Investment and Technology Upgrade of Milk Powder Producers:

Moreover, total global milk production in 2013 was lower than in 2012 due to the drought in New Zealand (14% lower), the mediocre quality of the available roughage in EU (2% lower), and bad weather conditions in Australia (8% lower) and Argentina (7% lower). As a result of this supply side shock, sales prices remained high during the second half of 2013. On the demand side, particularly the demand for milk powder in the world market remained exceptionally high due to the high demand from China and Russia. During the second half of 2013 China imported 25% more dairy products (mainly milk powders and infant nutrition) than during the comparable period in 2012. This meant total imports of around 4.5 billion kilos of milk equivalents. In the same period Russia imported around 173,000 tons of cheese and 52,000 tons of butter—10% more than in 2012. The new food safety legislation in China was also embedded in the internal quality programmes, exacerbating the gap between supply of and demand for high quality milk powder products.