Editorial ¦ IDM
1-2 2020 ¦ international-dairy.com · 3
Limits to growth?
The milk market in the 2020s
The turn of the year marked the beginning of a new decade for the dairy market, which will bring
new challenges. In the 2010s, liberalisation, the end of the milk quota in the EU and volatility of prices
were issues that kept market operators busy. In the new decade, other issues will probably have an
impact on market developments. At the end of the decade, new buzzwords are casting their shadows
like climate, soil and species protection. Animal welfare and sustainable packaging are moving more
into focus. A young generation is loudly calling for a rethink and is also practising a different dietary
style, with an increasing importance of vegan food. The next few years will show whether they will
also convert demands into sustainable actions.
Sustainability – under which the various postulates can be roughly summarised – has the potential
to change the dairy market in the coming years. It could show limits to growth and slow down a
further increase in global milk production. The first effects are already visible: In the Netherlands,
milk volumes have been declining since 2017, as upper limits for the application of phosphate from
livestock farming to agricultural land must be respected. Proposals for new nitrate limits are currently
dominating the political debate in the country. Climate change has had a firm grip on Australia for
years. As a result, milk production has declined in recent years and in the last marketing year fell to its
lowest level for more than two decades. The export surplus of what was once the world’s third-largest
supplier of dairy products to the world market is falling steadily. In New Zealand, which is currently the
second largest supplier of dairy products to the world market after the EU, a legislative package for
keeping water clean was recently presented. According to studies by the dairy industry, implementation
of this package could reduce milk production by almost a quarter by 2050. In addition, further
measures such as climate neutrality are to be introduced. German milk producers will also have to
comply with more stringent requirements, such as stricter fertiliser regulations. At the same time, the
path of liberalisation in international trade policy is currently not continuing in some cases, as the
Russian import ban and the recent punitive tariffs imposed by the USA demonstrate.
Before structural changes might take greater effect in the coming years, the new year 2020 will start
out more balanced than in previous years. It was possible to get rid of some "old burdens" in 2019
based on good international demand. After milk production in the exporting countries stagnated
overall last year, the high stocks of skimmed milk powder were reduced unexpectedly quickly. At the
same time, the scarcity on the butter market, which had lasted for several years, gave way. As a result,
the prices for butter and skimmed milk powder have normalised in terms of their absolute level and
their relationship to each other. Brexit will come; but the United Kingdom will remain in the EU Single
Market until the end of 2020. The signs for the new year are therefore stable to firm.
Author: Monika Wohlfarth,
ZMB, Berlin, Germany