June 20, 2011

 

India to become top milk producer

 

 

By 2020, India will challenge the EU for top rank among global dairy producers, with an annual growth of about 3% over this decade that will cause its production to reach some 150 million tonnes, the UN food agency and the OECD said in a joint report.

 

Expansion in China will be even faster, at 3.3%, leaving it with India to be responsible for nearly 60 million tonnes of the 153 million tonnes increase in world output between 2010 and 2010.

 

China's expansion will secure its grip on top rank among producers of whole milk powder and responsible for more than one-quarter of world output.

 

Nonetheless, China's surge in import demand, fuelled by scepticism over domestic milk fostered by 2008's melamine contamination scandal, is expected to ease only slowly.

 

"Rebuilding of consumer confidence in domestic products will likely take several years," the report from the UN FAO and OECD said.

 

"Modernisation of the dairy industry will gradually improve the situation. But, despite the quality improvement in the medium term, growing income and a strengthening yuan will keep dairy product imports above historical averages."

 

India, meanwhile, will fuel strong global demand for butter, which the FAO and OECD saw witnessing the strongest price rise of all dairy products by 2020, of 11%, compared with 2008-10 average.

 

The comments came hours after Fonterra, the world's biggest dairy exporter, forecast that China's dairy market will more than triple in value, to US$70 billion by 2020 as the New Zealand-based group unveiled plans to raise cash through a yuan-denominated bond.

 

The CNY300 million (US$46.3 million) raised through the bond will fund expansion including the expansion of Fonterra's marketing drive in China to more than 15 cities, from seven.

 

"We see huge potential to expand the breadth of products we offer in China," Philip Turner, the head of Fonterra's Shanghai-based China division, said.

 

Fonterra will become the first Australasian company to raise money through a yuan-denominated bond, a so-called dim sum bond, which has also been used by companies including McDonald's and Unilever.