Markets ¦ IDM
The development of feed costs and milk prices correlates with that of the oil price (Fig.: IFCN)
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May/June 2022 ¦ international-dairy.com · 33
Milk
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unchanged at a high level (1.4% CAGR), despite further increases
in product prices. IFCN attributes this to the middle class, which is
becoming more and more established worldwide.
Looking at milk production worldwide, 3% of farms produce
63% of the total raw milk. Still 40% of milk is marketed passing by
dairies in some form. Without any crisis, milk production is under
constant cost pressure, every year 6% of the dairy farms in the EU
quit, and according to IFCN, 50% of dairy farms are expected to
go out of business by 2030. This, mind you, is without any aggravation
of the economic situation through external effects such as
the current war in one of the world's largest agricultural countries,
which is driving up input costs dramatically. State-imposed climate
protection is now one of the main reasons for the demise of farms.
It increases costs without raising productivity in the slightest. Climate
protection requirements or simply seasonally bad weather
lead us to expect that the quantities of milk available to the EU or
Oceania will hardly grow any more.
For dairies, this in turn means that their raw material base will
come under threat and that competition for raw milk will intensify.
In addition, domestic and export business will compete with each
other.
IFCN advises to focus on the profitability of the farms and,
above all, to get an overview of global developments that influence
one's own business. For this purpose, but also to provide better
information about market developments, IFCN has developed
a new forecasting service that offers, among other things, shortterm
forecasts for milk prices, commodity prices, milk production
(volumes) and profitability of milk production.
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