GLOBAL INVESTMENT: Milk is a BIG Growth Industry!


Movie fans will remember the movie “BIG” where a young boy makes a wish at a fairground machine to be big. He wakes up the following morning to find that his wish has been granted and his body has grown older over night. But he is still the same 12 year old kid on the inside with a whole lot of strange new people and experiences to deal with! Some, including Canada, are finding themselves in a grown up world trying to catch up.

The Cream Rises to the Top of the Milk Maker List?

Globally, dairy farming, along with agriculture in general, is experiencing the “BIG” phenomenon. Milk production is expected to grow an average 2% per year for the next decade. Asia will account for most of it. Now that`s a lot of milk and BIG indeed!

Today we are looking at the list of Top 10 Countries By Milk Production as per US Department of Agriculture, 2011:

Top 10 Countries By Milk Production

Everyone feels patriotic when their country does well on ranked lists. Did you look to see where your country stood in the Top 10? How did it make you feel? Where you even on the list? If you’re like me, you probably thought (because of numerous publication writers telling you so) that Canada is a major milk producer. Ooops! We better make that major milk consumer. We are higher on the milk consumer list than we are on the milk producer list. We’re approximately 12th for per capita consumption, according to the United States Department of Agriculture and we’re 19th for production. Sounds a little far back even for a die-hard Blue Jays and Maple Leafs fan.

Where’s the Wiggle Room?

There’s lots of room for everybody to take advantage of the opportunities. If you’re at the top of the list, like the U.S. you can take heart from the fact that food production will be challenged to increase 70 percent over the next 30 years. The scary part is the fluctuating nature of consumer demand. An editorial in Hoard’s Dairyman, 8/25/10 made these points, “Of the countless wildcards in the dairy business, the future role of dairy exports is, perhaps, the wildest. That is why it is vital that our industry leaders and policymakers keep export potential in perspective. What our industry must have is a system that enables us all to expand production when domestic and foreign demand calls for it and to cut back on production when the market signals tell us to.” The comments are definitely something to think about. On the other hand, there are dangers in holding back as well. The truth is there is a huge gap between growing global demand and global supply. You might rewrite the axiom to say, “Nature abhors a gap!”You can be 100% sure of one thing. Somebody will move to fill it. The earliest ones into the game with vision and dollars will be able to profit from providing the milk, even it has to be accessed outside their own borders. It has been suggested that New Zealand could accomplish this. Or perhaps one of the mega-food companies who see the opportunity and are ready to take it. There is huge potential for countries or companies who have a low cost of production to move to the forefront of milk production.

But what if you`re further down the production side of the list? You may decide that it’s time to start movin’ on up! Hang on! It could be a bumpy ride. Consumer demands, trade regulations and national food policies are just three of the variables that are going to present ongoing challenges. even though many forecasters see agriculture as the greatest growth industry of our time. Super! All we have to do is increase the production of animals and plants. But then there is the increasing squeeze from land use, sustainable agriculture and available water. It’s ironic that at the very time when markets are growing and science and technology are making great strides, land and water use from growing urbanization are providing counter pressure.

Although we are learning to accept and adapt to the speed of new technology, it is probably true, that what we are familiar with today may not be the breakthrough that will take us into the future. For example, new technologies, such as nutrigenomics, will become increasingly important. With nutrigenomics, it will be possible to influence or control genetic expression in animals. Certain feed ingredients will be able to switch on genes in the animals, leading to improved production. It will revolutionize nutrition, said Karl Dawson, chief scientific officer at Alltech, when speaking at the Alltech International Symposium held in May in Lexington, Kentucky. He added. “You’re going to see more changes in nutrition in the next 10 years than you have seen in the last century.”

Thus far we see that there is growing demand and improved methods of delivering milk and milk products. Another key factor is the initiatives throughout the world to train farmers in the business of dairy farming. Rural development and sustainable agriculture projects are seeing successes that will affect milk production worldwide, while sourcing information and mentors in the areas of animal genetics, product development and dairy cattle management.

THE BULLVINE BOTTOM LINE:

So far, everyone agrees that it will be possible, somehow, to keep up with the food demands of a growing world population. What we may not be so sure of is the exactly how it will happen. Nevertheless, milk will be an important product in feeding world populations. If you`re already in the dairy industry, you have an advantage that not all of the companies who aspire to global trade can claim and that is that the market is far from saturated and demand is continually growing. No wonder the stock market is recognizing that you can put your money where the milk is.


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