Global supply shortage spoils milk market

BANGKOK - CP-Meiji Co, a unit of the Charoen Pokphand group, foresees a tougher year for Thailand's dairy industry this year due to a shortage of raw materials both at home and abroad. Milk output from the world's leading suppliers _ the United States, Australia and New Zealand _ has dropped to unprecedented levels, according to president Paisal Chongbanyatcharoen.
calendar icon 26 January 2007
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The US, which normally maintains a huge skimmed-milk supply, is running out of its buffer stock because of higher domestic consumption and a searing heat wave that left thousands of cattle dead last year. The European Union has also seen a significant decrease in the number of dairy farmers after a subsidy reduction.

Australia and New Zealand are also facing drought associated with the El Nino weather phenomenon. ''In our 16-17 years in business, this is the first time that the milk supply of the three major sources of the world is facing a shortage at the same time,'' Mr Paisal said.

As a result, the prices of imported skimmed milk are now around US$3,200 per tonne compared with only $1,100 in the past.

In Thailand, raw milk supply is estimated at 1,500 to 1,600 tonnes a day, a significant drop from 2,100 tonnes a day two years earlier, as farmers have shifted to other businesses because of high production costs.

Of the total output, CP-Meiji accounts for 200-300 tonnes a day or about 9,000 tonnes a year. Local dairy consumption stands at about 2,000 tonnes a day.

According to Mr Paisal, local raw milk is currently cheaper than imported skimmed milk, at 12.50 baht per kilogramme compared to 14 baht for skimmed milk mixed with water.

However, he said CP-Meiji was confident of overcoming the challenge, with plans to introduce new packaging and more innovative products.

Source: Bangkok Post
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