October 2, 2016

Rising dairy demand in emerging markets, particularly in the Middle East, Asia-Pacific, Africa, and Eastern Europe will fuel a 4.6 percent growth in the global dairy and soy food market, driving it to a value of $773.4 billion by 2020, according to research released this summer by consumer insight research firm, Canadean. As market growth in developed nations stagnates, international companies are tapping into the potential in emerging markets, positioning themselves to capitalize on demographic shifts to raise revenue.

U.S. per capita dairy consumption has remained flat over the past four years despite an increase in population of 0.8 percent, according to Paul Carbonneau, partner with McKinsey & Company, who surveyed 33 U.S. c-suite executives, 61 dairy companies, and 10 McKinsey dairy and retail experts to gauge industry sentiment and strategy direction. Over the same time period, dairy consumption increased by 6.1 percent in China and by 3.6 percent in India. Carbonneau explains this growth to Dairy Reporter saying it is simply a result of “Wealthy consumers putting new foods into their bodies.”

Reflecting these trends, three global giants announced moves within the dairy sectors of emerging economies between September 28 and September 30.

Cargill announced the inauguration of its new Rs 88 cr (US$13.2 million) feed plant in Bathinda, Punjab, India – the largest dairy consuming, and dairy producing country in the world. Additionally, India is also widely vegetarian, making dairy foods such as ghee, yogurt, and sauces a main source of protein. After 14 months of construction, the plant will have the capacity to produce 10,000 tons of feed per month, and the ability to feed 75,000 dairy cows per day.

“We believe this new dairy feed plant will provide quality feed and introduce latest know-how which will help our dairy farmers earn better yields and contribute to the progress of Punjab,” said the Honorable Deputy Chief Minister of Punjab, Shri Sukhbir Singh Badal. “We expect Cargill to share their global experience with the region’s farmers which will help put Punjab on a global map with other leading model dairy regions across the world.”

Nestlé has also made inroads in the emerging dairy market, launching its “Kiri Govi Diriya” dairy development program in Sri Lanka. The program, whose name means, “dairy farmer development,” will train 3,000 dairy farmers and will provide 150 farmers with the milking equipment needed to realize growth of their business.

Nestlé is currently the largest collector of fresh milk in Sri Lanka, collecting milk valued at $24.6 million last year, however, domestic production is still not able to meet demand. The company has been actively developing the country’s dairy sector through the establishment of milk collection points and chilling centers, as well as heading up training programs centered on feeding and breeding of cattle, best production methods, animal health and farm management with the dual goal of lifting the country’s production levels and milk quality while also improve the lives of Sri Lanka’s smallholder dairy farmers.

Lastly, FrieslandCampina WAMCO Nigeria Plc announced that it has invested N4 billion (US$12.7 million) to date in its Dairy Development Program (DDP) in Nigeria.

The company, which is the only dairy company that sources a portion of its raw milk from local producers, has worked to develop a sustainable raw milk value-chain with the goal of raising its locally sourced raw milk content from the current three percent to 10 percent every five years. In 2010 when FrieslandCampina began its DDP, the company was not sourcing any locally produced raw milk, instead buying its supply from farmers in Zimbabwe for processing at its facility in Nigeria.

“Dairy development is a gradual thing,” the company’s corporate affairs director, Ore Famurewa told The Nation. “You can’t compare milk development to crop development. For us, it is slow and steady, but we will surely get there.”

—

Lynda Kiernan