With a drop of 50% in the price of milk since mid-2014, producers in several countries are beginning to reduce their production. In New Zealand, one of the largest producers of the product in the world, many dairy cows have had to be euthanized recently and almost four out of every five producers are experiencing financial losses.
According to a global survey by consultancy KPMG, one in every 10 producers is expected to leave the activity in the world in the coming years and at least 28% will have to obtain new capital to adapt the business.
In Canada, dairy products have lower prices than in 2009 and require surcharges on imports of milk from the USA. In the case of the European Union, the value of the product is also the lowest in seven years, with the United Kingdom losing more than 10% of producers.
For consultancy IBISWorld, the main reason for the sector's crisis is the increase in dairy productivity in China with an average increase of 8% in the last five years, leaving exporters without customers. On the other hand, the market should recover because the growth of Chinese production should be limited.
Source: Agrolink
