The new economics of milk
The World Dairy Summit 2024, organised by the International Dairy Federation, took place in Paris from 15 to 18 October. The event provided a valuable opportunity to assess the current situation and anticipate the imminent changes in the dairy economy. There has been a significant increase in milk production in China, India and Pakistan, while the opposite is true for Europe, the United States and Oceania, where production levels have either remained static or declined. What will be the impact of this on the sector? Here are some explanations and analyses from the experts at AURIS Finance, a consultancy specialising in mergers and acquisitions.
An article published in the daily Les Echos suggests that Indian mozzarella and Chinese camembert could become established in the dairy products market in the future. The global milk production landscape is currently undergoing significant disruption. Traditional exporters are experiencing a decline in market share, while demand in Asia is growing rapidly.
An emerging geopolitics of milk
Global milk production is forecast to grow by 1.6% over the next ten years, reaching 1,085 billion tonnes by 2033. This will result in a significant shift in the map of production leaders. In 2023, European milk production is expected to decline, remain stagnant in the United States, and increase by a mere 1% in New Zealand. Concurrently, production in countries including India, China, Pakistan and Bangladesh increased by over 6% on average over the year. In terms of volume produced, India is now the second largest milk producer in the world, behind Europe and ahead of the United States.
India and China close in on self-sufficiency
Asia is now approaching self-sufficiency in milk production, with some countries meeting the majority of local demand. This is also the case in China, where 73% of demand is now met domestically. India, which accounts for 13% of the world’s livestock, exports just 3% of its production. By 2033, according to OECD forecasts, India and Pakistan will together account for 30% of global production. Going forward, these countries will become less reliant on imports of milk and finished products. India currently leads the way in buffalo milk production, which now accounts for 15% of the country’s total output. The Indian cheese market is experiencing rapid growth. Currently, only 5% of the population consumes cheese regularly, but this figure is expected to reach 20% in the next few years.
Mature markets
By contrast, the European market is already well established. A recent survey revealed that 95% of consumers in France have cheese as part of their regular diet. Therefore, there is less potential for growth than in the Asian market. What’s more, dairy producers are currently facing new regulatory constraints that are squeezing their margins.
Our experts at your service
The global geopolitics of milk are undergoing a significant transformation, with notable implications for the sector’s established players. To continue to win over consumers, they will have to maintain sustained production levels, while at the same time devising new, higher added-value products. A number of changes in the sector are to be expected. At AURIS Finance, we have a dedicated team of experts specialising in the agri-food sector. Our specialists are available to assist you in developing your business.
