January 13, 2012
Brazil's milk powder demand rising fast
Brazil has emerged among the world's top importers of milk powder as its dairy farmers struggle to meet rising demands.
Brazil's import of whole milk powder has soared by 35% to nearly 55,000 tonnes last year, data from Global Trade Information Services shows.
Imports at such level will see Brazil become the third biggest buyer of whole milk powder in the world, based on estimates from the US.
Brazil's imports jumps 120% to more than 31,000 tonnes for skim milk powder.
The growing reliance on foreign supplies comes despite efforts to discourage imports, through measures such as a quota of 3,300 tonnes a month on purchasing Argentine milk powder, and tougher licencing procedures on Uruguayan product.
Even so, Uruguay has exported more than 17,500 tonnes of skim milk powder to Brazil last year, and Argentina at 33,000 tonnes of whole milk powder.
The US provides Brazil with low skim milk powder imports with larger shares of lactose and whey purchases.
The strong Real currency is also a catalyst for increasing purchases.
Brazil's dairy farmers have struggled against margins squeezed by high feed prices. Local milk output falls by 1.4% as it enters its 13 successive month of contraction on October 13, last year.
Meanwhile, demand is being spurred by growth in urban populations, expected by Euromonitor to expand by 11 million between 2010 and 2015.
Urbanisation is typically linked to growing dairy consumption.
Increasing wealth is also boosting consumption, with per capita spending on milk drinks alone expected to reach US$67 by 2015, ahead of figures of US$52 forecast for France and US$45 for Germany.
Rabobank analysts forecast some recovery in the domestic milk production early in 2012 but remain sceptical that it will be sufficient to keep up with local demand growth.
"With local wholesale prices likely to remain above world price levels, imports are likely to rise a little higher through the first half of 2012," the bank said.
