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This article is based on the IFCN Dairy Report 2024.

IFCN is a global network for dairy economic research and consultancy. In 2024, researchers from over 100 countries and more than 140 agribusiness companies are members of the network. IFCN has created a better understanding of the dairy world for over 20 years.

IFCN Dairy Report has become a guideline publication for researchers and companies involved in the dairy chain, published annually since 2000. The analysis and the comprehensive data provide the background for strategic decisions and help people in the dairy world to make better decisions.

Key insights

In terms of global milk production, 2023 reached an average growth of +2.2% YoY, which was better than in 2022, but was still below the average for the period 2017-2021. The main factors driving this are, on one hand, the weak performance of both the EU-27 and the US, and on the other, the relatively modest growth of the Latin American dairy sector.

Demand for dairy products experienced a recovery by +2.4% in 2023 mainly driven by increased per capita consumption, greater availability of dairy products, and a moderate recovery in milk production.

World trade is still on a declining trend, especially due to higher local production and lower demand from top importers.

Farm profitability was average throughout 2023, due to lower input costs. The world milk price also decreased by 25% with an average of 39.8 USD/100 kg milk (SCM) in 2023.

IFCN monitors global milk production on an annual and monthly basis including real-time estimates to provide one of the fastest market updates available, which is crucial to understand the milk price development. The Dairy Report comprises detailed information about key dairy indicators for 125 countries.

Milk production rebounded, though regional challenges persisted

Global milk production in 2023 experienced a 2.2% increase, approaching its ten-year average growth rate (2012-2022). This positive result reflects a rebound after the sluggish milk production growth seen in 2022.

In 2023, India remains the largest producer. In contrast to last year, its growth rate bounced back to 5%, close to its 10 years’ average of 5.2%. EU-27, if considered as a single country, would rank second, but milk production there stagnated. Again, here it was majorly driven by environmental regulations and the high input costs faced by farmers. The United States grew by only 0.9%, due to weather constraints and reduced herd size. New Zealand saw a +1.7% rise in milk production, mainly driven by a base-year effect following poor output in 2022. Unfavorable weather events, devaluation and rising input costs led to moderate milk production growth in Latin America (+0.8%).

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Per capita consumption has been increasing over the past two decades

In the same way as with the milk production growth, total demand increased by 2.4% in 2023

Global dairy demand was very weak throughout 2022, even though there were some regional differences. In 2023, demand experienced a recovery, mainly driven by per capita consumption and the fact that there was a larger dairy availability coupled with a moderate recovery in milk production. Analysing this further, it can be observed that milk demand via population growth increased by 0.9%, and 1.4% via the per capita consumption.

Most of the uncertainties related to demand came from unstable macroeconomic environment and high inflation rates which were impacting the consumer purchasing power. The per capita consumption was especially impacted negatively by high inflation rates in Southeast Asia, Africa and Latin America. While global exports fell in 2023, with the EU reducing its exports by -23%, major importers scaled back their purchases, pushing prices down. China, the top importer, prioritized domestic production, converting surplus milk into powder and cutting back on imports

Milk price development in 2023

After reaching a record high level in 2022, the IFCN world milk price indicator decreased by 25 % in 2023 to 39.8 USD/100 kg SCM (Fig. 2). This strong decline was mainly driven by an imbalance of milk supply and demand, especially in the dairy exporting regions.

Farm economics and the impact on price and production After a strong year in 2022, farm economics were moderate in many countries in 2023. During the whole year, milk prices were in a declining trend along with feed prices. However, despite lower input costs, milk production costs in most countries stayed above 40 USD. Overall, global costs have risen by 19% over the last five years. Looking at the whole year, Latin America performed better than Oceania and Asia, due to the time-lag in milk price transmission from the world level to national. The United States showed high drop in profits due to the high decrease in milk price. Farmers in Western and Eastern Europe maintained good profit margins throughout 2023.
Looking ahead to 2024 In 2024 milk price remained above 40 USD/100 kg SCM and relatively stable, driven by the high fat prices, especially the butter prices. One of the reasons is that demand was improving after a slight recovery in the overall economic situation and stabilization of inflation in many countries. On the other hand, even with the recovery of production, the growth was only modest. This was balancing out and keeping the price on the level of around 43 USD without larger fluctuations. The wave of inflation is not only influencing consumer decision-making, but also causing farmers to cut back on investments. The prices of fertilizers, energy, wages, construction materials, etc., levelled off in 2023 but remained high, continuing to put pressure on the profit margins of dairy farms. For the sector to recover, it will be important that farmers’ input costs no longer eat up the additional farm income from the still quite favourable milk prices. At the time of writing, supply growth in 2024 appears to be positive, but only moderately, which is below the long-term average. Therefore, it is expected that the milk price will continue to fluctuate around the current price levels 42-44 USD/100 kg SCM.

IFCN Dairy Report 2014 & 2015

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About: IFCN is a global dairy research and consultancy network based in Kiel, Germany. Founded in 2000, it now brings together more than 100 researchers and provides expertise in the form of data services to more than 130 companies in the global dairy supply chain.
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