IFCN, the International Farm Comparison Network, has recently issued a very positive forecast for the future of the global dairy industry The organisation is positive that growth in demand will outstrip that of milk supply which. in turn, will strengthen the current positive level of farm gate milk prices
Currently, the global milk price that IFCN has been publishing based on its own monthly calculations, stands at 35 US-Cents This is considerably higher than the period 2016/17 when we had the last milk price crisis, just one in a row of many since 2007 and surely one in row of many such crises to come. Prices have recovered, yes. but there is still more than 250.000 tons of SMP in EU intervention stocks preventing the protein side of the dairy business from returning to a better earnings situation. No-one knows at this stage how and when the EU will release quantities of its hugc SMP pile to the market, nor is it clear which prices this powder will fetch. It stands to reason that sales of ‘old’ SMP can only be achieved at lower prices which will keep pressure up on milk protein
Before such a background, IFCN’s forecast until 2030 sounds a bit over optimistic The organization thinks that worldwide milk supply will increase by more than 300 million tons within the next 12 years. This is three times more than the US dairy industry is producing at this moment and a bit less than double the amount of milk deliveries in Europe. IFCN admit that this substantial growth will only happen if the milk price averages above 40 US-Cents
Needless to say, nobody has a clue now milk prices will develop. Most forecasts of the past failed miserably. Therefore, IFCN’s growth prognosis may come true or it may not. One thing is for sure, however: world population will grow by another 1.8 billion by 2030, and demand will increase accordingly.
IFCN’s positive statement was badly needed after the milk market crises to provide farmers with a good perspective on their future, hopefully keeping them milking despite all the ups and downs of the dairy sector.