November 5, 2003

Canada's Dairy and Products Review 2003

SUPPLIES

Production of fluid milk is based on Statistics Canada's volume of milk and cream sold off farms.  Based on the six months of available production data for 2003, total fluid milk production for total calendar year is expected to be about 7.88 million metric tonnes (MMT), down slightly from calendar year 2002 production of 7.96 MMT.  For 2004, Post forecasts that fluid milk production will decrease 7.77 MMT due to lower cows in milk numbers.

Nonfat dry milk production for 2003 is expected to decrease slightly relative to 2002 levels to 80,000 MT.  This reduction in production, combined with a 63% reduction in beginning stocks, resulted in nonfat dry milk supplies shrinking by almost 13%. The decrease in supplies will partially be offset by increased exports, according to year-to-date export data from Statistics Canada. For 2004, nonfat dry milk production is forecast to decrease to 78,000 MT.

CONSUMPTION

According to statistics from the Agriculture and Agri-Food Canada's (AAFC) Dairy Section, in 2002, Canadian per-capita milk consumption declined slightly from 86.9 liters of milk to 84.5 liters. Consumption of 3.25% milk accounted for 16%, 2% milk accounted for 47%, 1% milk accounted for 20%, skim milk accounted for 10%, and chocolate milk accounted for six percent of total fluid milk consumption. Canadians have reduced their consumption of higher fat milk by more than one-third during the past 30 years and by just over 25% during the past decade. 

TRADE

In 2002, the U.S. continued to be the largest market for Canadian fluid milk exports, with almost 87% of Canadian exports going to the U.S. For 2003, based on eight months of trade data from Statistics Canada, Libya is expected to displace the U.S. as the top export market for Canadian fluid milk, accounting for approximately 45% (8.8 of 19.2 MT) of Canadian exports. Canada is expected to export 7.6 MT of fluid milk to the U.S., accounting for almost 40% of total fluid milk exports. Taiwan is the third largest single market, at 1.6 MT, or 8% of Canadian fluid milk exports.

For non-fat dry milk (skim milk powder), New Zealand continued to be Canada's top supplier,  accounting for 57% of Canada's total imports in 2002. The U.S. increased its market share of Canadian imports from 24% in 2001 to 39% in 2002. In 2003, New Zealand is expected to capture 73% of Canadian imports of skim milk powder, while the U.S. share of Canadian imports is expected to drop 26%. Under the Canadian export program from 2002, Mexico, the U.S., and the Dominican Republic accounted for 49%, 12%, and 5% of skim milk powder shipments, respectively. According to the statistical data available for 2003, Thailand, Mexico, the Philippines, Indonesia, Cuba, and Chile will be the major markets for Canadian skim milk powder, accounting for 15%, 14%, 10%, 8%, 8%, and six percent of Canadian exports, respectively. The U.S. is expected to absorb just five percent of Canadian skim milk powder exports, down from 2002 levels.

Source: USDA