In the developing countries, growth in milk output is expected to continue in Asia and Latin America. Assuming normal weather conditions and an average rate of production increase, India's milk output in the 1998/99 (April/March) marketing year could rise to 74 million tonnes. This would make India the world's largest milk producing country: slightly over 50 percent of India's milk comes from buffaloes. Growth in Indian milk production has been sustained by an expansion in domestic demand, although per caput consumption is still a relatively modest 65 kg of milk equivalent per year. Many Latin American countries are expected to see an expansion in milk output, mainly as a result of increased demand from their domestic markets. However, producers in the southern cone have had to cope with extremely heavy rains - attributed to the El Niño weather phenomenon - which has limited access to pastures. For example, by the end of March, some parts of Argentina had already exceeded the annual average rainfall for the year. For Latin American countries which are also exporters of dairy products, principally Argentina and Uruguay, a fall in international prices since the beginning of the year (see below) may also contribute to a slow-down in production growth. Despite a slow start to the year, imports by Brazil from the Mercosur are reported to be proceeding well, with the outlook good until Brazil's spring milk flush (September/October).
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WORLD | 539 | 547 | 555 |
EC | 125 | 125 | 125 |
United States | 70 | 71 | 71 |
India | 68 | 71 | 74 |
Russian Fed. | 36 | 34 | 33 |
Pakistan | 20 | 21 | 22 |
Brazil | 19 | 21 | 22 |
Ukraine | 16 | 15 | 14 |
Poland | 11 | 12 | 12 |
New Zealand | 10 | 11 | 12 |
Australia | 9 | 9 | 10 |
Export prices for most dairy products have fallen since the end of 1997 due to reduced import demand and, at the same time, rising output in several exporting countries, for example, Australia, New Zealand and Argentina, which has contributed to some growth in supplies to the world market. Products affected are butter, skimmed milk powder and whole milk powder: casein prices fell sharply in the first-half of 1997 and have remained depressed ever since. Cheese is the exception to the general trend as prices for this commodity have remained generally stable. Cheese prices have been sustained, to a degree, by commitments to limit subsidized exports under the Uruguay Round Agreement. For the remainder of 1998, international prices of dairy products are expected to remain weak as a result of ample export availabilities and sluggish import demand. Prices for butter and powder may fall further during the year, while those for cheese are expected to remain stable.
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April '96 | 69 | 11 | 0 | 5 |
April '97 | 58 | 116 | 0 | 0 |
April '98 | 33 | 137 | 0 | 0 |
High prices for dairy products on the international market in 1995 led many in the industry to look forward to a period of further increases, in part associated with decreasing export subsidies as a result of commitments under the Uruguay Round's Agreement on Agriculture. In some countries, the
optimism of 1995 led farmers to extend production - sometimes via the purchase of land at what today seem inflated prices. In many countries where prices are linked to those in the world market, the subsequent drop in world prices has led to a severe fall in profitability. The fall in world prices since the end of 1997 has in some cases been offset by currency devaluation (for example, in New Zealand and Australia), while in others (Argentina and Uruguay) it has been translated into sharply lower prices to the farmer. Should prices remain at current levels, this could limit production growth in such countries which export without the use of subsidies, although this could be partially offset by some growth in these countries' domestic use. Furthermore, low returns may be expected to speed-up the process of less efficient milk producers in these countries leaving the industry, with a concomitant increase in the average herd size.
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Butter | 1 425 | 1 775 | 1 675 | 1 675 |
Skimmed milk powder | 1 775 | 1 575 | 1 525 | 1 525 |
Whole milk powder | 1 775 | 1 800 | 1 725 | 1 725 |
Cheddar cheese | 2 150 | 2 163 | 2 113 | 2 100 |
Acid casein | 4 125 | 4 100 | 4 100 | 4 100 |