Dairy Derivatives Global Market Outlook

  • The global supply–demand dynamics scenario is trending towards oversupplied condition in both milk and dairy derivatives. The regional differences and skewed trade dynamics are expected to govern the global price volatility in the near term 
  • Oceania is a key market, as it produces only 5 percent of the global milk, but contributes to more than 40 percent of the milk derivatives export market 

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  • With the removal of milk quota system, Europe is expected to increase its production of milk and milk powders until 2018. The high output of dairy products will be directed to export, mainly to Asian countries
  • The best cost region for Cheese is Europe, for butter is Oceania and for whey is North America

Dairy Derivatives - Value Chain

The market complexity is high, due to standardization and multiple (38) co-products in the value in tier 2 and 3, with majority of the products finding applications in the food & beverage industry. The dairy derivatives (tier 3) products namely the cheese and butter along with whey yield higher profits (15-30 percent) compared to tier 2 products (less than 15 percent)

Cheese and Butter - Value Chain

  • 100 liters of whole milk, yields only 1.8kg of butter (80 percent fat) which is a high value product 
  • 100 liters of whole milk, yields 3.75 liters of cream which in turn yields 10.56 kg cheese with 50 kg of whey as a by product

Whey Value Chain Analysis and Derivatives

  • Whey is a by-product of cheese production and hence it forms the raw material for whey powder production 
  • Various innovations and advances in processing technology of dairy ingredients over a period of time resulted in a number of different finished whey products with varying nutritional profiles 
  • The production of Whey Protein Concentrate (WPC) and WPI from whey is a value addition, which gives a higher nutritional product that was earlier used as animal feed or just whey. WPI at greater than 90 percent protein, and WPC with protein levels ranging from 34-90 percent are the most functional products of all whey ingredients

Whey Value Addition 

  • Whey products are experiencing increasing demand in drug and consumer health products. Increasing demand will lead to increased pricing in the upper levels of the whey value chain
  • Whey products including whey and lactose derivatives have wide applications. 43 percent of whey and lactose are used in nutrition and pharmaceuticals, 36 percent is used in processed foods like confectionery, meat and bakery and 21 percent is used in feed applications