PHILIPPINE DAIRY UPDATE
January – December 2009
• The dairy supply situation for 2009 is characterized by increasing local milk production and imports and
decreasing exports of milk and milk products.
The net supply stood at 272.82 million kg and was around 19 percent higher than the previous year’s net supply of 229.36 million kg. Local production and imports grew by 12.54% and 3.33% respectively while exports declined by 28.68 percent.
• For year 2009, imports of milk and dairy products increased by around 13 percent (up to 286.18 million kg from 254.29 million kg). In terms of value, it declined to a rate of 34.45 percent (from total dairy import bill of US$712.00 million to US$466.72 million in 2008 indicating a decrease in unit import cost of 41.75 percent in dollar terms and 37.60 percent in pesos. (depreciation of the peso to 7.13%).
Although milk powder constitutes the bulk of imports, this year it only accounted for 63 percent from the previous level of 67 percent. Skimmed milk powder that comprised 31percent of milk imports in 2008 was still at the same level of around 31 percent of total milk imports in 2009. However, of the milk powder, only whole milk powder posted a downtrend of around 24%.
According to FAO. despite a rebound of exports from New Zealand and South America, global exports in 2009 of the most important milk products are seen to decline 5 percent, falling to 38.6 million tons. This fall is due mainly to an estimated reduction of 3 million tons in the exports from the European Union and the United States. In these countries, where the combined exports accounted for one-third of world trade, traders were not attracted by world markets during the first half of the year, and preferred instead to stock or sell milk products in domestic markets.
On the imports side, the world market had been characterized by weak demand and prices, with a notable contraction of imports by some countries. However, with shrinking exports supplies, the end of 2009 is characterized by firmer prices, and the outlook for 2010 is for a return to the trade levels of 2008 or an increase of 5 percent.
Higher prices, and the recovery of the world economy creating a renewed interest of traders on exports markets, particularly in Asia.
According to FAO, about half of the world’s whole milk powder production is traded in the world market and the largest outlets are developing countries, still global trade of WMP of 1.9 million tons showed a decrease of about 2 percent in 2009.
Global trade in SMP is seen to fall of about 10 percent in 2009. Demand from Africa has fallen by 25%, but purchases from Southeast Asia have grown significantly, in particular due to our country’s renewed interest as well as Malaysia.
All dairy products are showing signs of strong recovery to levels not seen since August 2008. The largest increase has been displayed by butter, the price of which has doubled since February to USD 3 688/ton. However, prices for both skim milk and whole milk powder have also increased by over 90 percent to USD 3 375 and USD 3 525/ton respectively.
The causes of this rapid price rise are not fully clear, particularly in view of the large public stocks for both butter and skim milk powder available in the European Union.
However, a) stock retention combined with reduced milk output in the European Union and the United States, and b) lower growth than expected in Oceania's milk output may be contributing factors to tight export supplies.
The economic recovery underway in large Asian countries and in certain oil exporting countries may also be an important factor in renewed import demand. The sustainability of the rise in prices is uncertain, though contingent on the responses of the European Union and other exporting countries which hold dairy product stocks
Of the dairy product imports, skim milk powder as well as ready to drink milk (RTD), whey powder, buttermilk powder, butter and butterfat, cheese and condensed milk and other milk products all recorded increases in import levels. Whole milk powder recorded the highest decrease among imported dairy products at around 24% followed by cream, curd and evaporated milk. (Please refer to dairy industry statistics as Annex 1)
Ready to drink milk was higher by 7% in volume and down at 14 percent in value. It accounted still for 14% of dairy
import volume. The increase in local production of only 3%, accompanied by an increase in imports of liquid milk by 6%, resulted in 27% share of local production to total liquid milk supply (the same from the previous year level of 27%). So that, we are still at more than one out of four glasses of liquid milk supply.
• In terms of sources and value share, New Zealand accounted 49 percent to total dairy import bill. Due to stock retention combined with the reduced milk output in the European Union and the United States, Australia ranked now as second supplier followed by USA with 18 percent and 16 percent respectively.
Total tariff collected from dairy imports amounted to US$9.07 million or approximately Php432.09 million.
• The commercial milk importer/processors who re-export of reprocessed milk products to other Asian countries continued to be a robust activity in the processed milk sector.
The volume of exports reached 27.63 million kilograms, around 29% lower than the last year’s level. Whole milk powder (accounting for 85% share to total dairy exports) recorded a decrease of 35%. However, only ice cream, cream, cheese and other dairy products were the big exports during the period.
Malaysia was the top market of Phil. dairy products, accounting for 26 percent of the entire export volume and value respectively. Next was Indonesia that took 23percent of the total. For the first time, Bangladesh was included and ranked fourth with other countries of destination that include Thailand and South Africa with shares of 3%, 20% and 3% respectively.
• The dairy sector produced 3.33% more output as cow’s milk from the dairy cooperative farms as well as private individual/NGO farms grew.
Our local milk production is derived from dairy herd that had increased by 7% (34,093 head). Of this herd, dairy cattle registered an increase of 12% (to 16,949 head). There was also an increase of 14 percent in the number of dairy goats (to 3,674 head). Carabao inventory totaled to 13,470 head. By animal source, 63% of the volume of milk production was cow’s milk, 36% carabao’s milk and less than 1% goat’s milk.
Of the total milk output of 14.27 million liters, NDA-assisted projects' accounted for around 72percent or a total 10.22 million liters. Milk production increased from 26.48 MT per day to 28.01 MT per day.
Dairy recorded an 11.92% increase in gross earnings of P461.06 million as a result of higher production and farm gate price.
• The dairy sector accounted for 0.04% and 0.24% of total agricultural and livestock production value (at current prices) of Php1,188.02 billion and Php196.02 billion respectively.
NDA-PMSD3/19/10
