Milk can be classified as one of the most volatile agricultural commodities! Photo by Duc Viet

It’s one of the key findings presented at the 10th IFCN Dairy Conference 15 -17.06.2009 taking place at Hamra farm, Tumba, Sweden. As a full member of  IFCN (Internatinal Farm Comparison Network) from 2007, Dairy Vietnam sent its representative to join this important event.

In 2008, the world market price for milk has decreased dramatically after having reached a peak of 5,500 USD/ton (whole milk powder) in 10/2007. The key driver for this development is the global supply demand situation for milk (supply exceeds demand). World milk production is estimated to surge by 16.6 million tons ECM (Energy Corrected Milk, 4% fat and 3,3% protein) while demand rises by 7.8 million tons.

Decreased price for milk and impacts of the economic crisis have left global dairy industry in difficult situations. Costs of milk production in Asia, Africa, Middle East and Oceania are on lower level. However, the IFCN cost analysis indicates that only 10% of world’s milk can be produced at 20 USD/100 kg ECM which is now the current milk price, this means most of dairy farmers are facing bankruptcy.

In countries which apply subsidies to dairy production, farmers live on subsidies and other activities along dairy production (generation of electricity using biogas…). Protests for increased milk price and dairy policy change are used by dairy producers in those countries to get out of difficulties.

According to experts, the current price for milk is unsustainable unless the market is distorted by policy. Dairy policy will be the main driver for the global milk price level in the future. The development of milk price from now on was one of the topics received attention among international representatives. In general, milk price trend depends on the world’s economic recovery.

Currently, average milk price received by Vietnamese dairy farmers is about 44 USD/100 kg ECM, much higher than global milk price. Clearly local dairy producers enjoy more advantages over foreign counterparts. Dairy farmers, nevertheless, haven’t made the most out of this opportunity to increase profits. Keeping the price of milk high shows dairy companies’ favor for dairy development in Vietnam.

Further information at: www.ifcndairy.org