7 Reasons Why Milk Export is a Lucrative Business in 2022
Milk export is a booming industry that offers many benefits for producers and consumers alike. In this article, we will explore 7 reasons why milk export is a lucrative business in 2022, based on the latest data and trends.
1. Milk export is a growing market with high demand
According to the World’s Top Exports, milk exports by country totaled US$36.4 billion in 2022, increasing in value by 26.3% for all milk shipping nations over the 5-year period starting in 2018 when international milk sales were worth $28.8 billion. Year over year, the value of globally exported milk rose by 5.1% compared to $34.6 billion for 2021.
2. Milk export is a diversified and competitive industry with many opportunities
The top 15 countries that exported the highest dollar value worth of milk during 2022 accounted for over four-fifths (82.1%) of worldwide milk exported in 2022, but there are also many other countries that are emerging as potential suppliers or markets for milk products. For example, China’s renewed whey demand helped drive U.S. whey product sales by 24% in 2020.
3. Milk export is a value-added and innovative industry with high quality standards
Exporting fresh liquid milk to the Middle East, for instance, requires advanced technology and logistics to ensure freshness and safety of the product. The UK-based company Freshways exports fresh milk to Dubai using specially designed containers that keep the milk chilled at 4°C throughout the journey.
4. Milk export is a sustainable and responsible industry with environmental and social benefits
Exporting milk can help reduce food waste, support local farmers, create jobs, and contribute to global food security and nutrition. Exporting milk can also help reduce greenhouse gas emissions by optimizing production and transportation efficiency.
5. Milk export is a profitable and rewarding industry with attractive returns
Exporting milk can generate higher revenues and margins than selling domestically, especially in markets where there is a high demand and low supply of milk products. Exporting milk can also help diversify income sources and reduce risks associated with market fluctuations.
6. Milk export is a strategic and opportunistic industry with favorable policies and agreements
Exporting milk can benefit from trade liberalization, market access, tariff reductions, and other incentives that facilitate cross-border trade of dairy products. For example, the Phase 1 U.S.-China trade agreement lifted some of the barriers for U.S. dairy exports to China in 2020.
7. Milk export is a dynamic and evolving industry with new challenges and opportunities
Exporting milk requires constant adaptation and innovation to meet the changing needs and preferences of consumers, as well as the emerging trends and developments in the global dairy market. For example, the global milk exports reached 76.7 million tonnes in terms of volume in 2019, an increase of 1.0 percent from 2018, representing a relatively modest growth compared to 3.2 percent expansion registered in 2018. This indicates that there is still room for growth and improvement in the milk export industry.
Milk Export: A Global Industry
Milk is one of the most widely consumed and traded agricultural products in the world. According to the World’s Top Exports website, milk exports by country totaled US$36.4 billion in 2022, increasing in value by 26.3% for all milk shipping nations over the 5-year period starting in 2018 when international milk sales were worth $28.8 billion. In this blog post, we will look at some of the trends and factors that affect the global demand and supply of milk and its products.
The Top Milk Exporters and Importers
The top milk exporter in 2022 was New Zealand, with an export value of US$7.8 billion, accounting for 21.4% of the total milk exports. New Zealand is known for its large and efficient dairy sector, which produces more than enough milk to meet domestic demand and exports the surplus to other markets, mainly in Asia. New Zealand’s main export products are whole milk powder, butter, cheese, and skim milk powder.
The second-largest milk exporter was Germany, with an export value of US$3.53 billion, representing 9.7% of the global total. Germany is also a major producer and consumer of dairy products in Europe, with a diverse product portfolio that includes fresh milk, cheese, yogurt, butter, and whey powder. Germany’s main export destinations are other European countries, especially France, Italy, the Netherlands, and Poland.
The third-largest milk exporter was the United States, with an export value of US$3.45 billion, accounting for 9.5% of the world’s total. The United States is the largest producer of cow’s milk in the world, with a high level of productivity and technology. The United States exports mainly skim milk powder, cheese, whey products, lactose, and butter to markets such as Mexico, Canada, China, Japan, and Southeast Asia.
The top milk importer in 2022 was China, with an import value of US$13.6 billion, increasing by 28.6% from 2021. China is the largest consumer of dairy products in Asia, with a growing demand for high-quality and nutritious products such as infant formula, cheese, yogurt, and butter. China imports mainly whole milk powder, skim milk powder, whey powder, lactose, and cheese from countries such as New Zealand, Australia, the European Union, and the United States.
The second-largest milk importer was Mexico, with an import value of US$4.2 billion, decreasing by 4.5% from 2021. Mexico is a major market for U.S. dairy products, especially cheese, skim milk powder, whey products, and butterfat. Mexico’s demand for dairy products is driven by its large population, urbanization, income growth, and dietary changes.
The third-largest milk importer was Germany, with an import value of US$3.9 billion, increasing by 9.9% from 2021. As mentioned earlier, Germany is also a major exporter of dairy products, which means that it has a high level of trade within the European Union and beyond. Germany imports mainly cheese, butter, fresh milk, yogurt, and cream from countries such as the Netherlands, France, Belgium, Denmark, and Poland.
The Factors Affecting Milk Export
Milk export is influenced by various factors such as production costs, exchange rates, trade policies,
demand preferences, weather conditions, and animal health issues. Some of these factors are explained below:
Production costs
The cost of producing milk depends on factors such as feed prices, labor costs, energy costs, and capital costs. These costs vary across countries and regions, depending on their resource endowments, technology levels, and market structures. For example, New Zealand has a low-cost production system based on pasture grazing, whereas the United States has a high-cost production system based on intensive feeding and milking. Production costs affect the competitiveness and profitability of milk exporters in the global market.
Exchange rates
The exchange rate is the price of one currency in terms of another currency. It affects the relative prices of domestic and foreign goods, and thus influences the trade flows between countries. A depreciation (fall) of the domestic currency makes exports cheaper and imports more expensive, which stimulates exports and reduces imports. Conversely, an appreciation (rise) of the domestic currency makes exports more expensive and imports cheaper, which reduces exports and increases imports. For example,
the depreciation of the New Zealand dollar against the U.S. dollar in 2022 made New Zealand’s dairy products more competitive in international markets, whereas the appreciation of the U.S. dollar against the Mexican peso in 2022 made U.S. dairy products more expensive for Mexican consumers.
Trade policies
Trade policies are the rules and regulations that govern the trade relations between countries. They include tariffs, quotas, subsidies, sanitary and phytosanitary measures, and non-tariff barriers. Trade policies affect the market access, prices, and quality of dairy products in different countries. For example,
the United States-Mexico-Canada Agreement (USMCA) is a free trade agreement that eliminates tariffs and quotas on most dairy products between the three countries, which facilitates trade and lowers prices for consumers. However, the European Union imposes high tariffs and quotas on dairy products from non-EU countries, which restricts trade and raises prices for consumers.
Demand preferences
Demand preferences are the tastes and preferences of consumers for different types of dairy products. They depend on factors such as income levels, cultural norms, health awareness, and environmental concerns. Demand preferences affect the quantity and quality of dairy products that consumers demand in different markets. For example, China has a high demand for infant formula and cheese, which are considered high-quality and nutritious products. However, India has a low demand for cheese and butter, which are considered high-fat and unhealthy products.
Weather conditions
Weather conditions are the natural phenomena that affect the climate and environment of different regions. They include temperature, precipitation, droughts, floods, storms, and diseases. Weather conditions affect the availability and quality of feed and water for dairy animals, and thus influence the milk production and quality in different countries. For example, droughts in Australia and New Zealand in 2022 reduced the pasture growth and milk production in these countries, whereas floods in Germany and Belgium in 2022 damaged the dairy infrastructure and disrupted the milk supply in these countries.
Animal health issues
Animal health issues are the diseases and disorders that affect the health and welfare of dairy animals. They include mastitis, lameness, brucellosis, tuberculosis, and foot-and-mouth disease. Animal health issues affect the productivity and quality of milk and dairy products in different countries. They also pose risks to human health and trade relations. For example, foot-and-mouth disease is a highly contagious viral infection that causes blisters and fever in cattle, sheep, goats, pigs, and other cloven-hoofed animals. It can reduce milk production by up to 50% and lower milk quality by affecting the fat, protein, and lactose content. It can also spread to humans through direct contact or consumption of infected products. It can lead to trade bans or restrictions by importing countries to prevent the spread of the disease.
Milk export is a global industry that involves many countries, products, and factors. It is influenced by various economic, political, social, and environmental factors that affect the supply and demand of milk and its products in different markets. Milk export is important for the income and livelihood of dairy farmers, processors, traders, and consumers around the world. It also contributes to food security, nutrition, health, and sustainability.
References:
http://faostat.fao.org/Portals/_Faostat/documents/pdf/FAOSTAT-Forestry-def-e.pdf
https://www.fao.org/faostat/en/#data/FO/visualize
https://www.fao.org/faostat/en/#data/QCL/visualize
https://www.worldstopexports.com/top-milk-exporting-countries/
https://www.statista.com/statistics/805280/top-exporters-of-milk-global/)milk export
https://www.worldstopexports.com/top-milk-exporting-countries/
https://www.usdec.org/research-and-data/market-information/top-charts-x1507
https://www.bbc.com/news/uk-england-birmingham-41498774
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