April 8, 2011

 

Global demand for dairy products to increase

 

 

According to Fonterra Cooperative Group Ltd, the world's largest exporter of dairy products, world's demand for dairy products will surge in the next 10 years due to increasing consumption in China and India.

 

China's dairy demand will expand by 36 million tonnes, almost tripling in value to US$71 billion by 2020, Fonterra Chief Executive Andrew Ferrier said. Consumption in India will grow by 45 million tonnes, the company estimated.

 

Rising incomes and expanding populations are fuelling demand for protein-rich diets in emerging markets as global food prices tracked by the UN climbed to a record in February.

 

Whole-milk powder rose to an all-time high of US$4,958/tonne last month, buoyed by demand from Asia and concerns that dry weather in New Zealand may curb supply.

 

"There is enormous growth in dairy demand," Ferrier said on April 5. "Both per-capita consumption and populations are going up."

 

Chinese demand for New Zealand milk products last year surged more than fivefold from 2008 to about 353 million kilogrammes, Fonterra said.

 

Exports to China will more than double to US$950 million by 2020, from US$400 million last year, according to the company's forecast.

 

India's imports of New Zealand dairy products more than doubled to NZD162 million (US$125 million) last year, according to government data supplied by Fonterra.

 

Fonterra, with NZD16.7 billion in annual sales, sells milk, butter and cheese in 140 countries and accounts for almost 40% of global trade in dairy products.

 

"We are seeing demand go up very, very strongly," Ferrier said. "Although we think that imports are going to double, you can see the increasing gap, and the increasing gap will be filled by locally produced Chinese milk."

 

While New Zealand will not be able to meet the forecast expansion in global demand, with production growing four million tonnes by 2019, Fonterra said on Tuesday (Apr 5) that it was planning multiple dairy farms in China and was evaluating the idea of building farms in India and South America.

 

The company in October agreed to further develop a dairy farm in China's Hebei province to expand local production. Its farm at Tangshan has doubled to more than 6,000 cows since it opened in 2007 and produces about 25 million litres of milk for local consumption.

 

"The world is a big place and there is going to be opportunities to partner with customers beyond just New Zealand milk," Ferrier said.