THE dairy industry has emerged from the global financial crisis “shaken but not stirred” with a positive medium-term outlook, according to Rabobank.
In its recently-released Global Dairy Report – Beyond the Global Financial Crisis, Rabobank says a “brutal chapter in the history of the global dairy industry appears to have drawn to a close” as the sector emerges from “the completion of a phenomenal boom/bust cycle in the global dairy market”.
And while the industry has been dented – effectively losing a year of demand growth and with consumption likely to remain behind its original schedule in coming years – solid fundamentals should support global dairy price recovery into the medium term – 2011-13.
Rabobank senior analyst Tim Hunt said the demographic and cultural trends supporting dairy consumption growth had emerged largely unscathed from the GFC.
“And, as per-capita income once more begins to increase in the coming years, global dairy demand is expected to rise steadily,” he said.
Added to the rising demand, milk supply constraints in low-cost production regions – largely in the southern hemisphere – will most likely push up global prices as the market calls for additional exports from higher cost supply regions, including certain parts of the United States and the European Union, that have the capacity to expand in the medium term.
Market volatility will remain an ongoing factor however, with dairy market players needing to develop robust business models to withstand a volatile environment, the report advises.
* Full report www.rabobank.com.au
