RUMINANT NEWS

GLOBAL MILK PRODUCTION SLOWDOWN DUE TO RISE IN PRODUCTION COSTS

Rabobank says a current slowdown in global milk production can be largely attributed to an increase in overall production costs, with steep year-on-year rises in fuel, feed, fertiliser and labor, alongside new Covid restrictions. Milk production across the Big-7 exporting regions (The US, the EU, New Zealand, Australia, Brazil, Argentina, and Uruguay) contracted year-on-year in Q1 2022 for the third consecutive quarter despite higher farmgate prices. The milk output for the first half of 2022 is expected to decline 0.7% year-on-year. “The ongoing war between Russia and Ukraine has caused grains and oilseeds– among several other agricultural commodities and products – to reach unprecedented price levels,” according to Rabobank. “Although fertiliser is flowing from Russian ports, prices remain elevated, resulting in higher feed costs. Producers purchasing feed off-farm will be more susceptible to inflated agricultural commodity prices than producers that grow their own feed.” Also, the current logistical and financial challenges surrounding shipping make imported feeds very expensive, reducing producers’ margins. “On the plus side, strong farmgate prices are partially offsetting rising input costs, with May’s weighted average EU raw milk price up by 3% month-on-month to EUR 47.36 per 100 kg,” Rabobank explains. “In the US, milk production increases are stunted by a smaller dairy herd year-on-year, which is expected to be on par in Q3 2022.” Global dairy prices have dropped in the latest Global Dairy Trade auction, held in late June. The average price at the fortnightly sale dipped 1.3% to US $4,600 per metric ton.