GLOBAL milk demand is likely to exceed supply in the next 10 years, according to the latest dairy index released by Tetra Pak yesterday.
Demand would be driven by population growth, rising prosperity and increased urbanisation in emerging markets, including Africa, Asia and Latin America.
Tetra Pak, the Swiss-based food processing and packaging company, said global dairy consumption, including milk, butter and cheese, was expected to rise by 36 percent between this year and 2024.
Consumption of these products was expected to reach more than 710 million tons of liquid milk equivalent by 2024.
Tetra Pak president Dennis Jonsson said this kind of growth would allow milk-producing countries, including those in emerging markets, to look for new markets.
He said the expected population growth in countries such as Nigeria would increase dairy consumption, “not only as [a result of] lifestyle consumption but also as a nutritional need”.
The index revealed that milk supply was expected to lag behind demand by 2017 due to growth from Asia and Africa. “This booming demand is predicted to put pressure on dairy product prices… and profits by exposing a deficit within the next 10 years,” the report said.
The report said that after significant increases last year, dairy prices had been declining in recent months.
But the expected increase in demand from emerging markets was unlikely to be met by local producers in these emerging markets because production in these markets was predicted to decline.
Global white milk consumption was forecast to rise at a compound annual growth rate of 1.8 percent between 2013 and 2016 from about 212 billion litres to about 223 billion litres, overtaking compound annual growth of 1.2 percent between 2010 and 2013.
Africa was likely to see the biggest change in the flavoured milk category, with 7.1 percent growth across the continent.
The top 20 milk-importing countries were expected to account for 33 percent of global imports by 2024, up from 27 percent last year.
South Africa grew milk exports by at least 22.4 percent between 2004 and 2013.
On the other hand, milk producers in established markets such as Europe and the US were frantically looking for growth in developing markets as they faced the challenge of falling consumption at home.
“In Europe and North America changing lifestyles and dietary requirements have caused a significant shift in traditional consumption habits,” the report said.
This was evident as milk sales in the US were at their lowest level for 30 years, while white milk consumption in western Europe had fallen 0.8 percent in the past three years.
Jonsson said this was not the first time global demand had exceeded supply, “however it is the first time that we have seen such persistent growth, which is holding for several years”.
He said: “The predicted surge in global demand offers a huge opportunity for dairy companies in developed markets to export powder and ambient liquid dairy products to growing economies.”
However, he warned that in order to ensure long-term success, these producers needed to balance the quick wins of exports against the requirement to continue to grow their domestic markets.
Source: Businness Report
