Costs up in China for milk production, says IFCN

The cost of milk production in China is still significantly higher than EU and Germany, according to the latest from The Dairy Research Network, IFCN, which has released its annual dairy report, a comprehensive book on worldwide dairy economics.

Dairy farming in China highly depends on purchased feed. In addition, China had the strongest increase in salaries and an appreciation of the currency of 24%. The combined effect of these factors drove the costs in China from a level of US$40 (€34.97) per 100 kg milk in 2008 to a level of US$60 (€52.47) per 100 kg in 2014.

The world’s average farmer keeps 2.9 milk animals, with an average annual milk yield of approximately 2.145 tons of energy corrected milk (ECM) per animal per year, according to the report. Cost of milk production ranged from US$4.5 per 100 kg milk in extensive farming systems in Cameroon to US$118 for an average-sized farm type in Switzerland. The simple average cost over all countries analysed was US$46 per 100 kg of milk.

Detailed information on cow number, farm size, farm structure, milk yield and production are some of the key figures among many more that are presented to dairy experts in this report. The first chapter shows the increase of the cost of milk production in all countries during the last 15 years. Results show that costs in specific countries, the costs of production have doubled or tripled within the last two to six years. This is especially the case in countries like Poland, China and New Zealand. Looking to China, the cost of milk production was estimated at 50% above the level in the US.

Via standardised world milk and feed prices, IFCN is tracking the overall farm economic situation for dairy farming. The IFCN developed an indicator “margin over compound feed costs,” which is an improvement compared to the milk:feed price ratio. By using this margin, it becomes visible how much of a threat dairy farmers face in a situation when milk prices fall and feed prices increase to such an extent that 100 kg feed are more expensive than 100 kg of ECM. This situation occurred three times within the last eight years: in 2009, in 2012 and most recently in the beginning of 2015, according to the report.

For further information, please visit www.ifcndairy.org

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