Tetra Pak urges 'world view' to address dairy supply and demand imbalance


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Tetra Pak urges 'world view' to address dairy supply and demand issue

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The "traditionally domestic focused" dairy industry must adopt a "world view" to ensure increasing global consumer demand does not outstrip milk supply, says Tetra Pak.

Unveiling Tetra Pak's seventh annual Dairy Index report, A Global Balancing Act: Dairy Supply and Demand​, president and CEO, Dennis Jönsson said the global dairy industry is “approaching one of its most transformational eras”​ when dairy demand will likely exceed milk supply.

Processing technology and packaging giant Tetra Pak expects global dairy consumption - fueled by population growth, rising prosperity, and urbanization in Asia, Africa, and Latin America - to increase by 36% to more than 710m tonnes of liquid milk equivalent by 2024.

In the next decade, this booming demand from "milk deficit countries"​ such as China and Russia will likely outstrip supply from "milk surplus"​ markets such as New Zealand, the US, Australia, and the European Union (EU) - creating a supply deficit that will almost certainly drive up prices.

"It's predicted that the growth of supply of milk from milk supply countries this decade will not be able to catch up with this booming demand," ​said Jönsson.

Surplus & Deficit - Chart
Source: Tetra Pak

To address this predicted imbalance, the dairy industry must "take a world view of the supply of milk and the demand of consumers,"​ ​he said.

'Quick wins'

Challenges and opportunities are, however, "in equal measure"​ in this better interconnected world, said Tetra Pak.

Major "milk surplus" market, such as the European Union (EU), the US, New Zealand, and Australia, have significant opportunities to export dairy powders and ambient liquid dairy products to these dairy-hungry developing nations, it said.

"For dairy companies in developed export markets, meeting the demand from rapidly growing emerging markets offers a huge opportunity,​" said Jönsson.

"However, to ensure long-term success, these producers need to balance the 'quick wins' of exporting to fast growing economies against the need to continue to growth their domestic markets."

For exporters, this will mean "adapting to changing consumer demographics, behaviors and lifestyles,"​ he said.

Dairies in import markets across emerging regions such as Asia, Africa, and Latin America must meanwhile "overcome the challenge of securing a sustainable, high quality milk supply."

China and Saudi Arabia are among those setting the standard in these regions, said Jönsson

"Those who are getting it right are doing so in two ways: increasing investment in domestic farming, and partnering with companies in the export market," ​said Jönsson.

These measures, he added, will help achieve the "vital balancing act of shoring up the future of a sustainable dairy industry."

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