Global milk industry
Efficiency by economic and ecological standards
Unprecedented changes in our daily life, imposed by the COVID - 19 pandemic, raise numerous questions about our life after and with COVID. Related to this subject, the most of our concern pertains primarily to hitherto organization of economy, even its basic principles. As an example – the social distancing as a main protective measure against COVID - is contradictory to the principle of the production unit concentration which is the basis of calculation in numerous businesses particularly the low margin ones.
Notwithstanding the origin of virus and the path of its rapid spreading throughout the whole world, about what just vague explanation is being publicly offered, already a superficial consideration of this issue brings us inevitably to the question of ever-increasing global population. During the last 30 years, the number of the globe inhabitants rose to 7.9 billion, an increase of 43%. According to UN projections this number is expected to reach 10 billion by 2050. Such an immense increase of human concentration on the earth implies hitherto unknown challenges; the UN has been already for 15 years accentuating the complex of climatic changes along with pandemics and scarcity of resources. The latest primarily related to available feed and water for farm animal and human needs.
In fact, we are already facing a great deal of listed challenges in their full expression. Some countries like China, aware of its insufficient potential for forage production, has been developing a strategy of milk production on acquisition of integrated farm capacities abroad, in other countries. The milk produced at these operations is being processed into milk powder and transported for final manufacturing in domestic milk factories (Hoard’s Dairyman, 4/10, 2017).
Not less intriguing is the question of environmental pollution incurred by intensive agriculture. The most frequent questions in this regard are an increased Global Warming Capacity by excessive methane emissions and nitrogen production respectively.
The resource scarcity, as a combination of listed challenges, along with the imposed substantial changes of human behavior due to the COVID pandemic accentuates the necessity of dealing with resources with more circumspection. That means in the first place it is economically more efficient. Is it, particularly under the presented circumstances, justified to produce milk in a quantity below the animal’s genetic capacity? Moreover, is it even justified to use feed quantity for a liter of milk above the physiologic optimum? Or to allow more days to pass between parturition and the next pregnancy leading ultimately to less calves born and also to shortening of the productive life of an animal? All listed points belong to economic metrics and influence negative the farm productivity. Some governments are even paying subsidies from the national budget for covering the too high production costs of farm enterprise. Does it make sense that businesses, which by definition should generate profit, are being subsidized and what is the potential of the dairy farming industry to function in an ordinary economical manner?
In an intent to present the world trends in milk production in the wake of an accentuated increase of the world population in the light of increased resource consumption combined with the negative ecological impact of this production, we chose a group of 15 countries to show the mentioned trends in the period between 1990 and 2019. Nine out of 15 countries belong to a group of economically undeveloped countries (India, China, Bangladesh, Vietnam, Afghanistan, Indonesia, Nepal, Pakistan, Sri Lanka) and the remaining 6 falls into a group of developed countries (Australia, Canada, USA, Denmark, France and Germany). The division of the countries into the described groups enabled us to demonstrate the mentioned trends in relation to the technological level of milk production.
Chart 1: Changes of inhabitant number, produced milk quantity, number of cows and milk consumption in a group of countries between 1990. and 2019.
The world population increased in the named period from 5.5 billion to 7.9 billion, or 43% respectively. Dynamically, the world population increased in the last 30 years by 1 billion per decade. In the presented countries, as shown in Chart 1, the population rose from 3.15 billion up to 4.14 billion, or 31%. At the same time, milk production in these countries almost doubled, from 223.9 to 441.3 million tons (97%). The milk was produced by considerably enlarged cow population - the cow number grew 37 million, or 55%; simultaneously, the average milk consumption rose 15%, from 345 to 396 liters per capita.
Already by a superficial reviewing of this data it becomes obvious that among the monitored variables the milk production protrudes. It doubled during the observed time whereas other variables changed more moderately.
The data become more interesting after dividing them into the groups of developed and undeveloped countries which is shown in Chart 2.
The number of inhabitants increased in the group of undeveloped countries to a more significant extent than in developed countries (33%/20%). The increase in milk production, however, was in the group of undeveloped countries much more accentuated – it rose by 330%, from 79.6 to 264 million tons. On the contrary, in the group of developed countries, the milk production rose a moderate 23%. It is very interesting that the number of cows doubled in the group of undeveloped countries from 43.1 to 85.6 million; on the other hand, in the other group of countries this number declined for 22%, from 24.9 to 19.6 million. As for the average yearly milk consumption per capita, it rose in the group of undeveloped countries tremendously, by even 250%. In its counterpart countries, on the contrary, the consumption increase amounted just 2%. Σ
Chart 2: Number of inhabitants, quantity of milk produced, cow number and average milk consumption in the group of developed and undeveloped countries respectively, between 1990. and 2019.
The real significance is of this discrepancy is, however, revealed from the numbers; despite its tremendous increase the individual yearly milk consumption in undeveloped countries reached a „modest” average of 73 liters. On the contrary, statistically a modest increase in national consumption during the same period made the average citizen of developed countries consuming yearly the abundant amount of even 323 liters, that exceeds the consumption in undeveloped countries by 4.5 times.
Furthermore, it is very interesting to look at the balance of the feed and waste material which is needed and generated in the frame of the production of such a magnitude, respectively (Chart 3). The group of undeveloped countries needed 160 million tons more feed yearly for this production, whereas the developed countries (although for the lower amount of milk) spent for the same purpose “only” 24 million tons. Regarding the manure and CO2 production, the undeveloped countries increased the production by 100%, reaching through 2019 the quantity of as much as 1,620 million tons of manure and 196 tons of CO2, respectively.
On the contrary, the developed countries decreased both (and here begins the series of really interesting data) the manure and CO2 production during the same period despite the increased milk production. While the milk production rose by 23%, the manure and CO2 production decreased by 22% (manure from 470 to 370 million tons, and CO2 from 57.3 to 45 million tons, respectively.
Chart 3: Total feed consumption and production of pollutants per liter of produced milk in the group of developed and undeveloped countries between 1990 and 2019.
Lastly, the most important part and its main massage – is revealed in graph No 4. The data about average milk production (individual productivity) displays the significant increase in the group of undeveloped countries and that is 68%. However, the numbers despite the significant increase show a modest absolute value and that is a little above 3,000 liters per cow. In the group of developed countries, the increase of milk production followed similar pattern namely 56%. Furthermore, the numbers reveal an impressive amount of 9,050 liter per cow that is 3,200 liters more than in 1990. One should note that this increase of 3,200 liters exceeds the actual average milk production in undeveloped countries which is, even after its increase in 2019, 3,000 liters per cow. The data about environmental pollution, recalculated per liter of produced milk, represent a significant index of production efficiency. These numbers became considerably better in both groups after the increase of milk production. Nevertheless, despite lowering the extent of pollution by almost 60% in both groups, the undeveloped countries still expel 6.16 kg manure and 0.74 kg CO2 per liter of produced milk.
Chart 4: Parameters of production efficiency of milk production and production of pollutants per liter of produced milk in the group of developed and undeveloped countries between 1990. and 2019.
At the same time the respective numbers in developed countries are approximately 3 times lower, namely 2.8 kg manure and 0.25 kg CO2 per liter milk.
This, overall comprehensive data impose a few conclusions:
- The world population increases by the dynamics of a billion inhabitants per decade, meaning that the world population almost doubled in the last 30 years. The simultaneous increase in food demand was covered, at least partially with the impressive rise in overall global milk production. Since the milk production rise is accounted for by advanced technology that means that even the undeveloped have embraced the demanded technology forms. This conclusion was confirmed by the tremendous increase in cow numbers which implies the broad application of contemporary feeding, reproduction and management techniques. Of course, the notably increased simultaneous milk consumption run parallel with overall technological development, improvement of life quality and purchasing power in most world countries.
- An inhabitant increase in both developed and undeveloped countries occurred, however to a greater extent in undeveloped countries. In the group of developed countries, the population rose particularly in the USA and Canada, which was partially due to extensive immigration. Regardless of the origin, the population density made the market stronger which dictated the higher demand for food of higher quality, containing more nutrients, protein being in the first place. While the undeveloped countries increase the fresh milk consumption, the 4.5 times higher average milk consumption in developed countries is the result of a more developed market which absorbs larger quantities of products with a higher added value. The EU is processing even 31% of on farm produced milk into butter and 38% into cheese. Developed market, which protects the domestic production by means of refined regulations on the basis of product origin, is a generator of permanent nonmaterial demand which in turn induces an increase of farm production capacities. Although we are not focused here on the milk price it is well-known that its vibrant fluctuations are the consequence of periodical changes in the milk demand on the market in which the farmers cannot respond resiliently enough by instant production decrease.
- The impressive increase of milk production by even 330% in undeveloped countries during the last 30 years speaks in favor of tremendous potential of development of the farming industry. The inevitable prerequisite for it is, however, the entire embracement of modern technologies by farmers. Moreover, the real dimension of this potential reveals the numbers for developed countries. One should note that in this country group the substantial increase of production was attained on a smaller (not larger) number of cows – that was accounted for considerably higher, almost doubled, individual production per cow. Higher individual production implies as it is known lower production costs but also tangible lowering of the negative impact on the environment.
- Along with the considerably larger world population which increased the demand for the foods especially those of higher quality, containing protein and other valuable nutrients;
- The increased population makes available resources scarce, especially water and animal feed, which imposes more efficient exploitation of production units, meaning higher productivity;
- Higher productivity, besides larger product output, is also a main prerequisite for lowering of CO2 and methane production, the substances which stand for substantial contributors of environmental pollution;
- Higher productivity is usually accompanied by higher profitability, due to decreased production costs, that should make a milk production profitable business. That is a high potential saving for the countries which still pay subsidies for milk production;
- The prerequisite for achieving a higher productivity and profitability, respectively is the investment in modern technology, in particular:
- Genetics (genomic analysis and genetical herd improvement);
- Nutrition – CNCPS technology which – efficient feed utilization and higher production;
- Digitalization and automatization of production processes.
The data source; FAO Stat; physiological standards of manure, CO2, CH4 production related to distinct individual milk production; more detailed explanation available under email@example.com
Author: B.Kampl, Kampl consulting llc; SANO modern animal nutrition llc