Cost of milk rising, blame China
Among all the other things we blame China for (no offense), we have another to add to the list: the rising cost of milk. Why? Because of the growing appetite for for dairy foods in Asia, mainly China. Other factors, are rising costs for animal feed, shrinking European production and long-standing drought in Australia and New Zealand, the world’s largest milk-exporting region.
Milk consumption in China is soaring with rising incomes, a massive expansion of the dairy industry, and the creation of new taste-buds, of non-traditional food, among the young generation (ie. chocolate bars, cheeseburgers, lattes). Milk, yogurt, butter and packaged cheese slices can all be found in local supermarkets, with China’s growing love for dairy products today. Global demand for dairy products have been immense, while its supplies remain exceptionally tight.
According to the Food and Agricultural Organization, international dairy prices have increased 46 percent between the months of November 2006 and April 2007.
The Canadian government, as well as the United States government, imposes policies, tariffs and quotas to protect their respective milks from international prices. These policies are under strain today, as pressures from farmers continue to grow with high rewards in global markets. According to the United States Department of Agriculture, milk prices were at a record-high last month, where consumers paid an average $3.80 a gallon, compared to $3.29 in January.
Many companies that use milk as an ingredient, such as Hershey Co. (chocolate bar company), are looking to use less lactose and/or raise prices of their products due to the rising cost of milk. Now this would only be a solution (though I wouldn’t really call it one) for such substitutable products. What about the classic, healthy (required) milk? Hmmm…
Makes me wonder what other problems we will be faced with as the Chinese bubble continues to expand globally. As China becomes a growing net-importer in many industries, such as the dairy industry, it makes me wonder what China’s next big export will be… Global inflation?
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