Dairy Round-Up 2011

ANALYSIS - TheCattleSite does a roundup of the 2011 dairy industry.
calendar icon 23 December 2011
clock icon 3 minute read

Global dairy markets

Free trade agreements (FTAs) with South Korea, Colombia and Panama, announced earlier this year, are expected to provide a benefit of $400 million a year to US dairy producers.

Milk production in New Zealand, the EU and the US is continuing to increase.

Global milk prices are strong and are likely to remain this way in 2012.

On another note, Fonterra made the decision not renew any of its organic contracts as and when they expire.

Retail and processors pricing strategies

Australian retailers slashed retail milk prices earlier in the year, which forced an enquiry into a milk price war between Coles and Woolworths. The Australian Competition and Consumers Commission said that supermarket Coles had not broken any competition laws by selling home brand milk for A$1 per litre.

In July, Dean Foods in the US, paid out $140 million in compensation to dairy farmers after establishing anti-competitive practices to suppress farm milk prices in 2007.

Fairer policies for EU producers

The EU dairy package, launched earlier this month, will aim to boost dairy farmers' bargaining power and ensure fairer prices.

Whilst prices have stabilised over the last year, many producers are still struggling due to rising input costs.

The dairy package will encourage producers to negotiate contracts on price and quality, as well as allow producers' organisations to negotiate raw milk prices for the farmers they represent.

"Factory farms" and animal welfare

In the UK, it was a year of ups and downs for Nocton Dairies, who submitted a planning application for an 8000 dairy herd.

The general public were outraged that cows would be housed indoors all year around and questioned the welfare of large scale farm units.

Plans were resubmitted for a smaller, 3,770 herd, but were eventually withdrawn because of objections from the Environment Agency.

Animal health

Foot and mouth disease spread mercilessly across Asia - particularly China and Korea, although the situation is now under control the affects on the industry will be seen over the coming year, as breeding herds were wiped out.


The European Union (EU) decided to relax the rules on genetically modified (GM) feed coming into Europe. With the prices of feed soaring, allowing low levels of GM organisms in feed is one way of lowering costs for producers.

Severe global weather conditions pushed the price of corn and grain up, substantially increasing producers' costs.

There has been a lot of friction between US livestock producers and the bioethanol industry this year, as for the first time a higher percentage of corn went to bioethanol production, rather than into livestock feed.

Whilst there are many challenges facing the global dairy industry in the coming year, global trade, production efficiency and growing demand will present many opportunities.

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