Over the past five years, aggregate milk production from the top 5 global dairy suppliers—the European Union (EU), New Zealand, the United States, Australia and Argentina—grew nearly 2 percent annually. That equates to an additional 5 million tons of milk per year, the US Dairy Export Council says.
For most of that time, seemingly unrelenting demand growth—driven primarily by China—fueled those production gains and absorbed the additional product. But in late summer 2014, demand growth abruptly evaporated, and a boom in Chinese purchasing that began in 2013 proved to be a bubble.
Then if you combine Russia’s import numbers with China’s, the contrast grows even starker. From boom to bust, China and Russia imports were slashed nearly in half—a drop of 8 million tons, milk equivalent, that simply vanished from global dairy demand. For context, that loss represents more than 10 percent of total world dairy trade.
USDEC estimates there currently could be 400,000 tons of excess milk powder inventory in suppliers’ hands and throughout buyers’ inventory pipelines.
Mer än bara mjölk!