How will UK’s demand for milk change post-quota?
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This presentation covers the catalysts which will determine the demand for milk in the future and highlights that UK market demand for milk will not be directly impacted by the removal of production quotas.
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How will UK’s demand for milk change post-quota?
- 1. How will UK’s demand for milk change post-quota? Patty Clayton Senior Analyst AHDB Market Intelligence
- 2. The current picture fresh milkmanufactured products milk utilisation
- 3. Product mix Quantity fresh milk manufactured products 13.5 billion litres ? billion litres
- 4. Catalysts for growth Fresh milk • Domestic market • Demand determined by – Population – Age distribution of population Manufactured products • Domestic market • Export markets • Demand determined by – Population – Income – Prices – Competing products
- 5. Population trends 0 5 10 15 20 25 30 35 40 45 0 2 4 6 8 10 12 14 16 1950 1960 1970 1980 1985 1990 1995 2000 2005 2010 2015 2020 populationaged15-64(millions) population(millions) 14 and under 65 or over 15-64 Source: FAO
- 6. 4,250 4,500 4,750 5,000 5,250 5,500 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 volumesales(000litres) Retail liquid milk market Source: Kantar Worldpanel 1.2% growth per annum
- 7. -1500 -1000 -500 0 500 1000 1500 2000 2500 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Million£ Dairy Net Trade Balance DEFICIT IMPORTS EXPORTS UK trade balance Source: DairyCo Datum
- 8. Changes to milk demand? 1. more volume 2. more solids 3. both 4. no change from current
- 9. Changes to milk demand? fresh milk manufactured products Size of market? ?
- 10. Future demand? Which products? How much milk? Investments in processing Ability to compete
- 11. Impact of quota removal? no direct impact in the UK on milk demand 11,500 12,000 12,500 13,000 13,500 14,000 14,500 15,000 15,500 millionlitres UK wholesale quota v milk deliveries (1997/98 - 2012/13) Wholesale quota Annual declared deliveries
- 12. Impact of quota removal? increased exposure to competition • Import competition • Export competition
- 13. 0.0 10.0 20.0 30.0 40.0 50.0 60.0 2004 2006 2008 2010 2012 cents/100kilo(USD) International costs of production trends (dairy farms) UK Ireland Germany New Zealand US Source: IFCN
- 15. To keep informed sign up for: • Monthly Report To subscribe or for further information contact AHDB Market Intelligence email datum.info@dairyco.org.uk website www.dairyco.org.uk/market-information • Dairy Market Weekly
- 16. Thank you
Editor's Notes
- Based on your conversations with your milk buyers or by how your milk payment profile is structured – or your clients if you are not a farmer – what do you see as the main change in the demand for your milk in the future?
- Confident that we will see a shift in emphasis towards manufactured goods - some growth in liquid but more potential for increased demand for manufactured goods Less sure by how much Will depend on two things
- Which products will depend on what type of investments are made And How efficient the supply chain is – from farmer to distribution (retail or export markets) From responses to the most recent FIS, farmers are more confident than they have been for a long time, and feeling positive about the future Just 18 months on from the SOS dairy crisis of summer 2012, longer term confidence in the future of UK dairy farming has returned and is at its highest level for 3 years, exceeding 2012 and also pessimism has largely disappeared. 58% of dairy farmers interviewed are optimistic or extremely optimistic about dairy farming in the UK over the next 5 years and just 8% of farmers interviewed were pessimistic about the future of the Industry compared with 21% the previous year.