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The way forward for Sub-Saharan dairy industries within a globalised dairy world K Coetzee JA Pienaar August 2019
The way forward for Sub-Saharan dairy industries within a globalised dairy world
K Coetzee
JA Pienaar
August 2019
Global dairy structure
Implications for SSA dairy industries
Meeting the challenges
Global dairy structure
Implications for SSA dairy industries
Meeting the challenges
Global dairy structure
¨ Large informal sector ¨ Small-scale production
Informal, 46.0%
Fresh milk and dairy products,
16.0%
Butter, 15.0%
Cheese, 14.0%
Full cream milk powder,
4.0%
Skimmed milk powder,
3.0% Other, 2.0%
Global dairy structure
¨ Large informal sector ¨ Small-scale production
¨ 120 million dairy farms
¨ Average size = 3 cows/farm
Global dairy structure
¨ Large informal sector ¨ Fast growing demand
100
102
104
106
108
110
112
114
5,900
6,100
6,300
6,500
6,700
6,900
7,100
7,300
7,500
2005 2008 2009 2010 2011 2012 2013 2014 2015 2016
Per capita consump/on
(kg)
World popula/on (million)
World population Per capita consumption
Global dairy structure
¨ Large informal sector ¨ Fast growing demand ¨ Six countries = 80% of
trade
New Zealand 28%
EU 26%
USA 14%
Australia 5%
Belarus 5%
Argentina 2%
80%
Rest of the world 20% 100%
Global dairy structure
¨ Large informal sector ¨ Fast growing demand ¨ Six countries = 80% of
trade ¨ Large processors
dominate trade
Top 10 Milk processors, 2018
Rank Company Share of world milk production
1 Dairy farmers of America 3,5%
2 Fonterra 2,8% 3 Groupe lactalis 2,4% 4 Arla Foods 1,7% 5 Nestle 1,6% 6 Friesland Campina 1,6% 7 Saputo 1,2% 8 Dean Foods 1,1% 9 Amul 1,0%
10 Danone 1,0% % of world milk 17,9% % of world formal milk 33,7%
Source: IFCN, 2018
Global dairy structure ¨ Large informal sector ¨ Fast growing demand ¨ Six countries = 80% of
trade ¨ Large processors
dominate trade ¨ Domestic support
¨ PSE for dairy down to 12%
¨ Intervention in EU ¨ Farm bill in USA
Global dairy structure ¨ Large informal sector ¨ Fast growing demand ¨ Six countries = 80% of
trade ¨ Large processors
dominate trade ¨ Domestic support ¨ Price volatility
500
700
900
1 100
1 300
1 500
Index
GDT price index
Global dairy structure ¨ Large informal sector ¨ Fast growing demand ¨ Six countries = 80% of
trade ¨ Large processors
dominate trade ¨ Domestic support ¨ Price volatility
1 400
2 400
3 400
4 400
5 400
6 400
Jan-
12
Jul-1
2
Jan-
13
Jul-1
3
Jan-
14
Jul-1
4
Jan-
15
Jul-1
5
Jan-
16
Jul-1
6
Jan-
17
Jul-1
7
Jan-
18
Jul-1
8
Jan-
19
Jul-1
9
US$ per ton
Butter SMP Cheddar FMP
Global dairy structure ¨ Large informal sector ¨ Fast growing demand ¨ Six countries = 80% of trade ¨ Large processors dominate
trade ¨ Domestic support ¨ Price volatility ¨ Globalisation of industry
Morocco Centrale Danone 0.7
South Africa Clover (A)
0.7
Egypt Juhayna
0.3
Nigeria FrieslandCampina Wamco 0.4
Africa Parmalat (Lactalis)
0.5
Tunisia Délice
0.3
Global dairy structure
Implications for SSA dairy industries
Meeting the challenges
Threats
¨ Milk powder imports ¨ SMP intervention stocks
0
80,000
160,000
240,000
320,000
400,000
Aug 14
Oct 14
Dec 14
Feb 15
Apr 1
5 Jun 15
Aug 15
Oct 15
Dec 15
Feb 16
Apr 1
6 Jun 16
Aug 16
Oct 16
Dec 16
Feb 17
Apr 1
7 Jun 17
Aug 17
Oct 17
Dec 17
Feb 18
Apr 1
8 Jun 18
Aug 18
Oct 18
Dec 18
Feb 19
Apr 1
9 Jun 19
Tonnes
Irlande
Finlande
Royaume-‐Uni
France
Belgique
Lituanie
LeKonie
Pologne
Allemagne
Rep. tchèque
Pays-‐Bas
Estonie
Espagne
Slovaquie
Threats
¨ Milk powder imports ¨ “Food aid”
¤ Legalised dumping
Threats
¨ Milk powder imports ¨ “Food aid”
¤ Legalised dumping ¤ Monetization
¨ Sale of food aid on market.
¨ By-pass import tariffs
Threats
¨ Milk powder imports ¨ “Food aid”
¤ Legalised dumping ¤ Monetization
¨ Non-tariff barriers
Opportunities
¨ Growing market
Opportunities
¨ Growing market ¨ Low cost production ¨ No subsidies
0 10 20 30 40 50 60 70
KE-
2
KE-
8
UG
-1
UG
-3
ZW-7
5
ZA-2
30
Cost P&L - non milk returns Opportunity costs Quota costs Milk price
Opportunities
¨ Growing market ¨ Low cost production ¨ No subsidies ¨ Location
0 5
10 15 20 25 30 35 40 45 50
KE-
2
KE-
8
NZ-
397
Cost P&L - non milk returns Opportunity costs Quota costs Milk price
Global dairy structure
Implications for SSA dairy industries
Meeting the challenges
� Milk quality assurance
� Animal health and welfare
� Integrating small-scale producers into value-chain
� Managing food aid
� Managing donor funded programs
� Managing regional integration
