In spite of the global COVID-19 pandemic, the year 2020 was characterised by sustained milk production, which increased by 2.9%, compared with an average of 2.5% during the past decade. On the one hand, this was the result of a rebound in production after slower growth in 2019. On the other hand, a stronger focus on self-sufficiency in some countries drove higher growth.
Trade was initially impacted by supply chain and transport disruptions, but this was compensated by strong import demand from China.
Demand growth also kept up thanks to the positive image of dairy as a healthy product in many parts of the world, especially in South and South East Asia. Some emerging markets in Africa also benefitted from higher milk availability due to stronger production in comparison to 2019.
Farm economics in 2020 were stable, albeit on a modest level, not least because of additional government support. The milk price, meanwhile, decreased by 1.8% to 36.5 USD/100 kg milk (SCM) in 2020.
Production outlook for 2021
Still, 2021 points to a slight slowdown in milk production growth compared to 2020. Feed prices increased by more than 50% during the first half of 2021, caused by climatic conditions and strong demand. This puts further pressure on farmers’ margins that have been either stable or decreased for the most part in recent years.
In addition, national farm-gate milk prices have not followed the world milk price as closely as usual (Fig. 3). The impact of squeezed margins has not impacted production growth significantly during the first half of 2021. However, it is foreseen that this will increasingly come into effect until the end of 2021 and world milk supply growth will slow down, which should support a higher milk price in turn.
Overall, the COVID-19 pandemic appears to have stimulated dairy demand, especially in the Asian region and national dairy programs have been settled and boosted milk production growth.
IFCN has published a new issue of its Dairy Report that can be accessed online:
