A new report from Rabobank’s global Food & Agribusiness Research and Advisory department titled “Global Dairy Outlook: Show me the money,” Rabobank says that the global dairy market will offer strong growth prospects in the coming five years, but the uneven spread of this market expansion and an era of elevated pricing will create as many challenges as opportunities for key players along the dairy supply chain.

Growth will be highly skewed to emerging markets, with countries like China, India and South East Asiaexpected to account for more than 80% of market volume growth, while western markets continue to mature. “Tapping into emerging market growth will present a particular challenge for many of the world’s dairy processors, most of which are domiciled in, and still focused on, the EU and U.S. markets,” saidTim Hunt, Global Dairy Strategist for Rabobank.

Opportunities will also be uneven across product categories. Economic, demographic and dietary trends are likely to see cheese sales underperform the broader dairy market. With sales of higher end whey product set to track a much faster growth path, the strategic value of whey pools is rising rapidly. “The divergence of cheese growth and whey demand represents a major structural shift in the market, and justifies a re-evaluation of ingredient production and sourcing strategies,” said Mr. Hunt.

Rabobank forecasts that solid market growth, supply constraints and a structural shift in the costs of producing milk will sustain high milk and dairy commodity prices over the medium term. But this won’t translate to increased profits for all.

SOURCE Rabobank