Dutch dairy giant forecasts global milk production drop

One of the world’s largest dairy co-operatives, FrieslandCampina, has forecast global milk production to continue to fall in the second half of this year.

However, world demand would only grow modestly during the same period, said the Dutch giant in its half-year financial report.

Reduced purchasing power in many oil-exporting countries, lower Chinese appetite for dairy and Russia’s continued import ban, were identified as reasons for the restrained demand.

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UK milk production has seen an 8.3% drop in July against the same period last year, a trend being replicated worldwide as markets readjust to bottomed out milk prices.

Despite these decreases, European Commission statistics for raw milk, butter, skimmed milk powder, whole milk powder, cream and fermented products all showed increased production in the six months to June this year on the same period 12 months before.

Only condensed and liquid milk saw reductions in production of 15.0% and 0.9% respectively.

Friesland Campina, which is owned by its 19,000 farmer members, recorded a 17% decrease in profits to the six months ending June 2016.

“Due to the increased milk production (in the first two quarters), we had to process significantly higher volumes of milk into basic dairy products that we could not sell at a profit in the market”, said the co-op’s CEO, Roelof Joosten.