Changing perceptions boost global dairy demand - Kraamwinkel

South Africa accounted for approximately 0,5%, or

3,4 million tons, of global dairy production in 2017, according to the latest International Dairy Federation (IDF) World Dairy Situation Report, launched during the recent World Dairy Summit in South Korea.

Global production of cow’s milk increased 2,2% in 2017 to a total of 767 million tons. The EU accounted for the largest volume, with 165 million tons, or nearly 24% of total production. The US accounted for just less than 100 million tons, or 14% of global volume, while India produced more than 80 million tons, or 12% of global volume.

According to the CEO of the South African Milk Processers’ Organisation (Sampro), Alwyn Kraamwinkel, who was also serving a second term on the board of the IDF, South African dairy producers were operating in a very different environment than that of the major global dairy producing countries.

He said that the behaviour in, and structure of, the South African dairy industry was largely shaped by market forces, whereas producers in regions such as the EU or Canada were subject to “significant government intervention”. Such interventions would continue to disrupt global dairy trade for the foreseeable future, he added. Kraamwinkel said there was increasing global demand for butter, cheese and whole milk powder, and agreed with the report’s findings that butter prices remained high. He said these prices started spiking in mid-2016 after research revealed that plant-based fats were not necessarily better, changing decades of perceptions about cream and whole fat.

The price of skimmed milk powder remained low as the EU tried to sell off its large stocks, he added.

Global demand for milk for drinking purposes had declined, with the exception of developing countries, including India and South Africa. In South Africa, this was driven by increased demand for long-life or ultrahigh temperature (UHT) treated milk, which recorded growth in market share of 9,8% in 2017, Kraamwinkel said.

He said expectations were that milk production in South Africa would increase in 2018. “Preliminary figures for January to September show production is 4,89% higher than it was in 2017,” he said. – Sabrina Dean

demand is growing for butter, cheese and whole milk