By Bob Yonkers, IDFA Chief Economist

“The long run prospects for dairy globally are encouraging increased investment in the sector and are a cause for industry confidence” according to The World Dairy Situation 2013 report recently published by the International Dairy Federation (IDF). In 2012, world milk production increased 2.2 percent from the prior year, and world output increased for every kind of dairy product. Global per capita availability of milk in 2012 was on average 109.4 kilograms, up 1 percent from 2011.

All this dairy growth resulted in world dairy trade reaching 61.9 million metric tons (mmt) in 2012, an increase of 8 percent compared to 2011. This rate of dairy trade growth was double the average of 4 percent between 2000 and 2011. IDF notes this “reflects the increasing geographical imbalance between production and consumption of dairy in the world.”

Cow’s milk represented about 83 percent (637 mmt) of the total world farm milk production of 770 mmt in 2012, with the rest coming from buffalo (101 mmt, or 13 percent of the total), goats (2.4 percent), sheep (1.3 percent) and camel (0.4 percent). The IDF report notes that many regions of the world suffered from poor climate conditions during parts of 2012 and into the first half of 2013. This limited world farm milk production and was a key factor to the increase in farm milk prices globally during this time.

While nearly all milk produced on farms in the United States moves to a processing or manufacturing plant, globally only about 53 percent does so. The remaining world farm milk production is consumed by the farm household or enters an informal market for both liquid (fluid) milk and processed dairy products. Dairy product plants in the many countries included in the IDF report made 132 mmt of liquid milk, 9.7 mmt of butter, 19.0 mmt of cow’s milk cheese, 4.5 mmt of whole milk powder and 4.0 mmt of skim milk powder.

Meanwhile, dairy consumption is growing the most in South America, Asia and Africa. Between 2005 and 2012, IDF reports that per capita consumption of dairy grew 27 percent in South America, led by large increases in Brazil, Columbia and Venezuela. In Asia over the same time period, dairy demand growth in India, China and Indonesia led to a 22 percent per capita increase in that region. And in Africa, where dairy per capita grew overall by 16 percent between 2005 and 2012, large increases were noted in Algeria, Kenya and Egypt.

The report attributes the growth in dairy trade to the fast-growing demand in emerging countries which exceeds the capacity of local dairy production and processing. “As a consequence, developing countries are expected to significantly increase their global net deficit for all kinds of dairy products over the next decade.” This will continue to drive increases in world dairy trade to meet that demand.

The report includes much more detail on milk production, product consumption and dairy trade as well as details on the leading world dairy companies and investment in processing around the globe. There are individual reports on 52 countries, as well as research reports on topics ranging from a focus on the dairy supply chain in Latin America to an overview of milk prices and milk costs of production worldwide. The full 238-page IDF World Dairy Situation 2013 report is available for purchase from IDF.