Market Opportunities in the Dairy Sector

In recent decades, global trends and production have shown a stagnating level of milk consumption and of dairy farms in many developed countries, especially in the European Union, but a growing demand in some developing countries, notably in China (FAO, 2013). This suggests increasing demand and relatively high prices for milk and dairy products that could provide an opportunity for the millions of small dairy farmers located in developing countries (ibidem). In 2013, world milk production grew 1.9% (see Table 4.2.2.1). Although international dairy products prices have declined in recent years, they still remain at historically high levels. The main countries augmenting production are in Asia, which is the main market for dairy products; Latin America; and the Caribbean—in particular, Indonesia, Japan, Philippines, Malaysia, Vietnam, Thailand, China, and Iran will become important new markets (FAO, 2013). In South Asia, the growth in total demand has been significant, even though in Bangladesh average consumption per capita is still low, even though it is a country where dairy products are integral to the diet (McLeod, 2013).

At EU level, The new reform of the Common Agricultural Policy may also affect farmers' technology choices; the phasing out of milk quotas could cause higher

Table 4.2.2.1 FAO International Dairy Price Index.

2011

2012

estim.

2013 f'cast

Change: 2013 over 2012

million tonnes

%

WORLD BALANCE

Total milk production

742.2

765.6

780.3

1.9

Total trade

49.7

53.4

53.0

-0.9

SUPPLY AND DEMAND INDICATORS

Per caput food consumption:

World (kg/yr)

105.2

107.3

108.2

0.8

Developed (kg/yr)

234.6

237.0

236.2

-0.3

Developing (kg/yr)

71.7

74.0

75.6

2.2

Trade share of prod. (%)

6.7

7.0

6.8

-2.7

FAO DAIRY PRICE INDEX (2002-2004=100)

2011

2012

2013

Jan-Oct

Change: Jan-Oct 2013 over Jan-Oct 2012 %

230

194

240

25.0

Source: FAO, 2013b

production (Alvarez and Arias, 2015). But market access is often limited by weaknesses and new challenges in dairy industry development. Figure 4.2.2.1 shows the crucial features in a complex structured and formal market dairy sector: Elements of a less organized dairy sector included those inside the triangle plus consumer.

Figure 4.2.2.2 highlights the percentage share of various dairy products in the total value of dairy exports. Categories include butter and ghee; evaporated milk and condensed

Features of an organized dairy sector. Source

Figure 4.2.2.1 Features of an organized dairy sector. Source: FAO, 2013

Percentage share of various dairy products in the total value of dairy exports, 1990 to 2008. Source

Figure 4.2.2.2 Percentage share of various dairy products in the total value of dairy exports, 1990 to 2008. Source: McLeod (2013)

milk; fresk milk; dry milk; cheese; and others. New advances in the dairy industry shed light on recent developments in the area of dairy ingredients and dairy technology: Indeed, market trends and opportunities derive and are in line with with the latest science tools that provide basis for successfully capturing these opportunities (Smithers and Augustin, 2013). In this context, functional foods (FF) can be considered key drivers of the worldwide food economy and dairy ingredients representing a first step of these new development paths. Functional foods are adapted food that claims to improve health and to combat certain chronic illnesses by providing benefits beyond that of the traditional normal nutrients. In the dairy industry, the focus is on the traits related to cheese-making ability and on the nutraceutical aspects of milk (Macciotta et al., 2005).

Starting from the analysis of Polish dairy market, Hanf and Pieniadz (2007) studied the organization of two chain quality management highlighting that well-branded products manufacturers implement strategic quality management in line with existing market opportunities so facing the new challenges and weaknesses.

Finally, a crucial aspects is enhancing the quality and safety of dairy sector in order to take market opportunities so maintaining the competitiveness in the food and beverage market (Yeung, 2012).

 
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