expected.  

Price increase
Between the period 2014-2016 and 2026, the share of dairy exports from the EU will increase from 24% to 28%. Assuming a low milk price in 2016, global demand will increase and dairy prices could pick up in the medium term. The price of cheese will increase by 38%, according to the FAO. The price of milk powder is likely to rise more slowly, due to the slow recovery in Chinese demand. 

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