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Global Perspectives on Milk Production, Dairy Demand, Prices and Risk Changing Perspective of IFCN- On Milk Production, Prices and India

IFCNDairyResearchNetworkGermany,associated with UniversityKielPrashantTripathi,NetworkManagerPrashant.Tripathi@ifcndairy.org

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Milk production 2014 by regions

Country data: Milk production 2014 (cow and buffalo) in ECM. Regional data: Milk production 2014 (cow and buffalo) in natural fat and protein content. If not available 2013 data was taken for IN, NZ,2011 for AR.

Source: D3.2 - Dairy Sector Analysis with Base Line Projection 2025

India157

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Worlds milk production growth2006- 1/2016 and estimates for Feb-April 2016

Change in global milk supply (YoY)

Key findings

1. Milk supply growth reacts on dairy farm economics but with a substantial delay.

2. EU Post quota supply was stronger than expected and counted for ca. 1% point growth since 4/2015

3. IFCN estimated world milk supply growth for April 2016 at 1,5%

Key facts of this data base

1. 60 countries (>90% worlds milk)

2. ECM corrected (4% fat, 3,3% protein)

3. Leap year adjusted

4. Real time estimates (last 1-3 month)

5. Updates real time (mid of each month)

06/05/2016 © IFCN 2016

Deviation of national milk price from world milk price April 2016 (estimation)

60 countr ies analysed: EU-28, CIS: Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Ukraine , Uzbekistan,USA & Canada: Canada, USA, Latin America: Argentina , Brazil , Chile , Colombia , Mexico, Peru, Uruguay, Oceania: Australia, New Zealand, Asia: Bangladesh, China, India, Indonesia, Japan, Pakistan, Afr ica: Egypt, South Africa. Other: Switzerland, Turkey, Iran. Countries included represent 92% of world milk production. Data is preliminary or estimated.

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7EUweightedaverageis9USDaboveworldmilkprice

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Milk supply depends on cost coverage Cost of milk production in larger farms per country in 2014

USD

/ 100

kg

milk

(ECM

)AverageofthecombinedIFCNworldmilkpriceindicatorin

2014:

42.5USD/100kgECM

32.1EUR/100kgECM

6.7NZD/kgmilksolids

18.4USD/CWT(USD/CWTWith3.74%fat&3.12%protein)

Comment: Larger/better managed farms in the countries, analysed year: 2014. ECM: energy corrected milk (4% fat, 3.3% protein). Exchange rates used : 1 € = 1.245 USD, 1 NZD = 0.793 USD.

AverageofthecombinedIFCNworldmilkpriceindicatorin

2015:

28.0USD/100kgECM

25.2EUR/100kgECM

4.4NZD/kgmilksolids

12.1USD/CWT

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Absolute changes in milk volumes in 1000 t ECMApril 2016 vs. 2015 (estimation done mid April)

60 countr ies analysed: (p = milk production, d = milk delivery): EU-28:(d), CIS: Armenia (p), Azerbaijan (p), Belarus (p), Kazakhstan (p), Kyrgyzstan (p), Moldova(p), Russia (p), Tajikistan (p), Ukraine (p), Uzbekistan (p),North America: Canada (d), USA (p), Latin America: Argentina (p), Brazil (d), Chile (d), Colombia (d), Mexico (p), Peru (p), Uruguay (d), Oceania: Australia (d), New Zealand (p), Asia: Bangladesh (p), China (p), India (p), Japan (p), Pakistan (p), Afr ica: Egypt (p), South Africa (p). Other: Switzerland (d), Turkey (d), Iran (p). Countries included represent 92% of world milk production. Data is preliminary or estimated.

Milkproducedordeliveredincountriesanalysed.Seecountrylistbelow.

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Source: IFCN database

Where are the farms located?Number of dairy farms 2014, incl. estimates

Source: D3.2 - Dairy Sector Analysis with Base Line Projection 2025

Total number of dairy farms in 2014: 123.6 million- 1% decrease vs 2013

PK7mill

India76mill

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India milk price developments 2006-16and the three phases

Source: D3.2 - Dairy Sector Analysis with Base Line Projection 2025

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Farm gate milk price in India

IFCN World Milk Price Indicator

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India milk price and dairy trade 2006-15

Source: D3.2 - Dairy Sector Analysis with Base Line Projection 2025

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Farm gate milk price in India

IFCN World Milk Price Indicator

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Milk prices Dairy Trade in milk equivalants

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IFCN Baseline outlook for India -2025

Source: D3.2 - Dairy Sector Analysis with Base Line Projection 2025

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06/05/2016 © IFCN 2016Source: D3.2 - Dairy Sector Analysis with Base Line Projection 2025

ME: Milk equivalentBubbles magnified by ratio 2:1 to increase visibility

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World milk balance 2025Milk surplus and deficit in mill t ME

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Sum up

1. The third world dairy crisis is the longest one in the last 15 years due to EU post quota reaction. Nevertheless we have indicators to monitor it in real time.

2. Long term average world milk price will continue as in the last years – Ø 40 USD/100 kg ECM

3. India to become a net importer in future.

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Thank you for your attention

Dairy Research Center

in Kiel

Network of researchers

Conference 2015 hosted by GEA

Network of companies

Conference 2015 hosted by Cargill and Elanco

This presentation is the result of a large number of people working together since 2000.

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Additional slides once needed

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Range of IFCN milk price indicators (SMP&butter, cheese&whey, WMP)

Combined IFCN world milk price indicator

World milk price monthly since 2006

Monthlydata2006- 2016

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Combined IFCN world milk price indicator: weighted average of 3 IFCN world milk price indicators: 1. SMP & butter (35%), 2. Cheese & whey (45%), 3. WMP (20%)

$/CWT

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Oil, feed & milk prices 1981-2016

$/CWT

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06/05/2016 © IFCN 2016Source: D3.4 - IFCN Monthly real time data

Dairy farm economics – milk/feed prices drive milk production growth 2006-2016Worldmilk/feed pricesinUS$/100kg

Farmeconomic indicatorinUS$/100kgmilk

Prices in USD/100 kg (ECM) Margin over compound feed costs in USD/100kg Change in milk production on monthly basis

farm economics: Production: Leap year adjustment. February adjusted to 28 days

How to use this sheet:For selecting countries for the charts, please type in the numbers (country codes) into the yellow boxes below.

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Margin over compound feed costs (0.3 kg/kg milk)

Bound - average 2007-2015

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IFCN combined world milk price indicatorIFCN world feed price indicator

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% change to previous yearAverage annual % change

Globalgrowth milkproduction%year to year

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Change in global milk supply (including estimates for the last 3 months)

Source: Data product - Monthly real time data of milk production, milk & feed prices, status 5/2014

Ex planation: Relativ e c hange of the 12-months ro l ling s um of mi lk production express es the rela tiv e deviation of mi lk produc tion in a 12 month period compared to the s ame period one year before. Countries inc luded represent 92% of world mi lk production. Data is adjusted for leap year effect.

Key facts of this data base

1. 60 countries (>90% worlds milk)

2. ECM corrected (4% fat, 3,3% protein)

3. Leap year adjusted

4. Real time estimates (1-3 month)

5. Updates (mid of each month)

IFCN Dairy Data – Milk supply