GLOBAL - The end of milk quotas in Europe this year and the growth in yields in northern Europe is going to place more milk on the global dairy market.
And this extra supply of milk is going to have to find new markets according to Thomas Carstensen the senior vice president for Global Category Trading at milk cooperative Arla.
Speaking at the recent National Farmers’ Union Conference in Birmingham in the UK, Mr Carstensen said that the diary sector will have to start looking east to India, China, the Philippines and Indonesia where there is already a large population and this population is growing.
He said that while Arla wants to maintain its markets in the UK and Europe but it is also going to look for new markets to take an increased milk production.
The eastern and Asian markets together with Russia, which he said he believes will return to the global market place eventually, will be the new targets.
He added that while China had pulled back from the global dairy market recently, he predicted that it would again become a major importer in the third or fourth quarter of this year.
“We have to ensure that we are efficient,” Mr Carstensen said.
“Ninety two per cent of the dairy growth between 2012 and 2020 will be in the emerging markets and we have to be there with the right products.
“These are the markets we have to be ready for and we have to be in those markets now.”
Mr Carstensen added that there will be a growth in production with greater yields in cattle in northern Europe.
“There will be tremendous opportunities when we are going out of quota,” he said.
Mr Carstensen said that there would be growth in yields of between four and five per cent with additional growth in production in the US and South American seeing a three per cent growth in production last year. However he said that at present it is New Zealand that is driving global prices.
While there is growth in production, Mr Carstensen added that the global dairy sector is also subject to volatile market prices with the US seeing prices of 46 euro cents last year falling to just 24 euro cents this year.
“It has been a roller coaster of a market,” he said.
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