Growing populations in emerging countries, rising middle classes and diets favouring animal proteins all augur well for fast-rising dairy demand in sub-Saharan Africa, the Middle East, southeast Asia and, of course, China.
Our competitors are well ahead. New Zealand benefits from bilateral trade agreements with China for powder exports, as outlined by Fonterra’s Paul Campbell.
New Zealand milk processors have invested in seven new infant formula plants since 2011, with more planned for 2015, according to Tetra Pak’s Tim High.
The US has gone from opportunistic exporter of subsidised surpluses to strategic exports. John Davis of Davisco and Dermot Carey of Darigold, a major US co-op based in Seattle, both outlined their determined export strategies toward emerging regions.
Ireland is ahead of most of the rest of Europe. This came strongly from excellent contributions by Siobhan Talbot of Glanbia, and Jim Woulfe of Dairygold.
All speakers agreed that managing volatility of margins will be the key to competing successfully.
The short-term is challenging. IFCN’s Torsten Hemme showed strong profitability on dairy farms has raised global output to May 2014 by 3%, 4% in the EU alone, while demand growth has eased to under 2%.
I left the conference feeling quite optimistic, but not complacent.
Competitiveness is key to successfully reaping the opportunities of international dairy markets and we need to learn how to manage the roller coaster ride of margin volatility.
*Sean O’Leary is chairman of IFA’s Dairy Committee
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