In response to increased demand for its Althera and Alfare infant formula brands, Nestlé is currently doubling production capacity at the Nunspeet plant with an additional processing line. For the first time, Nestlé will be using a GEA heat recovery system that is fed by exhaust air from the spray drying plant and, in turn, provides 80°C hot water for its operation. As part of the project, GEA will also equip the complete wet processing technology, which supplies the Nestlé spray drying line with the prepared milk. Installation of the process technology and heat supply system is planned for this year. The plant will go into operation in 2025.

Recovering waste heat from spray dryer to reduce energy consumption

Nestlé’s aim with the investment project is not only to increase capacity, but also to advance its sustainability agenda by reducing carbon emissions, dust emissions and water demand. Exploiting renewable heat energy is a focus of the company’s climate strategy.

“The new plant in Nunspeet will also serve as a Group-wide demonstrator for future-oriented solutions to minimize energy consumption and greenhouse gas emissions in milk powder production. We are already familiar with heat pumps in various production processes. But using them with spray dryers, the most energy-intensive part of the process, is something new for us. The GEA system enables us to reduce the plant’s steam consumption by 75%,” explains Gerben Koopmans, Engineering Manager at Nestlé. For these reasons, the project is executed with subsidy of the Ministry of Economic Affairs and Climate.

Integrating process and heating/cooling technology

“Our integrated solutions combining process technology with heating and cooling technology set a new benchmark in milk powder production, because fusing the two disciplines in production planning and design implementation significantly reduces the plant’s energy consumption and carbon footprint,” says Ronald Hofland, GEA sales manager.

In addition to the ammonia heat pump for the spray dryer, GEA is providing a second heat pump that supplies hot water at 85°C to heat the entire production line and run the various dehydration processes, as well as cold water at 1.5°C to air-condition the factory. GEA’s process technology for the wet line includes state-of-the-art evaporators, inline formula mixers, a homogenizer, high-pressure and high-shear pumps, heat exchangers, valves, as well as all other connecting components and pipework. The heat pump system will provide this process technology with hot and cold water for maximum energy efficiency in operation.

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Tesfalidet Haile, head of Nestlé’s R&D Center in Abidjan, says, “We used our local expertise in cereals and dairy innovation to combine milk powder with a plant-based ingredient, while ensuring that the product had a good taste, texture, and solid nutritional credentials. This combined with the use of locally sourced soy enabled us to deliver a nutritious and affordable milk and plant-based beverage with sustainability benefits.”

Additionally, through the R+D Accelerator located at the R&D centre in Konolfingen, Switzerland, Nestlé teams leverage the centre’s expertise in dairy and dairy alternatives to rapidly develop and test new concepts that combine both milk and plant ingredients.

Last year the teams developed a nutritious powdered beverage made with a blend of milk and soy, and fruit that was first piloted in Asia. The beverage was tailored specifically to meet the nutritional and taste preferences of children, in an affordable and sustainable way.

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A Shekhar, CEO of ofi, says, “Expanding our innovation infrastructure in Malaysia spotlights our bold ambition as we continue our journey to become a more solutions-led, customer-centric organisation. With increasing demand from our global customer base, we will continue to explore growth opportunities within dairy ingredients that drive additional focus on the value-added capabilities within our portfolio.”

The enhancements to the Johor processing facility’s capabilities will more than double the production volume of functional dairy ingredients and fat filled milk powder made per year, in turn enabling ofi’s customers to formulate applications at scale. In addition, the expanded IEC has new laboratory spaces with state-of-the-art research and development equipment dedicated to supporting customers seeking a customisable, tailored and cost-efficient approach to application solutions in beverages, bakery and frozen dairy desserts.

Through working in close collaboration with its Singapore Customer Solutions Center and integrated across its global network of 15 innovation centers, the IEC’s new capabilities enable ofi to better collaborate with brands, grocery retailers and foodservice companies to create their next delicious and nutritious product for consumers, the firm says.

This aligned approach will drive further focus on ofi’s high-growth end-use categories – with ready-to-drink beverages, premixes and blending lines forming part of the wider service offering – along with its Lactorich range of dairy solutions, transforming the way consumers experience this healthy and nutritious product.

Sandeep Jain, managing director and CEO, dairy, at ofi commented: “The demand for nutrition-rich functional dairy ingredients continues to grow at pace, particularly across the Middle East & Africa. Furthermore, the expanded plant has been designed around food safety and operational excellence. This includes an automatic and ergonomic raw material feeding system and an advanced depalletising system, ensuring consistent product quality.”

Sustainability is also a central component of the plant design. It uses solar power, rainwater harvesting and operates at a high efficacy rate with strong energy and water consumption practices, with close to zero raw material wastage.

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Instant products, especially milk and protein powders, are showing strong growth. In a market environment with high competitive and cost pressures, efficiency increases are a must. At the same time these products are often exported, and so need to meet varied regulatory requirements. For example, in China, the largest target market for milk powder, especially in the infant nutrition category, there is a GB standard that must be met. Failure to do so can result in penalties up to and including market exclusion. There are also sometimes substantial differences in the approval and marking of lecithin as a food ingredient. For example, in the US chemically modified (such as acetylated or hydroxylated) lecithins are permitted and used, whereas they are prohibited for in foods in Europe. Here, enzymatically hydrolysed lecithins from the Sternchemie portfolio can be used instead.

Just keeping up with the legal requirements in the different markets takes a great amount of attention. On top of that there is the need for marketing and product development. Health & Nutrition is an example of a sustained megatrend that offers attractive market potential. Enriched instant products, such as for drinks or meal substitutes, offer added value here, according to Sternchemie.

Christine Schwarz, technical product manager, SternInstant, explains: “The most important criteria in the manufacture of instant powders are their wettability, sinking behaviour and easy stirring. Liquid lecithin is a proven way to get these properties. With SternInstant, we offer a sprayable, all-vegetable lecithin-oil mixture whose special composition gives it very low viscosity.” During instantizing, the lecithin forms a fine film around the individual powder particles, thus improving their wettability. The lecithin shows its effects when the power is mixed with liquids like water or milk. “It reduces the surface tension between the powder and the liquid to where the powder can distribute and dissolve evenly in the liquid. In this way fatty powders can dissolve easily even in cold liquids.”

SternInstant is suitable for milk powders of all kinds, whether whole milk, skim milk, coffee creamer or cocoa drink powder. It also improves the application properties of instant protein products like sports drinks and diet shakes. Enzymatically hydrolysed lecithin from the SternPhil series likewise optimises the properties of fat powders like powdered whole milk and cream. As an emulsifier, it brings lasting improvements in the wettability, sinking and distribution of very fatty particles.

In the instant category, Sternchemie works to provide tailor-made solutions for every customer. These are individually adapted to specific needs, be they regulatory or functional. “Our goal is to give the customer the best powder properties and high production efficiency. Naturally we also take into account individual wishes, like clean label, non-GMO, RSPO-certified and organic,” notes Torben Werner, product manager, SternInstant. In the company’s own Stern-Technology Center, Sternchemie tests the lecithins in its toolbox with the customer’s powder products in order to identify the best lecithin for the specific application. Together with extensive advisory services, this ensures that the lecithin meets all functional, quality and regulatory requirements.

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The focus at the new AmulFed site in Gandhinagar was set on sustainable production with innovative and future proof GEA technologies. GEA was responsible for the complete turnkey project, from milk processing to powder packing and including auxiliary systems, electricals, utilities, piping and automation. The plant was completed in record time so that it could be commissioned in time for this year’s flush season, the peak milk production season in India.

The scale of the powder plant, which covers 26,000 m2, and is eight stories in height, was unprecedented in the Indian dairy sector. The automated GEA facility can produce 150 metric tonnes per day (TPD) of skimmed milk powder and 120 TPD of dairy whitener. The plant sits on the same site as Amul’s existing 60 TPD and 100 TPD powder plants, which were also supplied by GEA, in 1994 and 2004, respectively. “The three plants together mean that AmulFed is now the largest single-site skimmed milk powder facility with capacity of 310 TPD in Asia,” explains Rajesh Golani, head of Sales Support and Offer Management, GEA India.

“We had series of interactions with AmulFed during the planning phase on the selection of suitable technology, superior features regarding energy efficiency, productivity, sustainability, plant and product safety, eco-friendliness, hygiene, zoning concepts and product quality, so that everybody was able to evaluate every aspect, and efficacy of the new plant at par with global standards,” Golani says.

The AmulFed plant had to be completed in record time, and within a very tight timescale. “The biggest achievement is that we could complete this whole project within 20 months. Our flush had started and we needed this capacity. We are thankful to GEA that they completed this project on time,” explains Dr Rupinder Singh Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation, Amul.

Hygienic design principles and advanced, integrated processing solutions ensure sustainable and future-proof milk powder processing at the AmulFed plant. Built to operate 24/7, the 150 TPD processing and packaging line can handle the highest volumes of milk arriving from dairy farmers throughout the region during the ‘flush’ season. The highest capacity and quality manufacturing at AmulFed mean that milk at peak loads is processed and converted into valued-added products, including skimmed milk powder, dairy whitener, and whole milk powder.

The end-to-end solution includes GEA’s energy efficient separators with integrated direct drive, bacteria removing clarifiers, high pressure homogenizers and hygienic valves for the liquid milk processing, as well as the largest GEA MVR evaporators delivered to India to date. These evaporators require typically 30% less space than conventional systems, and help to cut energy use and costs, and reduce CO2 emissions. Three sets of reverse osmosis polisher units treat condensate from the evaporation plant and reuse the water, which makes AmulFed nearly a zero-water plant. “Impressively, one hundred percent of evaporated water is condensed and reused in the dairy plant.” comments Dr Rupinder Singh Sodhi.

The MSD® spray dryer plant is equipped with hygienic air insulation panels that can be removed periodically to allow for inspection of any fine cracks in the chamber wall. Image: GEA

After evaporation, the milk concentrate is transferred to the spray dryers. GEA supplied its largest multistage MSD Spray Dryer for the AmulFed plant. The MSD Spray Dryer is equipped with a dual feed system to allow 24/7 operation. Because drying is carried out in three stages, it results into higher energy efficiency. The exhaust air from the dryer passes through four cyclones to GEA’s largest available SANICIP bag filter, and the fines discharged from the bag filter are then returned to the drying chamber, saving product and enabling nearly zero emissions.

AmulFed also operates an automated, high speed 25kg bag filling line, supplied by GEA, which features total bag control, and an enclosed filling area. With this system, manually handling of unfilled bags is no longer necessary, which minimizes contamination risk and helps to ensure complete safety. The plant also operates retail and jar filling lines, so it can be used flexible to match changing market and consumer demands.

The AmulFed facility has also been configured with advanced safety features. “The plant is equipped with an advanced level of safety, including a CO detection system, explosion suppression system as well as nozzle camera to monitor the atomizer cloud,” notes Golani. Systems for monitoring and regulating the entire plant operation, help to ensure top quality production, optimise the use of resources, minimize waste, product loss and emissions, and reduce time and unnecessary stoppages.

“We looked at the competency of GEA to provide us with a fully automatic plant. We aimed to look for the best technology that could deliver a very good quality product, very good efficiency, environmentally friendly, and also deliver a high level of productivity,” explains Anilkumar Bayati, general manager, AmulFed Dairy. “It’s a completely integrated setup right from our milk processing to our packaging. The products manufactured are of global standard and the products produced by the plant fetch the best price in the globe, because of the quality of the milk and the technology that we have adopted. This has really helped us in achieving our target.”

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In the grand scheme of things, reductions in demand from this particular group of countries won’t have a large impact on overall UK dairy export volumes, as the vast majority of our exports are destined for the EU (91% in 2019). The six countries expected to have the most severe import reductions accounted for 3.1% of UK dairy export volumes in 2019. The three countries highlighted for growth accounted for just 0.2% of volumes.

However, the losses will be more noticeable for specific markets, and for individual companies. For example, China and Algeria are big importers of milk powders, and are relatively important markets for UK exporters. In 2019, the UK exported around 8,000 tonnes of milk powders and concentrates to each of these countries, together accounting for 10% of annual volumes and 27% of the total value, Jack points out.

On the growth side of the FAO expectations, Canada is notable as a destination for premium UK cheese. The 1,800 tonnes of cheese exported to Canada in 2019 was only 1% of the UK’s cheese exports that year, but with an average price of £7,700/tonne (€8,542) it is likely a valuable market for those supplying it.

Although a relatively small amount of UK dairy gets exported outside the EU, UK markets may still feel the influence of changing global import levels on pricing. If world export supplies are not balanced to match the loss in demand, this could limit the volumes the UK is able to export, and put downward pressure on prices, Jack concludes.

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The strong performance was greater than expectations in light of global lockdowns and supply disruptions due to the Covid-19 outbreak.

Southeast Asia remained the number-one market for US dairy, once again posting record-high volume. Sales to China continued to improve. Exports to Mexico are still lagging year-ago levels, but the May volume was an improvement on April.

In May, US suppliers shipped 210,429 tons of milk powders, cheese, whey products, lactose and butterfat, 18% more than the year before. This was the highest figure since April 2018. On a solids basis, exports were also up 18%. The value of all exports was $585.2 million (€521m), 8% more than a year ago.

In the first five months of the year, US dairy export product volume is up 10% and export value is up 12%.

Exports of NDM/SMP were 79,163 tons in May, the most ever, and up 24% from a year ago. Sales to Southeast Asia (primarily the Philippines, Indonesia and Vietnam) nearly doubled, and exports to the region accounted for almost half of all NDM/SMP volume. In the first five months of the year, US powder exports to Southeast Asia were up 55% from last year, an increase of more than 10,600 tons per month.

Meanwhile, NDM/SMP sales to the Middle East/North Africa (MENA) region were the most in almost six years, and shipments to China were up more than six-fold from a year ago.

In contrast, powder exports to Mexico continue to lag, with volume down 28% from last May.

May whey exports were 44,304 tons, on par with previous months. This volume was up 17% from the depressed levels of last year, though it still trailed the strong pace of 2018. All the growth in May came from China, where volume was up 153% from last year. Relative to a year ago, whey volume was lower to Mexico, South Korea and Canada.

Shipments of whey protein isolate (WPI) dipped to a seven-month low, though they were still 20% above last year. Gains were posted in volume to China, the EU and Southeast Asia.

US lactose exports reached a 10-month high of 36,429 tons, up 21%. Suppliers increased sales to Southeast Asia, China and Japan.

Cheese exports rebounded to 35,605 tons, up 7%. This was the second-best month ever. Shipments to South Korea (+40% to a record high) and Japan (+45% to the most in almost six years) drove the gains, while sales to Australia and China more than doubled. In contrast, shipments to the MENA region, Mexico and Central America were lower.

Among other products, shipments of whole milk powder (+83%) and milk protein concentrate were higher (+23%), while volume of butterfat (-7%) continued to lag.

On a total milk solids basis, US exports were equivalent to 17.4% of US milk solids production in May, the highest rate since April 2018. In the first five months of the year, exports were 15.5% of production.

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This followed ratification by the European Parliament on 12 February. Key aspects of the EVFTA are the tariff elimination and bilateral trade facilitation. The EVFTA will eliminate nearly all tariffs except for a few tariff lines that are subject to tariff rate quotas (TRQs). The EVFTA is expected to enter into force in August 2020.

Vietnam’s agricultural sector is predicted to be among the top beneficiaries of the EVFTA.

For dairy, all tariffs will be abolished in a maximum of five years, with quicker reductions on most cheeses, milk powder and liquid milk, amounting to three years. Around 169 EU GIs for food and drink specialities such as Feta cheese, Rioja wine, Parmigiano Reggiano, Cogna, and 39 Vietnam GIs have been recognised and protected under the EVFTA, with the possibility to add others later.

Specific exceptions are made for prior users in Vietnam of the names Champagne, Asiago, Feta, Fontina, and Gorgonzola to address possible coexistence with prior registered trademarks or uses in Vietnam. As all of 39 Vietnamese GIs are related to agricultural products and food, these products are expected to have great chances of brand development in the EU market.

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In April, US suppliers shipped 181,437 tonnes of milk powders, cheese, whey products, lactose and butterfat, 7% more than the year before. On a solids basis, exports were up 10%. The value of all exports was $521.0 million, 4% more than a year ago.

On a product-volume basis, April exports to Southeast Asia were up 35% and shipments to China were up 47%. These gains were noteworthy in light of an 18% drop in sales to Mexico, where a depreciated peso and weaker economy reduced import demand and sent U.S. export volume to the lowest in almost four years.

Exports of nonfat dry milk/skim milk powder (NDM/SMP) were 67,936 tons in April, up 20% from a year ago. For the first time, half of the total went to Southeast Asia, which capitalised on a break in the price to take a record-high volume of 33,907 tons, up 62%. Most of the increased sales went to the Philippines, Malaysia and Indonesia.

US NDM/SMP exports to Japan reportedly also reached a record high in April, while shipments to the Middle East/North Africa (MENA) region tripled off a low base.

These gains offset declining purchases from Mexico. NDM/SMP sales to Mexico in April were just 18,934 tons, down 23% and the lowest since June 2016. In addition, exports to South America were down 25% in April.

The rebuilding swine herd in China, plus tariff relief for US exporters on whey permeate, drove a recovery in US whey exports. Total whey exports were 42,621 tons in April, up 14% from last year. Sales to China were 15,733 tonnes, more than double last year’s depressed levels, and the most since June 2018, just before the US-China trade war started. This left less whey available to ship elsewhere, as Southeast Asia, South Korea and Mexico all posted declines.

Within the whey category, exports of high-protein whey (WPC 80+/WPI) remained on track to establish a new high in 2020. In the first four months of the year, shipments were up 28% from last year’s pace.

Lactose exports in April were 32,899 tonnes, up 6% and the most in nine months (on a daily-average basis). Sales to Southeast Asia were the most ever – 9,521 tons, up 33% – with gains across the region. This offset losses to China and Japan.

Meanwhile, with global lockdowns leading to restaurant closures, US cheese exports slumped in April. Total volume was just 26,736 tons, down 18% from a year ago. The brunt of the declines came from Mexico, where volume was off 24%. Sales to South Korea, Japan, the MENA region and Central America also were below a year ago. Of the major customers, only Australia increased purchases.

US exports of other products were mixed. Though volumes were small, butterfat and whole milk powder (WMP) exports were up 8%. Shipments of milk protein concentrate (-2%), blends (-14%) and fluid milk (-4%) were lower. On fluid milk, sales to nearby Mexico and Canada were lower, but volume to Taiwan reached a record high, representing more than 43% of shipments.

On a total milk solids basis, US exports were equivalent to 15.3% of US milk solids production in April. In the first four months of the year, exports were 15.0% of production.

To use interactive charts with current and historical trade data, see usdec.org’s page on US export data.

To download a printable PDF summary with charts showing April trade data in detail, click here.

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The milk powder segment is projected to be the largest segment in the dairy ingredients market during the forecast period. An increase in the shift toward a healthy lifestyle has altered the food consumption habits among consumers. As a result, the demand for snacks and beverages options, which are indulging as well as nutritional, has been on the rise. Milk powder is used to provide texture, colour and flavour to food products. Milk powder provides enriched taste and texture to food products. It is used to provide mouthfeel texture to food without being high in fat content.

The bakery and confectionery segment is the dominant one regarding applications of dairy ingredient. Consumers are indulging in more healthy snacking habits now, which has also increased the demand for functional and fortified ingredients. Milk powder and whey concentrate find various applications in the bakery segment. They are used to provide texture and colour to products. They are also used as browning agents for bread. They are used for increasing the richness of the bread and other related products. As a result of their low fat content, they are popular among manufacturers.

Currently, the Asia Pacific region is the dominating market for dairy ingredients; it is estimated to be the fastest-growing market in the coming years, as well. The high population and increase in the purchasing capacity have enabled consumers to demand functional and fortified food products. The low mortality rate and improved living standards have also enabled them to invest in health and health-related services more than before. This has increased the market for all kinds of nutritional and ready-to-eat food options.

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The lift came from a surge in demand for fresh cream from the Continent, where buyers needed it for Christmas products. Some reports had prices rising as high as £1,700/tonne (€1994/tonne), but this peak only lasted a few days and reports suggest prices have dropped back a bit since then. The magnitude of the price increase could be a sign that the actual volumes being traded on the spot markets were thin.

There was disconnect between the cream and butter prices this month, which is a fairly usual effect of the festive demand for cream. The gap between the two prices made it economically difficult to buy cream for butter making as the butter would not make a return at the current spot prices. Those who can draw on stocks were better able to compete. Skim milk powder prices continued to firm in November, rising steadily through the month, bringing another five-year high.

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The company has fine-tuned its manufacturing process allowing it to dry blends of milk and live cultures and keep the cultures alive throughout the process and into the finished powder.

The resulting range of premium fermented powders (yogurt, quark powder and fermented milk powders) allows new developments to deliver the same live cultures and nutrition as traditional live culture products but without some of the hurdles of fresh yogurt. They are also naturally adapted to regions where harsh climate conditions might hinder milk production or pose a challenge when it comes to preserving fresh milk or refrigerated products.

“With our Epilac fermented powders, we can support manufacturers in the development of products designed to cater to consumers who are always pressed for time and looking for convenient, “on-the-go” snack options that are both healthy and indulgent,” said Mathieu Lucot, marketing manager at Epi Ingredients.

“And this new Kosher certification opens up new markets for our yogurt and fermented powders, notably in the US and some European countries.”

After the launch of a first concept, SoFlexi, featuring its yogurt powder in 2017, Epi Ingredients is working with its fermented powders again and is currently putting the finishing touches on a new revolutionary concept which will be unveiled later this year at Food Ingredients Europe and takes on a new dimension in light of the recent Kosher certification.

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The new agreement will remove nearly all tariffs on goods traded between both sides, phased over a period of 10 years. The European Parliament still needs to approve the deal, before it can come into force. They hope this will be before the end of the year.

Vietnamese trade in goods is estimated to be worth €47.6 billion a year. Under the new agreement, Vietnam will remove 65% of duties on EU exports with immediate effect, with the rest removed over a 10-year period. EU duties on Vietnamese exports will be eliminated over a 7-year period; the shorter time period accounting for the fact that Vietnam is still a developing country.

Currently, EU dairy exports to Vietnam face tariffs of up to a 20%. Under the new agreement, these will be removed over a 5-year period.

The EU exported nearly 74,500 tonnes of dairy products to Vietnam last year.  Like many Asian countries, milk and whey powders accounted for the largest proportion of exports, given their multiple uses for reconstituted drinking milk or food manufacturing inputs. Exports of small packs of liquid milk make most of the remaining export volumes.

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The partnership between Tetra Pak and FOSS, experts in milk analysis, resulted in a fully integrated standardisation process. The new solution utilises automation hardware and software algorithms that react and adjust in real time, offering guaranteed ratio performance. It delivers key data accurately every seven seconds, enabling quicker reaction times to ensure product quality.

The solution offers a range of benefits for customers especially in cheese and milk powder production, including:

• Advanced performance for fat to protein ratios significantly increasing profit
• Uniform and on-specification product quality 24/7
• Elimination of uncertainty associated with manual sampling

Tetra Pak product manager, Helen Sellar said: “Integrating our propriety software algorithm and the FOSS analyser in the new Tetra Pak Standardisation units with continuous protein control results in the industry’s most advanced and optimal solution for in-line measurement and control. With process variation minimised and profitability boosted, the solution is expected to pay for itself in 2 to 4 years.”

Ib Haunstrup, product manager, FOSS said: “A key benefit of the integration of FOSS analytic software within the new Tetra Pak Standardisation units with continuous protein control is the ability to test a number of components directly, eliminating the need for manual testing and enabling producers to run at very narrow margins between specified points. This unique technology supports producers to respond to changing market trends, such as increased demand for protein-enriched products, while also securing efficiency and product quality.”

Tetra Pak Standardisation units with continuous protein control are currently being tested with a Finnish dairy manufacturer, Valio.

Raimo Vehkoja, production manager, Valio said: “The challenge we faced was that the existing line was coming to the end of its life cycle and maintenance costs were high. This new investment gave us more accurate fat to protein ratio, giving us better use of raw materials and constant product quality. It also drastically reduces maintenance costs.”

The new unit is available in Australia, New Zealand, USA, Canada, Germany, Holland, France, UK, Denmark, Sweden and Poland and will roll out to more markets in the next year.

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“Many hundreds of thousands of families earn a living through milk production and processing,” said Christian Dovonou, country director of Veterinarians Without Borders in Burkina Faso, while explaining the economic importance of milk production in West Africa. “These local structures are put in danger as cheap imports from the EU increase further.” Since 2016, EU exports of fat-filled milk powder to West Africa have increased by 24%. “This mix of skimmed milk powder and vegetable oils is 30% cheaper than whole milk powder on African markets and is thus sold at a level that hinders the development of local milk and is similar to dumping prices.”

“The EU produces a lot of milk. Too much. To date, this problem has not been addressed at the source through appropriate instruments. Instead, export promotion, especially of cheap products, is seen as the only solution,” said Thierry Kesteloot from Belgian development organisation Oxfam-Solidarité while describing the current situation. “The victims end up being the people working in the dairy sector, especially women, who cannot compete with cheap exports from Europe,” said Kesteloot.

Milk powder is often imported in 25kg sacks and can thus enjoy the very low common external tariff (CET) of 5% agreed by the Economic Community of West African States (ECOWAS). François Graas of SOS Faim said that imports should not be condemned en bloc as the demand for milk products cannot currently be fulfilled by local production alone. “But there must be a balance and cheap imports cannot have the upper hand. It is also necessary to support local structures through development cooperation policy, because the local dairy sector has great potential for job creation and income generation.”

Erwin Schöpges, president of the European Milk Board (EMB), highlighted the importance of an effective crisis instrument within the future EU agricultural policy. “We cannot simply export the problem of European overproduction to Africa,” said Schöpges. The EMB is calling for a market responsibility programme that monitors the market and reacts quickly to looming crises – for example, through voluntary production cuts. “As a dairy farmer, I wish for cost-covering prices, so that I am no longer dependent on direct payments that act as indirect export subsidies for our products in third countries,” he concluded.

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Milk deliveries in Germany increased again in 2018 compared to previous years in parts of Germany, despite the drought in some regions.

German producers delivered 1.5% (31.7 million tons) more milk last year than in 2017. Milk producer prices for conventional cow’s milk in Germany in 2018 were €0.34/kg, which was five per cent less than in 2017.

The market for skimmed milk powder was significantly friendlier than 2017.

“After prices have fallen to a historic low, the EU has swiftly and carefully sold the large quantities of skimmed milk powder almost completely out of intervention. This was an end to horror, so hopefully we will not need the intervention in the future, ” Stahl explained.

Work on the sector strategy is progressing. “Developing a strategy for a whole sector through different stages is not an easy task,” Stahl said.

One subject was the contractual relationship between milk producer and dairy.

“There are already a large number of different contracts between dairy and dairy farmers. And if both sides want to set a quantity limit, they should also be happy to do so,” Stahl said.

“A mandatory introduction of contractual components such as quantity and price does not seem likely to undermine the international commodity markets. So, I find it hard to agree to such a field trial because I do not think that will work,” he noted.

The market outlook is currently closely linked to developments in Brexit, according to the MIV. The UK continues to be a very important milk trading partner for the Germans.

“The current likely shift of Brexit without concrete target and agreement extends the uncertainty for all market participants in Germany and Europe,” said the chairman. “But I am convinced that the German dairies on any form of Brexit quickly and accurately react and develop appropriate strategies”.

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In a country where 56% of children are underweight and malnutrition is prevalent, Arla is determined to give everyone access to affordable, nutritious dairy products. Dano Daily Pushti is a fortified filled milk powder, available in 20g sachets at an affordable price.

However with 70% of the population living in rural areas, an innovative, alternative sales model was called for. Equipped with a bicycle and with a tablet and the sachets in their backpacks, a group of women are able to reach people in rural parts of the country, cycling from village to village.

These women are not only gaining knowledge and an accreditation through training, they are securing a reliable income, helping to lift them out of poverty.

They are known as Arla’s Pushti ambassadors and, as well as selling products, the women conduct courtyard sessions to educate people about health and milk nutrition generally.

Of her experience of being a Pushti ambassador, Rebaka Khatun said: “It gives me immense pleasure and great fulfilment that I’m giving back to society and helping my own community. It gives me great pride that I am well respected both in my family and my community.”

Baby Bagum, also a Pushti ambassador said: “For Bangladesh to progress, women have to step out of the house. A women’s job is not only to cook. For Bangladesh to prosper we have to get out in the field.”

Rebaka agreed, adding: “I’m a big believer that if a man can do it, why not me? I want to show to everyone that we are equal.”

Arla’s Dano Daily Pushti sales force is currently 200-strong. By 2022, the company, together with partners, aims to have 5,000 female microentrepreneurs to generate their own income and reach nearly two million new rural Bangladeshi consumers.

Tim Ørting Jørgensen, executive vice president and head of Arla’s International Zone, said that the motivation for the company to be involved lies at the heart of its vision and strategy.

“We are committed to contributing positively to the societies in which we operate, behaving responsibly is an inherent part of Arla’s culture. We recognise the opportunity we have to help address Bangladesh’s high rates of malnutrition and to do so in a sustainable way, whilst having the additional benefit of creating employment opportunities for 5,000 female micro-entrepreneurs over the next four years.

“The Pushti Ambassador Partnership is also directly aligned to several of the UN’s sustainable development goals, which form the framework for our sustainability work. For example, it gives the women new skills, training and a sustainable source of income.

“Today, Bangladeshi families who previously couldn’t afford to consume milk, are now able to drink it on a regular basis. We are delighted to be playing a key role and the success of Dano Daily Pushti is inspiring us to develop new, nutritious products for low income consumers to add to the baskets of our ambassadors.”

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“In principle, the signs are better this year than in the previous year. However, it is difficult to make a forecast given the question marks that are still associated with Brexit,” said Peter Stahl, chairman of the association. That being said, the starting position at the beginning of this year is much firmer than the previous year. Milk delivery will not rise disproportionately in the coming months in Germany, according to MIV.

At the beginning of this year, milk deliveries are around 3.3% less compared to last year. But all in all, a new record delivery to German dairies of an estimated 32.4 million tons is expected for 2018. The German milk price estimate for 2018 is about 34.5 cents/kg (at 4.0% fat) on average. This is below the 36.2 cents of the previous year, but still slightly above the ten-year average.

After the weak start to the year, the overall result from Stahl’s point of view can still be described as neat. Firstly, development has been supported by good utilisation of milk fat for a long time. Secondly, exports have relieved the market in particular. Germany’s exports of dairy products remained stable around the high level of 2017, with exports of cheese and skimmed milk powder in particular expanding.

Demand for some dairy products, such as butter, has picked up significantly due to the Christmas rush and after the consumer sensed that the price spikes were over. In the first 11 months of 2018, sales of butter in food retail had previously fallen by 6.1%. The decline was partially, but not completely, compensated by a further increase in sales of mixed spreads.

EU stocks of skimmed milk powder in public storage has been reduced by almost 90% compared to the beginning of 2018. In Germany the warehouses have been cleared, while EU-wide, 22,000 tons are still for sale. The milk powder market has nevertheless picked up, also thanks to good foreign demand for milk protein.

Even though some dairies had to cut their milk prices in December, a stable market picture should emerge in the first quarter.
The MIV is concerned about rising costs, both on the part of producers and dairies. Especially in energy, packaging and disposal prices have risen.

“Not all dairies were in the black,” noted Eckhard Heuser, general manager of the MIV. Price increases are therefore important in the next negotiations for all parties involved in the milk value chain. A positive factor for the German dairy market is China’s high demand for European dairy products as well as the EU’s concluded free trade agreement with Japan. Also New Zealand and the US report increasing milk deliveries, which could lead to increased competition on the international markets.

In addition, oil prices recently weakened the purchasing power of various import countries, and the strong US dollar is putting pressure on the currencies of various emerging economies.

The new Packaging Act has already pushed up the costs of packaging recycling and thus the fees for the Green Dot, Heuser added.

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However, it is not just exports that have risen. Imports also rose by 7.6% to €619 million in the first nine months, reflecting the high level of competition on the international milk market. Overall, a positive foreign trade balance increased by 5.6% to €317 million in Austria’s favour.

The most important export product continues to be cheese with volumes rising from 105,000 tons to 115,000 tons, which caused income equaling €460 million, while imports were slightly lower at 91,000 tons at €357 million.

The second most important product in dairy trade is liquid dairy products, which, with a slight increase in volumes, produced an export value of €221 million, while increasing volumes were imported.

Fermented products were exported to the extent of 100,000 tons and yielded €107 million, while products were imported for €39 million.

Both in terms of sales and volume, exports of milk powder, in particular special milk powder varieties with good prices, had an export value €48 million, while cheap products were imported for €36 million.

For whey products, 82,000 tons were exported for €84 million, while 44,000 tons imported at €35 million.

Butter had an import surplus of 13,000 tons, with 2,600 tons exported at better prices.

“In recent years the Austrian dairy industry has invested a great deal in the extremely high quality of its products in farm production and processing. Consumers at home and abroad value high quality. This makes it all the more important to increasingly communicate the decisive quality advantages of domestic dairy products both domestically and abroad. It must not be the case that products with different quality standards end up on the shelves as ‘equivalent products’ because of insufficient labelling. Therefore, improved labelling of the products is necessary,” says Petschar.

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