Global dairy shortage looming – Bord Bia seminar

A slowdown in global dairy supply and an increase in global demand is going to maintain higher prices, according to CEO of international dairy analysts GIRA Christophe Lafougere.

Lafougere was speaking at a Bord Bia dairy seminar in Naas on Thursday. He said his organisation is predicting that global dairy supply will increase by just 0.8% per annum over the next five years.

Within that, he predicts that North American supply will grow by 0.6% and New Zealand and Australia by 0.5% per annum.

For Europe, he says the best-case scenario is for a 0.2% increase in supply. The worst-case scenario, he says, is a contraction of 1.7% in supply across Europe, when each governments' environmental targets are taken into account.

Lafougere says that bluetongue is having a major impact on EU milk supply, with Germany, France and Netherlands suffering cow losses, poor fertility and low milk yields as a result of the midge-borne infection.

Growing markets

For 2025, he says he expects German milk supply to be back 1.7%, France and Netherlands to be back 1.2%, while he expects Irish milk supply to increase by 2.5% in 2025.

In terms of growing markets, he says southeast Asia will outperform China as the region with the largest dairy imports.

Interestingly, southeast Asia had similar dairy imports as China in 2019, but has since surpassed China in terms of import volumes.

GIRA expects southeast Asian imports to increase by 2.5% per annum and, importantly, Lafougere says that dairy in the region must come from imports, as, unlike China, there is no substantial domestic dairy industry in the region.

Products

Lafougere says that there will be a continuation of the increase in demand for butter and cream. In addition, he expects that the increased trend in consumption of drinking milk will continue and he says that most of the increase in demand for drinking milk is for full fat milk, as opposed to skim milk.

This in turn means there will be less fat available for other products, as more milk will be consumed as whole milk.

There is also set to be a continuation of the increase in demand for yogurt, which he says is largely driven by the demand for fortified protein yogurt.

This in turn is going to lead to an increase in demand for protein, particularly whey protein concentrate.

He says there will be an increase in consumer goods fortified with protein, such as protein yogurts, ice-cream, etc.

He says cheese production is set to increase, partly as a means of producing extra whey, but that if more milk is going to be diverted to cheese and whole milk consumption, it means there will be less milk available for fats, such as butter and cream.

On the impact of potential US trade tariffs, the seminar heard that the impact of any tariffs will be greater now than the last time tariffs were applied.

This is because dairy prices are higher now, so the size of the tariff will be greater and consumer spending is already constrained by the high prices.

The Bord Bia dairy markets seminar is an annual event organised for the dairy industry and exporters.