Bright or dark future? The global dairy landscape and opportunities of the EU in it

Transcription

1 Bright or dark future? The global dairy landscape and opportunities of the EU in it Dairy conference 3/ 2015 In Belgium Author: Torsten Hemme, IFCN Dairy Research Center at University Kiel, Outline 1. IFCN research concept 2. Milk prices and its drivers demand, supply, farm economics 3. The dairy world in 10 years incl. view on EU after quota 4. Summing up

2 IFCN is a way to understand a complex & fast changing dairy world IFCN - a global research network Network of researchers 1. The IFCN is a global network of researchers and dairy related companies to create a better understanding of the dairy world. 2. We at IFCN - International Farm Comparison Network - started in 2000 with the basics - the cow and the dairy farmer. Network of companies 3. The IFCN has a Dairy Research Center with 15 dairy researchers. It has a cooperation with University Kiel, Germany. Dairy Research Center

3 IFCN mission: We create a better understanding of the dairy world by providing comparable data, knowledge and inspiration India Brazil Status of the IFCN Network in 2014 Researchers partners f. 100 countries Supporting partners (> 100) Farm Comparison: 51 countries & 61 dairy regions Country Profile: 100 countries (49 other than farm comparsion) IFCN has also partnerships with

4 IFCN results at public events IFCN - An ongoing knowledge creation system Kick off meeting Kiel Activities in the different months of the year Method work Data validation & analysis September Conference June Conference Outline 1. IFCN research concept 2. Milk prices and its drivers demand, supply, farm economics 3. The dairy world in 10 years incl. view on EU after quota 4. Summing up

5 World market prices Oil, Feed, Milk in US-$ 120 Crude oil 40 Feed 55 Milk Europe Spot Brent Price FOB (US-$/bbl) US-$ / 100 kg feed US-$ / 100 kg milk ECM = 2013 / 2014 high = 2013 / 2014 low IFCN feed price indicator based on corn and soybean meal IFCN milk price indicator based on a basket of dairy products IFCN world milk price indicator Lows 33 US$, 21 GBP, pounds 33 pounds 26 pounds 20 pounds 13 pounds Combined IFCN world milk price indicator: weighted average of 3 IFCN world milk price indicators: 1. SMP & butter (35%) 2. Cheese & whey (45%) 3. WMP (20%) Shares are based on volumes traded on the world market. Data until March 2015 Source: IFCN Database 2014

6 World milk prices drive national prices Monthly milk price developments (until March) Germany USA Brazil US-$ per 100 kg milk ecm 4% fat/3,3% protein Source: IFCN Database 2013 Outline 1. IFCN research concept 1. Dairy trade perspective 2. Milk prices and its drivers demand, supply, farm economics 3. The dairy world in 10 years incl. view on EU after quota 4. Summing up 2. Dairy demand perspective 3. Dairy supply perspective

7 1. The dairy trade perspective Global dairy market 2013 in milk equivalents (million t) EU-28 Deficit in mill t Source: IFCN Database Milk demand perspective World milk demand growth in mill t or %/year + 12 mill t via more per capita consumption Ø 16,8; 2,4%/ year mill t via more people on earth 8,8 Cow and buffalo milk in ECM milk ( 4% fat, 3,3% protein) Source: IFCN Database 2014

8 IFCN milk demand figures Per capita dairy consumption in kg milk equivalents (ME) > Source of data: National statistics, FAO, IMF. Calculation: Dairy consumption = milk production of all milk animals plus import minus export volumes plus or minus stock changes. Per capita consumption = dairy consumption in the country divided by population. Specification: Milk production data in ECM (Energy corrected milk) standardised to 4% fat and 3.3 % protein. ME (milk equivalent) based on fat and protein only. Source: IFCN Dairy Report Milk supply perspective Milk supply 2013 in mill t ECM Total milk produced in 2013: 756 mill ton ECM Source: IFCN Database 2014

9 Where did world milk production grew? Change in milk production ø / year EU Milk production increased (in mill tons/year) Milk production decreased (inill tons/year) IFCN Dairy Report 2013 estimates for the year 2013 Dairy farm economics a key driver for milk supply growth Data f /2015 estimates World milk and feed price IFCN margin over compound feed costs % change in milk production 60 countries IFCN world milk price US-$ per 100 kg IFCN world feed price 30% soyabean meal, 70% corn Explanation: Relative change of the 12-months rolling sum of milk production expresses the relative deviation of milk production in a 12 month period compared to the same period one year before. Countries included represent 92% of world milk production. Data is adjusted for leap year effect. Source: Data product - Monthly real time data of milk production, milk & feed prices, status 5/2014

10 Belgium milk prices and production Milk price in Euro % change in milk production Euro per 100 kg milk ecm 4% fat/3,3% protein Source: IFCN Database 2015 Outline 1. IFCN research concept 2. Milk prices and its drivers demand, supply, farm economics 3. The dairy world in 10 years incl. view on EU after quota 4. Summing up

11 Two sentences what we belief regarding forecasts 1. Predicting the future shall be done in a dialog. 2. Predicting the future shall be continued process History of the IFCN Dairy Baseline? Step 900 mill t in qualitative work Step: Quantitative work + mile stone in IFCN development analysis and database for globally consistent and comparable Step: Refine, improve and deepen feedback received in 03/2014 new IFCN Baseline Step: Improvement outlook 2015 Sources: Baseline done 3/ 2014 Dairy sector database and baseline projection product, IFCN Dairy Research Center

12 Baseline assumptions - milk &feed price World milk and feed price IFCN world milk price US-$ per 100 kg IFCN world feed price Milk price assumption 44,5 US-$; 19$/cwt Feed price assumption 33 US-$, IFCN Baseline process = 1. Estimating milk supply and demand growth in all countries world wide and see how the sum matches. 2. If they do not match => change the milk price assumption Sources: Baseline done 3/ 2014 Dairy sector database and baseline projection product, IFCN Dairy Research Center China Country fact sheets Supply & demand balance Milk supply, demand, Imports/export Self sufficiency Milk supply details % growth / year Cows & milk yield Farm number and size Milk demand details % growth / year Population Per capita consumption

13 China - Dairy developments until 2024 => Milk production +4 mill t demand +3%/year, imports + 10 mill t + 4 mill t -13% + 2,5%/year + 10 mill t milk 70% Sources: Baseline done 3/ 2014 Dairy sector database and baseline projection product, IFCN Dairy Research Center Where will the world be in 10 years? Global results of IFCN Baseline 2024 Variable Results 2024 % change 2024 vs 2013 Milk production + consumption Per capita consumption 1,023 mill t ECM mill t to kg milk per capita / year +30% + 14% Population 8 bn +14% Milk animals 399 mill cows and buffalos + 13% Milk yield t ECM / milk animal / year +15% Sources: Baseline done 3/ 2014 Dairy sector database and baseline projection product, IFCN Dairy Research Center

14 Where will the growth happen? IFCN Baseline results on production growth next 10 years + 15% + 22% + 12% + 15% + 48% + 50% + 25% but from lowered base + 57% Milk delivered Milk not delivered + 26% Milk volumes cows & buffalo milk standardised to 4% fat and 3,3% protein Sources: Baseline done 3/ 2014 Dairy sector database and baseline projection product, IFCN Dairy Research Center And what about the EU after quotas? Is this the right question or shall we ask: 1. What opportunities we have with latest exchange rate developments? 2. How much milk will be produced at what milk/feed price scenario? 3. How can we better support dairy farmers which grow their farms milk output at a rate of >10% per year? => First thing can be stop hindering / discriminating. Source: IFCN Dairy Research Center

15 Costs of milk production Data for typical dairy farms (est. 2014/15) Exchange rate US-$/Euro Cost of milk production 26 pounds Source: IFCN Dairy Research Center EU - Dairy developments until 2024 => Milk production + 12%, demand moderate, exports + 13 mill t + 1%/year +12 % + 13 million t milk 18% of EU milk to be exported Sources: Baseline done 3/ 2014 Dairy sector database and baseline projection product, IFCN Dairy Research Center

16 Where in Europe will milk production grow? Annual change in milk production by region in mill t Change Change (partly est.) Milk production increased in mill t Milk production decreased in mill t Sources: Dairy sector database, IFCN Dairy Research Center Criteria for winning dairy regions Farm structure dynamics cows / size class in 1,000 s Poland France Denmark size classes, cows per farm: size classes, cows per farm: size classes, cows per farm: cows per herd size class in 1,000 s Ø herd size change to 6 30 to to 147 Ø change in farm no. -78% -53% -74% Sources: Dairy sector database product, IFCN Dairy Research Center

17 Criteria for winning dairy regions A competetive milk processors & dairy chain IFCN Processor Ranking 2014 by milk intake Rank Company name Orgin & main operation countries Milk intake, in mill. t milk equivalants Turnover per kg milk, in US-$ Market share in % of world milk production 1 Dairy Farmers of America USA 27,8 0,5 3,7% 2 Fonterra Co-operative Group New Zealand/ others 22,0 0,7 2,9% 3 Groupe Lactalis (incl. Parmalat) France/others 15,0 1,3 2,0% 4 Nestlé Switzerland/others 14-15* 1,25* 2,0% 5 Arla Foods Denmark/Sweden/others 12,7 1,1 1,7% 6 FrieslandCampina Netherlands/others 10,3 1,1 1,4% 7 Dean Foods USA 10,1 0,9 1,4% 8 Danone France/others 8-9* 1,9* 1,1% 9 California Dairies USA 8,1 0,7 1,1% 10 DMK Deutsches Milchkontor Germany 6,8 1,0 0,8% 11 Saputo Canada/USA/others 6,0 1,1 0,8% 12 Glanbia Group Ireland/USA/others 6,0 0,7 0,8% 13 Land O' Lakes USA 5.4* 0,7* 0,7% 14 Groupe Sodiaal France 5,2 1,0 0,7% 15 Amul (GCMMF) India 4,8 0,5 0,6% 16 Yili Group China 4,5-5* 1,6* 0,6% 17 Unternehmensgruppe Theo Müller Germany/UK, others 4,4 1,5 0,6% 18 Mengniu Dairy Company China 4-4.5* 1,6* 0,6% 19 Bongrain France/others 4,2 1,4 0,6% 20 Darigold (Northwest Dairy Association) USA 3,6 0,6 0,5% Sum of Top ,2 1,0 25% Source: IFCN Dairy Research Center Sum up IFCN dairy perspectives and EU dairy opportunities Milk demand: We need a >20 mill t more milk each year! Milk supply: Can meet demand growth once milk price, feed price, weather and policy is ok. Milk price assumption 2/2014 : milk supply & demand balance out at a milk price 44,5 $ / 37 / 100 kg milk * EU dairy opportunities: - Once you can grow milk supply at Go + grow! - More milk in the EU most will be exported - We recommend to build regional dairy think tanks * Technical comments: There are alternative outlooks/scenarios but the one shown has for us right now the highest probability Source: IFCN Dairy Research Center

18 This presentation is the result of a large number of people working together since 2000 Network of researchers Network of companies Dairy Research Center IFCN 2014