Surge in Milk Production Costs Widens Global Gap, Rabobank Reports

Milk production costs have surged across various dairy-exporting regions, leading to an ever-widening gap between the highest and lowest cost producers on a global scale, according to Emma Higgens, a senior analyst in agriculture at Rabobank RaboResearch. Despite a brief respite in 2024, costs have remained above the five-year average, Emma Higgens notes.

China, recognized as the largest dairy importer, has increased its cost competitiveness, while Oceania maintains the lowest production costs worldwide. Over the next decade, dairy producers will face more expensive and variable operating costs due to factors like regulatory pressures, energy transitions, climate change, and higher interest rates. These elements place producers in a vulnerable position during milk price downturns, emphasizing the importance of cost control for survival.

The ability to meet medium-term demand will hinge on wider producer margins, with efficiency-focused producers being best positioned to navigate the challenges of the future. As per Rabobank's analysis, the dairy industry must brace for these changes, adapting swiftly to ensure sustainability and profitability amidst evolving market conditions.