The World Dairy Situation 2000

World milk production is estimated at 571 million tonnes for the year 2000, which is 8 million tonnes or 1.4% higher than 1999. The speed of growth has slightly slowed down. The largest increase is expected for buffalo milk production with 4% growth, which is also slower than in previous years. In absolute terms, however, cow milk production will grow most at 6 million tonnes to 487 million (+ 1.5%). The share of cow milk remains at 85% and that of buffalo 11.3%. The growth of cow milk production is well spread throughout the world, with the exception of Western Europe and some Central and Eastern European countries. In the EU, it is slightly declining because new quota allocations will be offset by a stricter quota discipline. In Eastern Europe, the forecasts and expectations vary from country to country according to the general situation and the impacts of the severe spring drought. But Russian production may manage to maintain the stability which was achieved in 1999. Sixty-eight per cent of all milk produced is delivered to dairy companies in the countries from where statistics are available. Thus the share has not increased significantly in recent years, because in many developed countries it is already near to 100%. But in others, particularly in some Eastern European and Latin American countries, shares are still low, ranging from around 10% in India, around 40% in CIS countries to nearly 90% in Hungary. Many dairy companies in Eastern Europe still have many difficulties to overcome in order to become attractive partners for large dairy farms as an alternative to their own distribution channels. In the international dairy industry the concentration process through mergers, acquisitions and formation of strategic alliances is ongoing. Already large companies are becoming even larger, and the rate of expansion over national borders is increasing. This is happening not only in the EU but also in other parts of the world. In developed markets, liquid milk sales are stagnating, and the overall volume is partly dependent on weather conditions, with increasing sales in hot periods. Growth is mainly in the sector producing higher added value products: milk drinks, yoghurts, desserts. Within the ordinary milk range, product types with longer shelf life are gaining shares at the expense of the traditional pasteurized products. In emerging markets, growth of all major types is occurring, but here also the long-life products are the sector showing the fastest growth. World butter production is stable at around 4.2 million tonnes after several years of decline. This stabilization is mainly due to higher milk production which is providing enough raw milk to the growing sectors of milk processing. Thus these sectors can absorb more milk but leave the quantity of cream which is available for butter production unchanged. In absolute terms, cheese production is growing fastest with annual rates of between 2 and 3% in the world's major producing areas. This growth is mainly driven by continued unsaturated demand even in countries with a high consumption level. The production of whole milk powder continues to grow and will almost achieve a world-wide volume of 3 million tonnes. In recent years the growth was mainly concentrated in Oceania, China and Argentina.