Global Dairy Market Report 2010

The Egyptian Center for Studies of Export & Import ‫ا
آ ا ى رات ا
و ااد‬
"Analysis report of the markets' crises"
The Egyptian Center for Studies of Export & Import

Legal & Economic Consultations
General Manager
Medhat Saad Eldin
Legal Consultations
www.ecsei.com www.ecsei-eg.com … December 2009
www.ecsei.com www.ecsei-eg.com Email: info@ecsei.com info@ecsei-eg.com

The Egyptian Center for Studies of Export & Import ‫ا آ ا ى رات ا
و ااد‬
The Global Dairy Products Industry 2010

"Analysis report
r of the market's crises"
Our Summary Report's Notes:
Abbreviations and Explanatory Notes

World Food Situation
• Critical sector
• First forecasts
International Dairy Trade
• The major dairy products traded internationally can be broadly
placed in four categories.
• The biggest players in international dairy trade.
• Multinational firms.
firms
• Multinational dairy companies
The Changing Face of Dairy Products.
Products
Dairy Products.
• Raw milk
• Major exporters of dairy products
Domestic Dairy Policies in Key Global Markets
• The Interface between Domestic Dairy Policies and Dairy Trade
• The top five countries or areas of the world for production:
production
• The European Union
• Canada
• Japan
• United States
Dairy-Trading
Trading Nations with Little Domestic Support
• Australia and New Zealand
• Brazil and Argentina
Dairy Markets Review - Overview of current market situation
Outlook for the short to medium term:
term
• The European Union
• The United States
• Australia
• New Zealand
• South America
• Brazil
• Argentina
• China
• India
• Russia
Internationall dairy trade 2008

International Dairy Markets Outlook
Tables:
Cows milk for selected countries 1,000 metric tons.

Cheese production for selected countries 1/1,000 metric tons.
tons
Butter production for selected countries 3/1,000 metric tons.
tons
Notes: this is summary Report for full report contacts us.
General Manager
Medhat Saad Eldin
Legal consultations
www.ecsei.com www.ecse
sei-eg.com Email: info@ecsei.com
com info@ecsei-eg.com
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Abbreviations and Explanatory Notes
Acidity test
Milk quality tests that measures lactic acid.

acid
Adulteration
Addition of other substances to milk which

reduces the quality of the milk (e.g. water).
water)
Alcohol test
Milk quality test.
Artificial insemination
Animal breeding method..
Association
Association consisting of and governed by

representatives of milk producer
Groups.
A recombined milk product

oduct
Is a product resulting from the combining of

milk fat and milk-solids-non
non-fat in their
preserved forms with or without the addition
of water to achieve the appropriate milk
product composition.
Artisan
Artisan cheeses are small volume cheeses,

often produced with the milk of one
herd, using traditional methods of production
Affineur
The person who ages and ripens cheese.
Sometimes cheeses are produced by a
farmer and then sent to the affineur in order
to age the cheeses. The affineur’s skill
skil is
often equal to the cheese maker's. They
select the temperature and humidity, wash
the cheese for washed rind cheeses or
whatever is needed to release the best
qualities in each batch of cheese.
Babcock test
Traditional method of measuring the

butterfat
rfat content of milk, which may be used
for calibrating modern electronic testing
devices.
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Bacteria
Single-celled organisms living either

independently or in close association
with other living organisms; often
referred to as microbes or micro
organisms
ms because of their microscopic
size. Some bacteria are beneficial, but
others cause infectious diseases.
disease
Breeding services
Upgrading of animals through

introduction of improved genes.
genes
Cheese
Milk product.
Churning
Agitation of whole milk or cream to make

butter adding starters and rennet.
rennet
Clot on boiling test
Milk quality test through heating.

heating
Clotting
Change from liquid milk to (semi-)

(semi solid
by.
CODEX
The Codex Alimentarius Commission was

created in 1963 by FAO and WHO to
develop food standards,
dards, guidelines and
related texts such as codes of practice
under the Joint FAO/WHO Food
Standards Programme. The main
purposes of this Programme are
protecting health of the consumers and
ensuring fair trade practices in the food
trade, and promoting coordination
ordination of all
food standards work undertaken by
international governmental and non-
non
governmental organizations.
Collection centre
A place to collect milk in bulk.

bulk
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Composite milk product
Is a product of which the milk, milk products or

milk constituents
onstituents are an essential part in terms of
quantity in the final product, as consumed
provided that the constituents not derived from
milk are not intended to take the place in part or
in whole of any milk constituent.
Cream
Milk product.
Curd separation
After coagulation the milk is separated into whey

and cheese curd.
Dairy
1. A retail outlet for milk products.

products
2. The feeding and milking sheds on a dairy farm.
3. Pertaining to or emanating from an animals or
other thing concerned in the
production
roduction of milk, e.g. dairy goat, dairy
cleanser.
Dairy barn
standard indoor housing in temperate and

subarctic northern hemisphere countries; a
common plan is to have animals housed on the
ground floor and grain and hay on the top floor
from which it is delivered to the animals below; the
cows are tied in stanchions and milked on the spot
or roam free and are milked in a parlor.
Dairy calf
Calf of a mating between a bull and a cow, both of

dairy breeds.
Dairy cow
Cow of a breed specifically defined

defi as being for
milk production, as distinct from a beef or dual
purpose breed or A bovine from which milk
production is intended for human consumption, or
is kept for raising replacement dairy heifers.
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Dairy Steer
A neutered male of any of the dairy

d cattle
breeds. The "dairy steers" are raised for meat
production and usually managed like beef cattle.
Dam
Mother or female parent in a pedigree.
Dairy farmer
A farmer whose major enterprise is dairy

farming.
Dairy herd
Includes milking cows,, dry cows, heifers

(maiden and in-calf),
calf), calves and, where needed,
bulls. Called also milking herd, dry herd,
followers.
Dairy industry
Includes:
• The farms,
• The milk collecting and handling services,
• The processors,
• Manufacturers and retailers and thet
private and
• Government organizations involved in a
coordinating or controlling function with
respect to the harvesting and disposal of
dairy products.
Dairy sanitizers
Disinfectants suitable for use in an environment

and in a situation in which contamination
con of the
human food chain is likely to occur.
Dairy terms
Means names, designations, symbols, pictorial
or other devices which refer to or are
suggestive, directly or indirectly, of milk or milk
products.
DDS
(Dairy development strategy).

strategy)
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Essential Composition and Quality Factors:
Raw materials
Milk and/or products obtained from milk.
Permitted ingredients
• Starter cultures of harmless lactic acid

and/or flavour producing bacteria and
cultures of other harmless microorganisms.
microorganisms
• Safe
fe and suitable enzymes.
enzymes
• Sodium chloride.
• Potable water.
External factors
Agricultural policy and trade policy changes:
Policy issues remain to be decided and will impact on

the outlook for the dairy sector.
Animal welfare concerns:
Animal welfare concerns

oncerns related to food production
continue to grow among consumers in the EU.
It is not easy to consider how these concerns will
evolve or how these concerns will impact on dairy
trade.
Weather:
Weather events will continue to contribute to dairy

product price volatility.
Energy prices and input prices:
Rising energy prices will have an impact on dairy

production costs and dairy demand.
Environmental policies and consumer

preferences:
Environmental concerns will exert an increasing influence on agriculture,

agriculture, including
the dairy sector.
Exchange rates:
Exchange rate movements will impact on export competitiveness.
Macro economic and population growth:
The rate of recovery in dairy demand will depend on the recovery in global
economic growth.
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Nutrition and health agenda:
The health benefits of dairy product consumption may be undermined by

legislation on labelling.
Renationalization of dairy demand:
The renationalization of dairy demand would have an adverse impact on dairy

exports.
FAO
Food and Agriculture Organization of the United Nations
Fermented milk
Milk left at room temperature (less than 21c) in which the lactose is fermented
into lactic acid.
Fermented milk can be used to feed young calves and may include extra
colostrums,, transitional milk, or mastitis milk that are not saleable but have
nutritional value.
FDA
FDA is an agency within the Department of Health and Human Services and consists of
centers and offices, which are listed in menu at left.
The FDA is responsiblee for protecting the public health by assuring the safety,
efficacy, and security of human and veterinary drugs, biological products, medical
devices, our nation’s food supply, cosmetics, and products that emit radiation.
The FDA is also responsible for advancing
advancing the public health by helping to speed
innovations that make medicines and foods more effective, safer, and more
affordable; and helping the public get the accurate, science-based
science based information
they need to use medicines and foods to improve their health.
he
Flavoured milk
A subclass of fluid (packaged milks) to which flavoring has been added, such as
chocolate, strawberry and vanilla
Fluid milk products
Milk, flavored milk, concentrated milk, filled milk, skim milk, fortified skim milk,
low fat milk,
k, buttermilk, milk drinks, and cream products
Fresh Cow
A cow that has recently given birth to a calf.
Fresh Milk
Dairy products having original qualities unimpaired and those recently produced
or processed.
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Gerber test
Test to determine amount

unt of fat in milk
Ghee
Concentrated
oncentrated milk fat prepared by melting butter, decanting the fat after gravity
separation from the serum, and driving off most of the remaining moisture by
heating. About 1 percent moisture remains.
remains It is used mostly in Asia and
an Africa.
Heat treatment
Destroying any potential pathogenic germs by heating milk at a minimum of 63C

for 30 min.
Handlers
Processors or dealers of milk who commonly purchase raw milk and sell
pasteurized milk and milk products.
Hand Milking
The manual milking of an animal as opposed to the use of mechanical milking

devices.
ISO 1737
Evaporated milk and sweetened condensed milk - Determination of fat content -

Gravimetric method (Reference method).
method)
ISO 2446
Milk - Determination of fat content

conte (Routine method).
ISO 4832
Microbiology of food and animal feeding stuffs - Horizontal method for the
enumeration of coliforms - Colony-count technique.
ISO 4833
Microbiology of food and animal feeding stuffs — Horizontal method for the
enumeration of microorganisms — Colony-count technique at 30 °C.°C
ISO 5538
Milk and milk products — Sampling — Inspection by attributes.
IS0 6734
Sweetened condensed milk — Determination

etermination of total solids content (reference
method).
ISO 6611
Milk and milk products — Enumeration of colony-forming

forming units of yeasts and/or
moulds — Colony-count
count technique at 25 °C.
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ISO 8197
Milk and milk products — Inspecting sampling — Inspection by variables.

variables
ISO 6888
Microbiology of food and animal feeding stuffs — Horizontal method for the
enumeration of coagulase-positive
coagulase staphylococci (Staphylococcus aureus and
other species).
ISO 8968
Milk — Determination of nitrogen content - Kjeldahl Method.
ISO 11866
Milk and milk products — Enumeration of presumptive Escherichia coli.

c
ISO 8197
Milk and milk products — Inspecting sampling — Inspection by variables.

variables
ISO 14501
Milk and milk powder — Determination of aflatoxin M1

M content — Clean-up
Clean by
immunoaffinity chromatography and determination by high-performance
high performance liquid
chromatography.
Lactate
To secrete or produce milk.
Lagoon
An earthen pond used as a primary storage site for manure.

Leg Bands Cloth or plastic strips of a bright color used for marking treated cows,
fresh cows, or cows needing special handling.
Legume
Any of thousands of plant species that have seed pods that split along both sides
when ripe. Some of the more common legumes used for human consumption are
beans, lentils, peanuts, peas, and soybeans. Others, such as clover and alfalfa,
are used as animal
imal feed. Legumes have a unique ability to obtain much or all of
their nitrogen requirements from symbiotic nitrogen fixation.
Letdown
The process in a cow where physical stimulation causes a release of oxytocin and
the contraction of smooth muscles surrounding
surrounding milk alveoli resulting in fluid
pressure within the udder and milk flow.
Liner
A flexible sleeve in the milking teat cup or rigid-walled

rigid walled liner holder. Responsible
for massaging the teat end and intermittently cutting vacuum at the teat end
during
ing milking. Also called inflation.
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Lactoperoxidase
Enzyme that keeps the milk for a longer period.
Milk
Is the normal mammary secretion of milking animals obtained from one or more
milking without either addition to it or extraction from it, intended
intended for
consumption as liquid milk or for further processing.
Milk from animals that is collected and processed (from cows, goats, sheep, yaks,
buffaloes, camels).
Milk collection
Collection of milk from more than one farmer to a collection point or centre.
Milk cooling
Cooling milk to increase keeping time.

time
Milk hygiene
Making sure a milk product is clean and safe for consumption.

consumption
Milk product
Is a product obtained by any processing of milk, which may contain food

additives, and other ingredients
ingredients functionally necessary for the processing.
Milk testing
Checking the hygiene and composition of milk.

milk
Pasteurization
Destroying any potential pathogenic germs by heating milk at a minimum of 63C

for 30 min.
Pasteurized milk
Milk that has been heat treated to a high temperature in order to kill potentially
harmful bacteria. Of course much of the good bacteria have been killed as well.
Through technology, there are many methods that can be employed to
reintroduce beneficial flavours back into the milk after the process. There are
many extremely delicious pasteurized cheeses.
Processing of milk
Making milk products like cheese, yoghurt, etc.

et
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Raw milk
Milk that has not been heat treated to kill bacteria. There are good and bad
bacteria. When the milk is heated, both good and bad bacteria are killed. The
good bacteria contain flavours and when they are destroyed their flavour
disappears as well. Raw milk cheeses often retain more subtle flavours specific to
their milk.
Rennet
Substance causing milk to coagulate, used for the preparation of cheese.

cheese
Rind
The exterior surface of the cheese.
Semi-soft
These cheeses have a bit of bounce, when pressed they are firm, but give.
When opened, they are often smooth and supple, but retain their shape.
Skim milk
Milk from which sufficient cream has been removed to reduce its milk fat content
to not more than 0.2 percent.
percent Skim milk contains protein, lactose, minerals and
water-soluble
soluble vitamins and only half as many calories as whole milk.
In the final beverage form, it has been pasteurized or ultra-pasteurized
pasteurized and
contains added vitamins A and D. It can be used in a liquid form to feed young
calves.
SNF
Solids Non Fat.
Sweetened
weetened condensed milk
Milk product which can be obtained by the partial removal of water from milk with
the addition of sugar, or by any other process which leads to a product of the
same composition and characteristics.
characteristics
Soft ripened
This is a cheese where the curds more or less liquefy during the aging
process, taking
ing between 30 and 120 days. The cheese is notably soft to the
touch. When opened, they often ooze.
Standardisation
Making milk with constant butterfat through partial skimming.

skimming
Thermalized milk
This is a heat treating process that is a half way measure

measure and in many regions is
technically considered “raw milk”. The milk is heated to a lesser temperature
than pasteurization, but for a longer period of time. The idea is that many of the
potentially harmful bacteria are destroyed and at the same time much
much of the
good bacteria and enzymes are preserved contributing to increased flavour.
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TS
Total Solids.
USDA
The U.S. Department of Agriculture (USDA).

(USDA)
Yoghurt
Fermented milk product.
Washed rind
After these cheeses are formed, they begin a process

process of being washed in a
cultured brine solution.
This process washes away unwanted mould and bacteria and introduces specific
bacteria that will act on the cheese and transform its character.
Many washed rind cheeses are also washed with a local alcoholic
alcoholic spirit imbuing
additional flavour.
Washed rind cheeses are often known as the “stinky cheeses” The resulting
flavour is usually more mild than the aroma suggests and is, many times,
delightfully complex.
Whey
Watery part remaining after milk has curdled.
Whey Cheeses
Are solid, semi-solid,

solid, or soft products which are principally obtained through
either of the following processes:
(1) The concentration of whey and the molding of the concentrated product;
(2) The coagulation of whey by heat with or without the addition of acid.
Whole milk
Unaltered milk collected from day 4 after calving until the end of a lactation (see
also colostrums and transitional milk).
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World Food Situation
With the second-highest

highest recorded cereals crop expected this
year and stocks replenished, the world food supply looks less
vulnerable to shocks than it was during last year’s food crisis,
FAO said in its food outlook report published today. But some
potential dangers remain, it also noted.
“In spite
pite of strong gains in recent weeks, international prices
of most agricultural commodities have fallen in 2009 from their
2008 heights, an indication that many markets are slowly
returning into balance,” the twice-yearly
twice report said.
Apparent easing of market

arket conditions was reflected in the
benchmark FAO Food Price Index, which had fallen by one third since its peak in
June 2008 at the height of the world food crisis.
crisis
But food prices remained high in many developing countries, and access to food
by the poor also continued to be threatened by loss of employment, income and other
effects of the global economic crisis.
Critical sector
So far the improvement largely concerned cereals – the critical

sector for food security – after record production in 2008.
Overshot original forecasts, the report said. The bumper crop
had also facilitated replenishment of global reserves to pre-
pre
crisis levels.
“With the new 2009-2010

2010 marketing season commencing,
prospects continue to be positive as world cereal production is
expected to be the second largest, after last year’s record,” it
added. World production was forecast at 2 219 million tonnes
as compared with 2 287 million tonnes in 2008/09.
FAO’s first forecast for world cereal utilization in 2009/10

suggested a relatively
latively weak growth of around 1.3 percent from
the estimated 2008/09 level,
level to 2 230 million tonnes.
This compared with nearly 4 percent growth in the previous season
First forecasts
First forecast for world cereal trade in 2009/10 was 257 million tonnes,
tonn down by
nearly 4 percent from last year.
This contraction mostly concerned wheat imports, which could fall by as much as
10 million tonnes in the new season,
season reflecting a strong anticipated recovery in
production in several major wheat-importing
wheat countries.
More problematic was the oilseed products sector, with prices on world markets
increasing as a consequence of production setbacks in some major producers and
of expanding consumption of animal feed in China and India.
Oilseeds production in 2008/09
2008/0 was forecast at 405.9 million tonnes,
tonnes 0.7
percent more than the 403.1 million tonnes estimated for the year before.
before
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“The surge in soybean quotations in recent weeks, on the back of shrinking world
reserves, is emerging as a cause for concern given its strong bearing on food and
feed prices,” Food Outlook noted.
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International Dairy Trade
The major dairy products traded internationally can be broadly placed in

four categories:
Butter,
Cheese,
Dry milk powders, and
Ingredients
Within these
hese categories are a large number of “differentiated products”
Cheese
heese varieties,
Dry
ry milk powders with a range of fat contents, or
Milk
ilk components, such as the various milk proteins.
The ingredient trade has only recently emerged as a key sector, driven
drive
primarily by widening uses of milk proteins and lactose (milk sugar) in
various food applications.
The biggest players in international dairy trade
The biggest players in international dairy trade are not necessarily the
largest producers..
New Zealand,
nd, for example, is one of the smallest producing countries but
is a major dairy trading country.
country
A country’s population relative to its production of milk is a key to
determining the likelihood of its having a milk surplus or a milk deficit.
deficit
Milk-surplus
us countries that supply foreign markets typically have an
efficient manufacturing sector capable of producing storable dairy products
with quality attributes at prices that make exporting economically feasible.
feasible
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International dairy trade has

has often been called a dumping ground for
unwanted surplus commodities. However, dairy trade is now increasingly
driven by demands from developing-country
developing country consumers wanting to
upgrade diets and developed-country
developed country markets seeking specialty products
Dairy markets
kets everywhere are being shaped by consumer demands, the
ability of dairy farmers to react to change, and dairy company strategies
for maximizing profits. Firms operating successfully in global dairy markets
are those that respond quickly to changing economic
economic forces, changing
policies—nonagricultural
nonagricultural as well as agricultural—and
agricultural and shifts in milk supply
and demand factors.
Those firms may be national firms operating in single countries, regional

firms operating in a well-defined
well defined area, or multinational (global)
(global firms with
a presence in multiple regions or areas.
Competition among firms has grown, but so has the number of firms
joining forces.
As international dairy companies recognize the potential benefits from

supplying milk and dairy products in different
different countries and the prospects
for demand growth, they are repositioning themselves to source milk and
products from multiple locations. This trend is spawning partnerships and
joint ventures among firms seeking to benefit by controlling all stages of
the production
roduction process.
Direct investment across borders has also altered competition in dairy

markets. Globalization has tended to emphasize the strength of
multinational dairy firms, with the most prominent being :
• Nestlé (Switzerland),
• Arla Foods (Denmark-Sweden),
(Denmark
• Danone (France),
• Thehe Fonterra Co-operative
Co Group (New Zealand),
• Lactalis (France),
• Unilever (Netherlands-U.K),
(Netherlands and
• Kraft Foods (U.S.).
Multinational firms
Multinational firms can operate in several countries or regions using any

number of approaches.
pproaches.
They can build new facilities to manufacture locally demanded products, or
they can form alliances or partnerships with existing local firms that have
cultivated local demand.
Purchase of local brands is another option.

A strategy that employs
employs all of these approaches enables multinationals to
reduce price risks and market volatility.
While multinationals are most active in stable, well-established
well established markets,
alliances or partnerships with local firms have helped them expand to
emerging markets s in recent years.
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Multinational dairy companies
Have long viewed the U.S. with its large and affluent market as an
opportunity. Since trade opportunities are limited by trade
impediments, multinationals have chosen to make direct
investments.
Led
d by firms based in the European Union (EU), foreign direct
investment in the U.S.
U now stands at about $5 billion.
Nestlé and Unilever have gained a major stake in the U.S. ice cream
industry through purchases of U.S. brands.
Together, they account for about
a 30 percent of supermarket ice cream
sales in the U.S.
Several French companies—Fromageries
companies Fromageries Bel, Sodiaal, Lactalis, and
Bongrain—areare involved in U.S. yogurt and cheese markets.
Yoplait, a premier brand of Sodiaal, has been licensed to General Mills,
while the Président brand of cheese is a Lactalis product manufactured in
Wisconsin and California.
The Changing Face of Dairy Products
Dairy products available on the market range from

basic raw milk to fairly standardized “commodity”
products to an array of higher valued products that
have only recently gained wider market presence.
Historically, when trade is the issue, both within and
between countries, the commodity products—cheese,
products
nonfat dry milk, and butter—have
butter held center stage.
These were e the products that could best withstand the
rigors of transport. However, factors such as the
emergence of sophisticated milk components as
ingredients, greater emphasis on cheese variety
(including brands), recognition of well-defined
well defined local, national, and
an even
international product markets, development of manufacturing processes
that lengthen shelf-life,
shelf life, and improved transportation systems have
changed the way firms assess both domestic and global dairy
marketplaces.
These changes in global dairy markets

markets are taking place in the context of
significant market intervention by some of the world’s leading dairy
product importers and exporters.
Many countries maintain border and domestic support measures of various
types for their dairy sectors.
sectors
Dairy policies
es around the world are changing slowly, primarily as a result
of the Uruguay Round of trade negotiations.
The dominant border measures now in place are tariffs or tariff-rate
tariff quota
systems, and they are at the core of many issues surrounding market
access.
Domestic dairy policies include mainly price support and institutionalized
pricing systems, policies that have been called trade distorting in many
circles.
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Dairy Products
Fluid Milk
Egg Nog
Cheese
Butter
Yogurt
Ice Cream
Powdered Milk
Whey Powder
Butter Powder
Meat
Leather goods
Fertilizers
Cosmetics
The variety of products resulting from the milk.
Fluid milk is available in several varieties
Skim Milk (0% fat), 1%,, 2%, and Whole

(approximately 3.5%).
Raw milk
d into skim milk and cream, and then re-

Is separated re
blended to a standard fat content for each product.
Because cows' milk averages more than 3.5% fat, the
extra cream is used to make other liquid products like
whipping cream, half and half, and eggnog or it is
manufactured
actured into butter or ice cream.
Fluid milk in the U.S. is pasteurized (milk is pasteurized

by rapidly heating it to 72 - 75 °C for 15 to 20
seconds, and then quickly cooling) to kill potentially
harmful bacteria.
Fluid milk is also homogenized (fat droplets are

dispersed so they do not float to the top) and is
fortified with vitamins A and D, which along with the
absorbable calcium naturally in milk are needed for
strong healthy bones and teeth.
Over the most recent two decades, fluid milk

consumptionon per capita has declined, and sales of low-
low
fat milk have increased relative to whole milk.
Recent innovative marketing of convenient single
servings of milk and introduction of a wide variety of
milk flavors have increased sales of individual servings.
servings
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Major exporters of dairy products
2007 2008 Preliminary 2009 Forecast

Thousand tonnes
WHOLE MILK POWDER
World 1 757 1 849 1 826
New Zealand 680 607 686
European Union * 366 484 386
Argentina 115 120 107
Australia 116 107 109
SKIM
KIM MILK POWDER
World 1 145 1 201 1 186
United States 255 400 350
BUTTER
World 852 809 798
Australia 66 56 58
Belarus 50 55 60
CHEESE
World 1 818 1 751 1 776
Belarus 92 101 110
* Excluding trade between the European Union Member States.
Domestic Dairy Policies in Key Global Markets

Market
The Interface between Domestic Dairy Policies and Dairy Trade
For dairy industries in individual countries, the first priority is to provide an

adequate supply of milk to satisfy domestic market needs, first the fluid
market, and then manufactured product
pro markets.
Domestic dairy policies and programs are generally mechanisms to

promote milk production in a country, but in some cases around the world
they have promoted surplus production above domestic needs.
Those surpluses are available for export but may also impede imports—for
imports
which they are termed trade distorting.
By explicitly including agricultural trade and domestic agricultural support

policies in its negotiations, the Uruguay Round of the General Agreement
on Tariffs and Trade (GATT) opened
opened the door for several contentious
debates during trade talks that often centered on domestic dairy policies
and programs.
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As evidenced by these discussions, firms interested in greater international

market participation may benefit from an assessment of the effects of
domestic dairy policies and programs as they interface with dairy trade
policies.
As the global dairy industry continues to evolve, it is important to
determine
those countries for which the interface between international dairy trade
and domestic dairy policy is an issue.
The top five countries or areas of the world for production, consumption,
Imports,
mports, and exports of butter, cheese, nonfat dry milk, and whole milk
powder.
Almost all countries have tariffs or tariff-rate quota (TRQ) systems in place
and at least two countries have both.
The bottom line in the table identifies four countries
with significant institutional structures, other than
tariffs and TRQs, in place to provide domestic dairy
industry support:
The EU, Canada, Japan,
Ja and the United States.
Years—a 7-percent
percent reduction per year in 2005-07 and
a 4-percent
percent reduction in 2008.
For nonfat dry milk, the price reductions are uniform
at 5 percent per Year from 2004 to 2006, reductions
that actually did occur.
A limit has been
een established for annual intervention
purchases of 30,000 tons of butter by 2008, starting from 70,000 tons in
2004 and reduced by 10,000 tons annually.
The EU will make direct payments, which may be coupled to milk
production or not, to cover lost revenues
revenues due to price reductions.
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Member states may make additional payments from a national budget

provided by the EU.
EU In 2008, dairy payments will be incorporated into the
(noncommodity-specific)
specific) single farm payment (Kelch
Kelch and Normile,
Normile 2004).
The EU
The
he EU increased its population by nearly 30
percent and its arable land by nearly 40 percent.
Other countries are also scheduled for
membership, including Romania and Bulgaria in
2007.
The ongoing changes in the EU will result in its

having a larger presence
pre
in global agricultural markets, but whether it will
be an importing or exporting area for various
products is to be determined.
Canada
Canadian dairy policy rests first and foremost on the supply management
system implemented in the mid-1970s.
mid
All current programs are designed with this system as the backdrop.
Both the Federal and the Provincial Governments are involved in

regulating milk markets.
Canada has several other programs in place that address seasonality,

domestic dairy product innovation,
innovation, the marketing of dairy ingredients, and
the provision of milk components through a special use permit for use in
manufactured products.
A revenue pooling system in place since 1996 serves as a means for

revenues from all milk sales, fluid and industrial,
indust adjusted by several
factors, to be used to establish blend prices for producers.
Canada also employs a purchase program for butter and skim milk powder
that establishes reference (support) prices for milk used in manufactured
products.
Canada implemented
mented several TRQs for dairy products under the terms of
the World Trade Organization (WTO) in 1994, the primary TRQ being for
butter.
Approximately two-thirds
two thirds of the butter TRQ is allocated to New Zealand
(Canadian
Canadian Dairy Commission,
Commission 2005).
Japan
Dairy
y policies in Japan emphasize self-sufficiency
self sufficiency in milk and dairy product
production through milk supply controls and direct producer income
support.
There are two milk markets—one

markets for drinking milk and one for
manufacturing milk.
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The quantity of fluid

flui milk is set by a national board of designated milk
producers and allocated to regional members who voluntarily accept their
quota and face penalties if they exceed it.
Manufacturing milk constitutes about 40 percent of total production (Bull

and Roberts, 2001)
2001 and is subject to a formal quota system,, except for
milk to be used for cheese production.
Quota participation is voluntary, and those who participate receive direct

payments for milk produced within their quota and no payment for milk
produced over
ver their quota.
The direct payment system replaced a deficiency payment system in 2001.
Japan initiated an income stabilization program for milk producers in 2001

to reduce the effects of dairy product price declines.
The Agriculture and Livestock Industries

Industries Corporation, a state trade
enterprise, is authorized to stabilize dairy product prices by market
intervention and stockpiling when necessary (Obara, Dyck, and Stout,
2005).
United States
U.S. milk producers have received government support since the 1930s.
Current domestic programs include milk price support, the Federal milk
marketing order system, and direct payments under the Milk Income Loss
Contract (MILC) program.
Dairy policies and programs have been modified to meet changing

economic relationships
elationships over time, but underlying general objectives
remain the same: ensure the orderly marketing of an adequate supply of
fresh wholesome milk to meet consumer demands at reasonable prices
and provide adequate returns to milk producers (Manchester and a Blayney,
2001).
WTO commitments in 1994 had immediate implications for the U.S.

U dairy
industry.
Legislation in 1996 addressed meeting the WTO commitments and
proposed fundamental changes in domestic dairy policies and programs
that, if implemented, would
wo reduce trade-distorting
distorting support.
The Dairy Export Incentive Program (DEIP), a program for subsidizing

certain dairy product exports, was limited by WTO commitments, and the
end of the price support program was proposed. Milk price support never
actually ended. It
was revived in its more traditional “permanent” form in 2002,
2002 and a direct
Payment program for milk producers, MILC, was authorized with payments
First made in 2003.
2003
The DEIP was continued still subject to the reduced Levels agreed to under
the WTO.
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Dairy-Trading
Trading Nations with Little Domestic Support
Most of the remaining countries that appear as major dairy product exporters
or importers have few or no domestic dairy policies or programs.
Australia and New Zealand
Are long-time international

ternational dairy market participants.
New Zealand has not had significant agricultural support of any kind
since the mid-1980
1980s.
The Australian dairy industry generally has been more protected, but
efforts to tie its agricultural industries to international
international markets have led to
domestic dairy policy changes—the
changes most recent in 2000 when fluid milk
market pricing was reformed.
Brazil and Argentina
Countries such as Brazil and Argentina are relatively new participants in

international dairy-market
dairy exporting, and their long-term
term prospects are
unknown.
However, they are clearly recognized as potential key suppliers and have
relatively unregulated domestic industries.
Other importing and exporting relationships seem to be based on regional
proximity and possibly
possi former political ties.
Domestic dairy policies and programs in key trading areas or nations are
still a significant determinant of global dairy product flows.
Dairy industry representatives in the United States emphasize three major

concerns in statements
ements regarding international dairy trade:
• market access (including administration of border measures),
• export subsidies, and
• change in existing domestic dairy support programs.
Milk producers, processors, product manufacturers, and dairy marketing

firms
irms in other countries have generally expressed the same concern—but
concern
to different degrees.
Assessments of dairy trade liberalization often posit complete elimination

of domestic policies and programs, dairy border measures, and export
subsidies.
Dairy Markets Review - Overview of current market situation
Global dairy markets have experienced substantial price swings over the
last two years. In 2007 and early 2008, a range of factors initially gave
rise to a record increase in world prices across the full
full dairy product range.
However, this was then followed by an even more dramatic collapse in
world dairy product prices over the last 12 months.
Numerous factors, on both the demand side and the supply side, played a
role in the evolution of world dairy
dairy prices over the last three years.
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World milk production has fallen since 2005, with unfavourable weather
impacting production in Australia, New Zealand, Argentina and Ukraine,
while some countries also placed restriction on exports to world markets
as a means of dampening domestic food price inflation.
On the demand side, strong global consumption growth had been a
consistent trend in dairy markets in the current decade.
Rapid economic growth in developing economies and in crude oil exporting
countries stimulated demand for dairy products. In addition, population
growth, increased urbanization and the adoption of western eating habits
have also boosted consumption.
In 2007 dairy producers temporarily experienced an income boom, boom as
costs remained relatively
relatively stable while milk prices increased. In addition,
decoupled compensation became available for the price drop that had
been expected under the Mid Term Review.
As energy costs rose and the development of the biofuels sector
continued, a surge in farm input
input prices followed and in the latter half of
2008 this offset the benefits for producers that the initial increase in dairy
prices provided.
The next stage in the process saw a negative reaction in consumer and
food ingredient demand to the increase in dairy prices over the course of
2008.
Dairy product consumption per capita dropped around the world as
consumers increasingly sought out value by buying cheaper products and
smaller packets and by reducing domestic food waste through better
monitoring of use by dates.
The economic and financial crisis which began to emerge in mid 2008,
added further complexity to the dairy market picture.
As income growth stalled in the face of recession, dairy product
consumption contracted and global dairy prices fell dramatically in the
second half of 2008.
2008
Outlook for the short to medium term
The report focuses on the global dairy product production and consumption
outlook and how this is likely to evolve in the period to 2015.
European Union
In spite of the presence

presence of milk production quotas, the EU dairy market is
characterized by an excess of production over consumption.
In 2008 EU milk self-sufficiency
self was 109 per cent.
Third country imports are small relative to total consumption and are
limited by tariffs barriers, which protect the EU market and allow internal
EU prices to exceed prices on the world market.
Nevertheless, special import arrangements allow for a range of imports
into the EU by other dairy exporters:
exporters New Zealand has 75,000 tonnes of
butter, 4,000 tonnes of cheese for processing and 7,000 tonnes of
cheddar, all at reduced tariffs.
Australia has 500 tonnes of cheese for processing and 3,711 tonnes of
cheddar also at reduced tariffs,
tariffs while Canada has 4,000 tonnes of
cheddar, again at reduced tariffs.
tariffs. In addition to the above concessions,
there are several non-country
non country specific quotas for reduced import tariffs
covering 11,360 tonnes of butter;
butter 84,000 tonnes of assorted cheeses and
69,000 tonnes of skimmed milk powder.powder
There are numerous bilateral
bilateral trade arrangements between the EU and
other countries, normally at zero duties.
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These cover cheese from Norway and South Africa as well as miscellaneous
concessions to Switzerland, Turkey and ACP countries.
Exports subsidies have been used by the EU to make it possible to export
excess production to third countries at prices that are lower than internal EU
prices. Intervention is used at times of market weakness to remove additional
volumes from the market when consumption is depressed.
The Mid Term Review (MTR) of the CAP and the Health Check which followed
reduced the level of intervention support and set in train a process of milk
quota removal.
Some 40 per cent of the EU milk supply is used for cheese produc/on and a
further 30 per cent is used in fresh dairy products.
These two product areas have been the drivers of growth in dairy
consump/on in the EU over the last decade. The remaining 30 per cent of EU
milk production is mainly used in the manufacture of butter, powders and
casein.
Due to higher than anticipated international demand, it has only been in the
la1er half of 2008 and into 2009 that producer prices have fallen below the
price levels that prevailed at the time of the MTR negotiations.
The decrease in producer milk prices in 2008/09
2008/09 has had an impact on
monthly milk production around the EU.
In spite of the increases in the EU milk quota the monthly production profile
in the 2008/09 quota year is only slightly ahead of the 2008/09 quota level.
Weak domestic consumption and exportsexports in 2008 and 2009 have led to
extended intervention measures and a restoration of dairy export subsidies,
which had been set to zero by the EU Commission in 2007.
Within the EU the impact of the recession and the downturn in international
dairy prices is being felt at present and EU intervention stocks are building.
EU bu1er stocks at almost 80,00 tones are equivalent to about 4 per cent of
EU annual produc/on, while EU skimmed milk powder stocks at 250,000
tonnes are close to 30 per cent of annual EUEU produc/on (August 2009).
The impact of intervention purchases and export subsidization over the short
term is to prevent an even greater decline in EU producer milk prices.
However, stockpiled intervention products have to be released to the market
at some future point.
The EU Commission's selling off strategy for these stocks will influence
market prices over the short term.
The short term outlook for the EU dairy sector is that production will be
below milk quota in 2009/10, that stocks will con/nue
con/nue to feature through the
rest of calendar year 2009, and that any recovery in EU prices is likely to be
very gradual.
The presence of substantial intervention stocks will delay the recovery in EU
prices, even when international prices begin to rise.
Depending
ending on the supply response to the current low prices this situation
may persist into 2010.
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A higher than average annual reduction in the EU dairy cow herd could
tighten supplies, but it is not clear for how long producers in financial
difficulty will try to persevere in the current downturn. To some extent this
will depend on their own resolve, but the willingness of banks to advance
credit in a tight cashflow situation will also be a consideration.
Projected Evolution of EU Milk Production
Projections
ections point to a decrease in milk production in the short term
(although possibly less than suggested in the OECD projections above)
followed by a medium term recovery, but prices are likely to be weaker
than the levels projected in advance of the economic
econom crisis.
Over the period to 2015, EU milk production should recover as prices
improve and EU milk production should keep pace with the annual milk
quota increases agreed in the Health Check.
The trend of declining milk production in southern Europe and the
maintenance of production at quota levels in much of northern Europe will
continue.
Growth in EU cheese and fresh product consumption, the drivers of growth
in the EU dairy sector, will be weak due to lower income growth prospects.
EU dairy export competitiveness
com will need to recover by 2013 or the EU
may find it politically difficult to eliminate export subsidies.
The European Commission view is that the elimination of export subsidies

is a realistic objective as the EU butter surplus will decline over
ov the period
to 2015 due to lower levels of butter production and greater production of
cheese and higher value added products. This perspective is consistent
with a view that intervention and export subsidies will not be required in
the future.
However, this view of how the EU market will evolve is not consistent with
the opinion of some market experts who consider that the EU butter
surplus will continue into the future, as EU butter production will not
decline to the extent envisaged by the European Commission.
Commission.
The basis for this view is an expectation of increased availability of butter fat
due to the increased production of lower fat dairy products in the EU.
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United States
In general, import barriers have limited dairy trade with the US. To a large
l
extent the US has been more or less self sufficient in dairy products and
has not traditionally had a sizeable exportable surplus.
However, a characteristic of US dairy markets over the last four or five
years has been that production has grown at a faster rate than
consumption.
The growth in US dairy consumption has been running at about one per
cent per annum, while production has grown by 2.5 per cent per annum.
annum
This has created an exportable milk surplus of around three to five million
tonnes of milk.
The origins of the US dairy export surplus were high margins as illustrated
in the high US income over feed cost (IOFC) on dairy farms which
prompted strong growth in US milk production.
It is important to note also that the US dairy exports to the

the world market
are less reliant on export subsidies than are dairy exports from the EU.
The recent weakness of the US dollar relative to the currencies of other
key exporters has aided the competitiveness of US dairy exports.
The farm scale of US milk production

production has been growing rapidly.
While the average herd size is 120 cows, the emergence of large scale
herds in excess of 2,000 cows continues.
At the current rate of progress just 500 farms will soon produce one third
of US milk production.
The emergence
gence of these large operations suggests that this may now be
the most economic means of producing milk in the US.
The expansion of large scale operations may be constrained in the future
by environmental concerns, or a lack of access to water or the
unavailability
ailability of low cost labour.
In reaction to the current low level of milk prices, the US government has
subsidised exports and has announced that it will raise US support prices
from August through to October 2009.
Evolution of US Milk Production
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The
he short term dairy outlook in the US is not good from a US dairy farming
perspective and the consensus is that US production will contract slightly
in 2009 and 2010.
The outlook over the medium term will depend on a recovery in milk
prices and affordable feed costs.
More modest production growth of 5 to 6 million tonnes is achievable in
the period to 2015 and this will be mainly channelled to cheese production
for consumption on the home market.
Exchange rate movements will impact on international competitiveness
compe
and the weak outlook for the US dollar will create an environment to
support US dairy exports.
Australia
There is a strong view that the recovery in the Australian dairy sector will
be very weak.
The importance of access to water for the Australian
Australian dairy sector cannot
be understated.
Drought conditions have been an ongoing problem for producers in
Australia over the last decade.
Access to irrigation water has become a key concern and has affected both
yields and herd investment decisions in Australia.
A
In Northern Victoria, urban areas are taking precedence over agriculture
and water allocations are being redirected to towns in the region.
Water stocks in the Murray-Darling
Murray Darling Basin remain low and water access
rights will continue to be restricted.
restrict
Estimates suggest that it may take a full decade to replenish these water
reserves.
Milk production in Australia has now begun to show a recovery for the first
time in a number of years,
years up two percent in 2008/09, but the country's
country
exports remain significantly
sig below those of a decade ago.
Drought conditions have caused some producers to exit and many of those
that remain have reduced their herd size.
Projections suggest that milk production in Australia will not recover to its
2002 peak until 2015.
2015
New Zealand
New Zealand (NZ)) is the largest dairy exporter in the world,, with over 95
per cent of its milk production being exported.
New Zealand production has not been affected to the same degree as
Australia, but adverse weather conditions still depressed
depressed production by as
much as three per cent in the 2007/08 milk year, with a resultant impact
on export capacity.
NZ milk production recovered well in the 2008/09 year and finished the
year eight per cent ahead of the 2007/08 year.
Commentators expect
expect NZ production to continue to grow over the short to
medium term.
This growth will be driven on the one hand by increasing yields, through
increased feed supplementation, while farm conversions to dairying from
sheep finishing on the South Island will continue
continue to provide additional land
for dairy cows.
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At present dairy cow numbers are falling on the North Island. The average
annual rate of NZ milk production growth since 1990 has been about four
per cent.
However, it is considered that expansion will bebe more costly in the coming
decade than in the current decade and that production growth rates will be
lower as a result.
Consequently growth of 3 percent per annum is possible over the short
term with growth easing back to 1 percent per annum by 2015. 2015
Given
iven the grass based production system in NZ, weather can be expected
to exert an impact on production, which will add further variability around
these average annual growth rates.
While the NZ milk production system retains its very low cost, grass based
focus, there is evidence of a trend towards increased utilization of
concentrate feed and fertilizer and this is impacting on production costs.
In this context, milk and feed price relativities will become more important
and this may have negative implications
implications for the resilience of some
elements of the NZ dairy sector in periods when milk prices are low.
In international trade terms, exchange rate movements are of critical
importance for the New Zealand dairy sector.
The NZ dollar has appreciated by almost
almo 20 per cent against the US dollar
since the beginning of 2009.
This has impacted on the competitiveness of the country's exports and
further depressed world dairy price when expressed in NZ dollars terms.
Overall, barring adverse weather, it would seem that New Zealand will
maintain its position as the leading dairy exporter. Export growth will
continue, albeit at a declining rate.
South America
South America is growing in importance as a dairy exporting region. Aside

from the US, over the last five years
years Brazil and Argentina have recorded
the largest growth in net exports of dairy products.
When South American dairy processors seek to export further afield, their
export market tends to be Africa rather than Asia.
In turn this puts South American dairy
dairy exports in direct competition with
EU dairy exports to markets in Africa. South American dairy exports are
less likely to compete directly with New Zealand exports to dairy markets
in Asia.
Brazil
Traditionally Brazil was a net importer of dairy products.

products. Brazilian dairy
exports have grown through the decade and Brazil has had a net export
position in dairy products since 2004.
Whether Brazil continues to increase its net exports will depend not alone
on its production growth, but also on the expansion
expansion of Brazilian dairy
consumption.
Economic growth in Brazil will occur at a higher rate than in more
developed economies and this will mean that consumption growth should
be strong.
Reduced income inequality and the growth in the size of the Brazilian
middle
iddle class should also aid the growth in the consumption of dairy
products.
Some projections indicate that the production growth will accelerate
further in the period to 2015 and by then a doubling of production relative
to 2000 is possible.
possible
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Argentina
Government intervention has led to a loss of confidence among producers

in Argentina and this has resulted in a stagnation in milk production in
recent years.
High international prices boosted exports in 2007 and 2008..
This prompted inflationary pressure in the domestic dairy market and led
to the introduction of export taxes by the government.
Over the medium term production growth is projected to re- re-emerge,
allowing milk production to increase by 20 per cent over the period to
2015.
However, strong growth
growth in cheese and whole milk powder consumption
will absorb much of this increased milk production.
Argentina should be able to maintain its current level of net exports in the
period to 2015, but may not become a bigger player on the world market.
China
GDP in China is now ten times the level it was in 1980 and the Chinese
market has become a major element of global consumption growth in
dairy products over the last decade.
By 2015 Chinese whole milk powder consumption could reach almost 4
times the level
evel in 1998.
The expansion of Chinese milk production over the last decade has been
extremely rapid. While it has not matched the pace of growth in dairy
product consumption, it has meant that only some of the growth in
Chinese dairy consumption has stimulated
stimulated increased imports of dairy
products.
Over the medium term Chinese imports of cheese and skimmed milk
powder will increase, while the growth in Chinese exports of whole milk
powder will continue.
The recent melamine contamination of infant formula in China led to
increasing infant formula imports, and these import volumes should be
maintained until such time as consumers' faith in indigenously produced
infant formula is restored.
India
India is the world's largest milk producer and in absolute terms

ter its growth
in milk production over the medium term is projected to considerably
exceed that of any other major milk producing region.
Animal productivity in India's traditional milk production regions continues
to improve. However, consumption growth in India will absorb much of
this increased milk production due to growing population, additional
demand for value added products and increased incomes levels among the
middle classes.
India's net trade in dairy products is unlikely to change considerably over
o
the medium term.
Russia
Commentators agree that milk production in Russia will recover over the medium
term. Low yielding cows are being replaced by higher yielding imported stock and
considerable government investment is being made in a new dairy cattle
c breeding
programme.
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For food security reasons Russia would like to boost its self sufficiency in dairy
products from just over 70 per cent at present to 95 per cent. A milk production
target of 37 million tonnes has been set for 2012. There are mixed ed opinions as to
whether this target will be achieved.
Global summary
Projected Milk Production Growth in Selected Regions 2009 to 2018
Russia and the other former Soviet republics (CIS) will remain the largest
butter importers. Sub-Saharan
Sub Africa
a and Algeria will remain the main
whole milk powder importing regions and imports are expected to grow
substantially. Mexico, Algeria and China should increase their imports of
skimmed milk powder. Imports of cheese by Russia and Mexico in
particular should
ld increase over the period.
External factors
Weather:
Weather events will continue to contribute to dairy product price volatility.
Energy prices and input prices:
Rising energy prices will have an impact on dairy production costs and dairy
demand.
Exchange rates:
Exchange rate movements will impact on export competitiveness.
Macro economic and population growth:
The rate of recovery in dairy demand will depend on the recovery in global
economic growth.
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Agricultural policy and trade policy changes:
Policy issues remain to be decided and will impact on the outlook for the dairy
sector.
Environmental policies and consumer preferences:
Environmental concerns will exert an increasing influence on agriculture, including

the dairy sector.
Renationalisation
enationalisation of dairy demand:
The renationalization of dairy demand would have an adverse impact on dairy

exports.
Nutrition and health agenda:
The health benefits of dairy product consumption may be undermined by

legislation on labelling.
Animall welfare concerns:
Animal welfare concerns related to food production continue to grow among

consumers in the EU. It is not easy to consider how these concerns will evolve or
how these concerns will impact on dairy trade.
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International dairy trade 2008
International dairy trade is primarily in butter,

cheese and dry milk powders, with some trade in
fluid milk products, ice cream, yogurt and dry whey
products (ERS).
The United States produced 190 billion pounds, or
86,179 metric tons
ton (MT), of milk in 2008, more
than any other individual country.
Other major producers of milk in 2008 included the
27 countries of the European Union (EU), which
produced 134,346 MT; India, which produced
44,100 MT; China,
China which produced 36,700 MT; Russia,
Which produced 32,500 MT; and New Zealand, which
Produced 15,141 MT (FAS 2009).
Nearly 11 percent of the milk and dairy products produced in the United
States were shipped overseas in 2008 (USDEC).
U.S. exports of dairy products were valued at $3.8
billion, up 26 percent from the previous year,
year and
volume totaled 1.4 million MT, up 13 percent.
(FAS).
The United Stated imported 730,167 MT of dairy
products in 2008,, a decline of 9.5 percent from the
previous year. The products were valued at
$3.1billion, an increase of 9 percent.
Like last year, the United States posted a trade
surplus of dairy products; the value of exports
totaled $700,000 more than the value of imports
(FAS). November 2009
New Zealand, Australia, and the EU are leading dairy exporting

exportin
countries/regions.
Low-cost
cost producers in Australia and New Zealand are the principal
suppliers of cheese and dry milk products to Asian markets, while
subsidized EU producers focus on nearby markets in Africa, the Middle
East, and Russia and export significant
significant amounts of cheese to North
America
As diets around the world have changed, so, too, has global demand for
milk and dairy products.
The mix of products demanded, however, varies by region or country and
the stage of a region’s economic development.
developmen
The largest consumers of dairy products are high-income

high income developed
countries, such as the U.S., EU, Australia, New Zealand, and Japan.
Middle-income
income developing countries use large quantities of dry milk
powders for fluid milk reconstitution programs and as ingredients in other
foods.
In low-income
income developing countries, demand is insignificant outside of
food aid programs.
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These changes in global dairy markets are taking place in the context of
significant market intervention by some of the world’s leading dairy
product importers and exporters.
Many countries maintain border and domestic support measures of various
types for their dairy sectors.
sectors
Dairy policies around the world are changing slowly, primarily as a result
of the Uruguay Round of trade
trad negotiations.
The dominant border measures now in place are tariffs or tariff-rate
tariff quota
systems, and they are at the core of many issues surrounding market
access.
Domestic dairy policies include mainly price support and institutionalized
pricing systems,
ems, policies that have been called trade distorting in many
circles.
International Dairy Markets Outlook
International dairy trade is primarily in butter, cheese and dry milk

powders, with some trade in fluid milk products, ice cream, yogurt and
dry whey products.
The United States produced 190 billion pounds, or 86,179 metric tons
(MT), of milk in 2008 more than any other individual country.
Other major producers of milk in 2008 included the 27 countries of the

European Union (EU),, which produced 134,346 MT.
India, which produced 44,100 MT;
China, which produced 36,700 MT;
Russia, which produced 32,500 MT; and
New Zealand, which produced 15,141 MT (FAS 2009).
Milk production in Brazil, has been expanding at an

average of over 6 percent annually over the 2006-
2008 period and is set to grow by 5 percent in 2009.
Exports in 2009 are also anticipated to expand due to

flat domestic consumption and increased
competitiveness resulting from the expected further
devaluation of the Brazilian currency.
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Dairy outlook
2007-08 2008-09
Cow numbers ’000 1 640 1 645
Milk yields L/cow 5 624 5 702
Production
Total milk ML 9 223 9 380
– market sales ML 2 188 2 240
– manufacturing ML 7 035 7 140
Butter kt 128 150
Cheese kt 359 348
Whole milk powder kt 142 141
Skim milk powder kt 164 208
Farm-gate milk price Ac/L 49.6 40.0
Value of exports A$m 2 763 2 724
World prices
Butter US$/t 4 027 2 483
Cheese US$/t 5 073 3 271
Skim milk powder US$/t 4 204 2 329
Whole milk powder US$/t 4 562 2 548
COWS MILK: SUMMARY FOR SELECTED COUNTRIES 1,000 Metric Tons
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CHEESE PRODUCTION:: SUMMARY FOR SELECTED COUNTRIES 1/ 1,000

Metric Tons
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BUTTER PRODUCTION:: SUMMARY FOR SELECTED COUNTRIES 3/ 1,000

Metric Tons
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End of Summary report
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Global Dairy Market Report 2010

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Global Dairy Market Report 2010

Enviado por

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The Egyptian Center for Studies of Export & Import ‫ا

"Analysis report of the markets' crises"

The Egyptian Center for Studies of Export & Import

www.ecsei.com www.ecsei-eg.com … December 2009

www.ecsei.com www.ecsei-eg.com Email: info@ecsei.com info@ecsei-eg.com

The Global Dairy Products Industry 2010

Our Summary Report's Notes:

Abbreviations and Explanatory Notes

Internationall dairy trade 2008

Cows milk for selected countries 1,000 metric tons.

Notes: this is summary Report for full report contacts us.

Abbreviations and Explanatory Notes

Milk quality tests that measures lactic acid.

Addition of other substances to milk which

Milk quality test.

Animal breeding method..

Association consisting of and governed by

A recombined milk product

Is a product resulting from the combining of

Artisan cheeses are small volume cheeses,

Traditional method of measuring the

Single-celled organisms living either

Upgrading of animals through

Agitation of whole milk or cream to make

Clot on boiling test

Milk quality test through heating.

Change from liquid milk to (semi-)

The Codex Alimentarius Commission was

A place to collect milk in bulk.

Composite milk product

Is a product of which the milk, milk products or

After coagulation the milk is separated into whey

1. A retail outlet for milk products.

standard indoor housing in temperate and

Calf of a mating between a bull and a cow, both of

Cow of a breed specifically defined

A neutered male of any of the dairy

Mother or female parent in a pedigree.

A farmer whose major enterprise is dairy

Includes milking cows,, dry cows, heifers

Disinfectants suitable for use in an environment

(Dairy development strategy).

Essential Composition and Quality Factors:

Milk and/or products obtained from milk.

• Starter cultures of harmless lactic acid

Agricultural policy and trade policy changes:

Policy issues remain to be decided and will impact on

Animal welfare concerns:

Animal welfare concerns

Weather events will continue to contribute to dairy

Energy prices and input prices:

Rising energy prices will have an impact on dairy

Environmental policies and consumer

Environmental concerns will exert an increasing influence on agriculture,

Exchange rate movements will impact on export competitiveness.

Macro economic and population growth:

Nutrition and health agenda:

The health benefits of dairy product consumption may be undermined by

Renationalization of dairy demand:

The renationalization of dairy demand would have an adverse impact on dairy

Food and Agriculture Organization of the United Nations

Fluid milk products

A cow that has recently given birth to a calf.