THE global dairy sector and its future solid market growth will be the envy of the food world, according to a new report released today.
Rabobank's report, Global Dairy Outlook: Show me the money says growth in dairy markets will be dominated by developing markets, many of which will require outside assistance to supply enough product to meet rising appetites for dairy.
Rabobank senior dairy analyst Michael Harvey said this demand will sustain an era of trade growth and provide a substantial opportunity for many farmers, traders and processors in export regions.
"The Australian dairy sector is well placed to take advantage of these market opportunities given its close proximity to growth markets and a stable exportable surplus of milk,'' he said.
With most of the growth in consumption volumes expected in regions that are already short of milk, such as China and South East Asia, Mr Harvey said a significant share of supply in the coming years will need to come from export regions.
The Rabobank report shows that the cost of producing milk in these exporting regions remains much higher than it was prior to the 2007 commodity price boom.
"Importantly, we also find evidence that the gap between low cost and mid-table cost milk producers is narrowing, providing a more level playing field for exporters in a range of regions, and increasing the importance of export cooperatives in ensuring that their farmers are best placed to benefit from opportunities abroad,'' Mr Harvey said.
The report expects production costs to remain elevated for the medium-term, supporting a high trading range for dairy commodity prices.
