Milk Prices Rise On Chinese Interest

CZECH REPUBLIC - There’s no surer sign of the country’s increasing integration into the global economy than this: China’s newfound zest for milk and a drought in Australia have caused a recent uptick in dairy prices.
calendar icon 4 October 2007
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A disparity in dairy prices has led farmers to begin exporting milk.

“Production of milk has dropped not only in Australia, but also in Argentina and Brazil,” said Michal Nemec, director of the Bohemian-Moravian Dairy Association, “this while milk consumption has increased in some regions of Asia, in particular China and India.”

Since traditional suppliers cannot fulfill Asia’s demands — last year, China’s prime minister said he had a dream that everyone in China would have a half-liter of milk a day — the eastern giants have taken to importing powdered milk from across the world, putting a strain on global supplies.

“There is a worldwide shortage amounting to 3 million to 5 million metric tons [3.3–5.5 million short tons] of milk,” said František Zobal of the Agricultural Chamber. “Stocks of butter and skim milk are almost nil.”

“Currently, demand outpaces supply [in the Czech Republic],” confirmed Jirí Nikl, executive director of the Mlékárna Hlinsko dairy wholesaler, better known by its Tatra brand name. And since the supply situation is no better in any other neighboring country, his company is not importing milk to ease the squeeze, he said.

According to simple economics, then, consumer prices have seen a marked increase, with the cost of milk, cheese and butter rising 1.8 percent, 4 percent and 2.8 percent in August, respectively. A liter of low-fat milk cost 15.47 Kc (79 U.S. cents) in September, up from 14.61 Kc a year ago, according to the Czech Statistical Office.

Source: Prague Post

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