Global Dairy Production Costs: A Growing Divide

According to Emma Higgens, senior analyst at Rabobank RaboResearch, there is a growing divide between high and low-cost dairy producers worldwide. The increasing production costs, especially in dairy-exporting regions, are resulting in a significant disparity among global producers. Despite some temporary relief in 2024, production expenses continue to stay above the five-year average.

China, being the largest dairy importer, has gained a competitive edge in terms of cost, while Oceania maintains the lowest production costs. However, the next decade predicts further cost challenges driven by regulatory pressures, transitions in energy, climate change, and hikes in interest rates.

Higgens emphasizes the increasing vulnerability of dairy producers during downturns in milk prices, making cost management paramount for business survival. Meeting the upcoming demand will require wider producer margins, with efficiency-oriented producers best positioned to handle future obstacles effectively.