Dairy drinks touted as key product for Asian market as industry deals with oversupply of milk powder

Nutritious dairy drinks, made from milk powder, are expected to drive growth of dairy products in Asia, according to an industry analyst.
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Stephen Spencer, a director of food consultancy group FreshAgenda says Asian and Middle Eastern markets are converting milk powder into drinks with added dairy nutrition, or soft desserts.
«That’s the driver of demand long term,» Mr Spencer said.
The west is relishing new demand for milk powder in Asia, which is being used in infant formula products and nutritious dairy drinks that are being marketed to adults and the elderly.
There’s also growing demand for cream cheese, with Dairy Australia figures indicating fresh cheese products are one of the key Australian dairy exports to markets like Japan.
Cream cheese, a key product for some of the big dairy companies like Bega, Parmalat and Warrnmabool Cheese and Butter, is increasingly making up a larger share of overall cheese production.

World awash with whole milk powder

Dairy production in Europe has increased since quota restrictions were lifted on in April, with more European companies producing milk powder, and the companies are encroaching on traditional Australian and New Zealand markets in Asia, as well as supplying their existing markets of the Middle East and North Africa.
«Europeans have been building powder driers in a pretty frantic pace in the past few years, in the lead up to the removal of quotas,» said John Droppert, dairy industry analyst with Dairy Australia.
«So they’re competitive on skim milk powder in particular and also competitive up the value chain in infant formula.
«Infant formula is something you need a high quality reputation to do really well and European companies market themselves like we do in Australia, with strict quality standards and traceability.
«On top of that is European cheese 260,000 tonnes a year of European cheese can’t go to Russia this year [because of import bans].
«So European specialty cheeses that they have protected names for, the high value low volume products…we’re seeing them sell more heavily into South East Asia, China, Japan markets traditionally Australian companies.»

Analysts don’t share Fonterra’s optimism on dairy price rebound in 2016

New Zealand dairy giant Fonterra, which has major production in Australia, has been bullish on global dairy prices, forecasting a return to better prices in early 2016.
But analysts at FreshAgenda, Dairy Australia and New Zealand’s Dairy Exporter magazine disagree.
«Unfortunately farmers were told this at exactly this time last year, that recovery would come in the first part of the New Year, but farmers are hoping there’ll be a gradual trend upward,» said Glenys Christian, editor of Dairy Exporter.
Stephen Spencer, of Fresh Agenda, said there was no shortage of milk powder around the globe.
«We’re not that optimistic because there’s stockpiles, both in the hands of exporters in Europe, United States and New Zealand as well as a lot of product in market, where buyers have taken a lot of advantage of lower prices,» Mr Spencer said.
«Europe has been surging along.
«The relaxation of quotas in April is seeing the pent-up production potential in Ireland, the Netherlands, Denmark and Germany currently growing between 2.5 and 3 per cent over the prior year and they produce 2.5 billion litres of milk a year.
«That will keep prices low until early next year.»
Source: ABC

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