Competitiveness of Milk Production: Global Scenario

Abstract

The dairy world today can be depicted as globally connected, composite and fast-changing over the last two decades as the milk production has expanded by a yearly average compound growth rate of almost 2 per cent. In 2013, milk ranked third by production and was the top agricultural commodity in value terms worldwide (FAOSTAT, 2016). This paper analyses the competitiveness of milk production in the major milk producer countries in the world. As far as farm structure is concerned, the number of farms in the world has shown a decreasing trend since 2013. The average cost of milk production only at world level has decreased significantly since 2013. In the case of total cost analysis among major countries, New Zealand had the lowest cost but when returns were considered then only Brazil and India were able to cover the total economic cost. Other farms had positive farm income when all direct subsidies were considered, except like a few countries in Germany and China. While some countries like the US were able to cover cash cost but they were not able to cover the total economic cost when opportunity cost was also included, which pose a question in the long-term competitiveness of these countries.