Higher international producer prices expected

International milk producer prices will have to increase in future to a long-term average price of US$44,5 per 100 kg energy-corrected milk (R5,27/litre)  to keep the global dairy supply and demand in balance. This is the consensus opinion of dairy scientists who attended the 16th IFCN Dairy Conference in Kiel, Germany between 8 and 10 June 2015. Dr Koos Coetzee represented the South African industry at the conference. Delegates agreed that current lower international producer prices will not encourage the increased production needed to fulfil the growing demand for dairy.

Delegates learnt that the IFCN world price index peaked at the end of 2013 and has since decreased steadily, thus reflecting the decrease in international product prices. The IFCN world milk price indicator decreased by 16% from 2013 to 2014. This is the highest annual drop in prices since 2009. Global milk production increased by 25 million tonnes (3,1%) in 2014, mainly driven by the higher producer prices paid in 2013. Milk demand increased at an estimated 21 million tonnes or 2,7%. Current producer price levels are not sustainable. Dr Coetzee’s attendance was partially funded by Milk SA.