RESTRICTED
WORLD TRADE IDA/W/7
28September 1995
ORGANIZATION(95-2860)
International Dairy Agreement
INTERNATIONAL DAIRY COUNCIL
Status Report ontheWorld Market forDairy Products
Note bytheSecretariatIDA/W/7
Page2
INTRODUCTION
TheInternational Dairy Agreement entered intoeffect on1January 1995. Itreplaces the
International Dairy Arrangement, which hadoperated since 1980. Asof15September 1995, the
following wereparties totheInternational Dairy Agreement: Argentina, theEuropean Community (15),
Japan, NewZealand, Norway, Romania, Switzerland andUruguay.
Theprimary objectives oftheAgreement, likeitspredecessor, aretoadvance theexpansion
andliberalization ofworld trade indairy products under asstable aspossible market conditions, on
thebasis ofmutual benefit toexporting andimporting countries, andtofurther economic andsocial
development indeveloping countries. Inadopting these objectives, theeconomic importance ofmilk
anddairyproductstomanycountrieswasrecognized,aswellastheneedtoavoidsurplusesandshortages
andtomaintain prices atanequitable level. AnInternational Dairy Council andaCommittee onCertain
Milk Products havebeenestablished toadminister theAgreement. Previously three Protocols were
annexed totheInternational Dairy Arrangement; under theInternational Dairy Agreement these have
beencombined intoasingle Annex onCertain Milk Products.
ThisAnnex establishes minimum export prices forskimmed milkpowder, whole milkpowder,
buttermilk powder, anhydrous milkfat,butter andcheese (Table 1).Theminimum export prices are
fixed fordefined pilotproducts andtakeintoaccount thecurrent market situation, dairy prices in
participating producing countries, theneedtoensure equitable prices toconsumers, andthedesirability
ofmaintaining aminimum return tothemostefficient producers inorder toensure stability ofsupply
overthelonger term.
Theminimum export prices forbutter andanhydrous milkfatweresuspended on4May1994
foraperiod oftwelve months.
TABLE 1:MINIMUM EXPORT PRICES EFFECTIVE 1JANUARY 1995
Pilot products US$/metric tonf.o.b.
Skimmed milkpowder 1,200
Whole milkpowder 1,250
Buttermilk powder 1,200
Anhydrous milkfat 1,625*
Butter 1,350*
Cheese 1,500
*Minimum export prices forthese products were suspended from 4May 1994
to3May 1995.IDA/W/7
Page3
Thisstatus report hasbeenprepared bytheSecretariat inaccordance withArticle IV:1ofthe
Agreement andRule29oftheRules ofProcedure. Theaimofthisreport istoprovide abasis for
discussionandadvancementoftheworkoftheCouncilandCommitteeattheirmeetingsinOctober1995.
Thereport isbased oninformation provided byparties aswellasdocumentation provided by
theFood andAgriculture Organization (FAO), theOrganization forEconomic Co-Operation and
Development (OECD), theUNEconomic Commission forEurope (ECE), theInternational Dairy
Federation (IDF), Agriculture Canada, theUnited States Department ofAgriculture, Zentrale Markt-
undPreisberichtstelle (ZMP), Agra Europe andother selected national andprivate sources.
Thereport provides information onproduction, consumption, trade, stocks andprices formilk
andprincipal dairyproducts in1994. Itcovers developments indairy policies through 1994and,where
possible, theoutlook for1995. Thereport should bereadinconjunction withthestatistical information
circulated inthefollowing documents:
IDA/W/8 Milk Deliveries andProduction
IDA/CMP/W/6 Committee onCertain Milk Products -Summary Tables
Delegationswishingtosuggestmodificationsorcorrections,ortoprovideadditionalinformation,
areinvited tomake submissions totheSecretariat, preferably inwriting, assoonaspossible. Such
submissions might cover boththepresent report andthestatistical information mentioned above. The
drafting ofthisreport wascompleted on15September 1995.IDA/W/7
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TABLE OFCONTENTS
Page
INTRODUCTION 2
WORLD DAIRY MARKET HIGHLIGHTS 7
WORLD MILK PRODUCTION AND CONSUMPTION 8
MILK POWDERS 9
BUTTER AND ANHYDROUS MILK FAT 14
CHEESE 18
INTERNATIONAL DAIRY PRICES 23
DAIRY PRODUCTION AND POLICIES INSELECTED COUNTRIES
AND REGIONS 24
WESTERN EUROPE 24
European Community 24
EFTA -Norway andSwitzerland 26
CENTRAL AND EASTERN EUROPE 27
COMMONWEALTH OFINDEPENDENT STATES 30
BALTIC REPUBLICS 31
OCEANIA 31
Australia 31
NewZealand 32
NORTH AMERICA 33
Canada 33
United States 35
LATIN AMERICA 36
ASIA 38
Japan 38
Other Asian Countries 39
AFRICA 39IDA/W/7
Page5
Page
TABLES
Table 1 Minimum Export Prices Effective 1January 1995 2
Table 2 Major Milk Producers 8
Table 3 Major Skimmed Milk Powder Exporters 9
Table 4 Major Skimmed Milk Powder Importers 9
Table 5 Major Butter Producers 14
Table 6 Major Butter Exporters 15
Table 7 Major Butter Importers 15
Table 8 Major Cheese Producers 19
Table 9 Major Cheese Exporters 19
Table 10 Major Cheese Importers 19
Table 11 International Dairy Prices 1993-1995 23
Table 12 EC-Milk Deliveries 24
Table 13 EC(15)-Dairy Production andWholesale Prices 25
Table 14 EC-Export Restitutions forSelected Dairy Products 25
Table 15 Norway andSwitzerland -Butter andCheese 26
Table 16 Milk Production inCentral andEastern Europe 27
Table 17 Dairy Production inHungary 28
Table 18 Bulgaria -Cheese Production andTrade 29
Table 19 Milk Production intheCIS 30
Table 20 Tariff Quotas forImports ofDairy Products from the
Baltic States intotheEuropean Community 31
Table 21 Australia -Milk Deliveries 32
Table 22 Australia -Dairy Production, Consumption andExports 32
Table 23 NewZealand -Milk Deliveries 33
Table 24 NewZealand -Dairy Production, Consumption, Exports
andStocks 33
Table 25 Canada -Milk Production andLiquid Sales 34
Table 26 Canada -Dairy Production, Consumption andTrade 34
Table 27 United States -Milk Deliveries 35
Table 28 United States -Dairy Production andWholesale Prices 35
Table 29 United States -TheDairy Export Incentive Program
forJanuary-September 1995 36
Table 30 Argentina -Dairy Production, Consumption andTrade 37
Table 31 Japan -Milk Production andConsumption ofDrinking Milk 38
Table 32 Japan -Dairy Production, Consumption, Imports andStocks 38IDA/W/7
Page6
Page
GRAPHS
Graph 1Skimmed Milk Powder Production 1980-1994 10
Graph 2Skimmed Milk Powder Exports 1980-1994 10
Graph 3Skimmed Milk Powder Stocks 1980-1994 11
Graph 4Skimmed Milk Powder Prices 1980-1995 11
Graph 5Whole Milk Powder Production 1980-1994 12
Graph 6Whole Milk Powder Exports 1980-1994 13
Graph 7Whole Milk Powder Prices 1980-1995 13
Graph 8Butter Production 1980-1994 15
Graph 9Butter Exports 1980-1994 16
Graph 10 Butter Stocks 1980-1994 16
Graph 11 Butter Prices 1980-1995 17
Graph 12 Anhydrous Milk FatProduction andExports 1980-1994 17
Graph 13 Anhydrous Milk FatPrices 1980-1995 18
Graph 14 Cheese Production 1980-1994 20
Graph 15 Cheese Exports 1980-1994 20
Graph 16 Cheese Stocks 1980-1994 21
Graph 17 Cheese Prices 1980-1995 21
Graph 18 Price Indices forSkimmed Milk Powder andWhole Milk Powder 22
Graph 19 Prices Indices forButter andCheese 22
Graph 20 Poland -Milk Production, Deliveries andProducer Prices 27IDA/W/7
Page7
WORLD DAIRY MARKET HIGHLIGHTS
Worldmilkproductionin1994continuedtodeclineslightly,asfurtherdropsinoutputinCentral
andEastern European countries offset increases inmostdeveloping countries andfurther record
level output inAustralia andNewZealand. Provisional estimates suggest thatworld milk
production in1995 willbesimilar totheprevious year. Production inCentral andEastern
European countries isexpected tocontinue declining, offsetting further increases inthe
developing countries.
World production ofskimmed milkpowder alsodeclined in1994, particularly inEuropean
countries. Incontrast, world traderecovered somewhat, andpricelevels wererelatively high.
Japan substantially increased imports ofskimmed milkpowder asdomestic milkwasdiverted
tomeet anincrease indemand fordrinking milkduetotheunusually hotsummer. The
draw-down ofstocks insome major producing areashasreduced thesupplies normally available
foranimal feeduse. Itappears likely that,atleastfor1995, stocks willremain verylow.
Inthefirsthalfof1995theworld market situation forskimmed milkpowder wascharacterized
byhighprices andtightsupplies.
Whole milkpowder production continued toincrease globally in1994, buttheincrease in
demand forskimmed milkpowder andbutter inlate1994 ledsome major exporters tobegin
ashiftawayfromproduction ofwhole milkpowder toskimmed milkpowder andbutter. Prices
forwhole milkpowder improved during thelatter partof1994andremained firminthefirst
halfof1995.
World butter andbutter oilproduction continued todrop, while world consumption appeared
tohavelevelled offafteralong-term decline. World exports in1994 areestimated tohave
declined further, buttherewasanotable surge inRussian import demand intheclosing months
of1994 andintoearly 1995. World prices forbutter were substantially higher inthelatter
partof1994 thaninrecent years. They continued toincrease inthefirsthalfof1995 and
werenearrecord levels inJune1995. World stock levels were10percentlower attheend
of1994 thantheprevious year, andafurther substantial decline isexpected in1995.
Cheese production continued toincrease globally by1percentin1994, andconsumption also
continued togrow by1-2percent. World trade further expanded, although prices were
relativelyhighandsteady.Internationaldemandforcheeseisexpectedtoincreaseinthemedium
tolongtermresulting infirmprices.
There wasasteady growth intheuseoftheproduction enhancing hormone BSTinUSdairy
herds following itsavailability inthemarket inFebruary 1994. TheEuropean Community
further extended itsmoratorium ontheuseofBSTuntil2000, withlimited trialusesapproved.
InCanada, avoluntary moratorium ontheuseofBSTended inJuly1995, however, afinal
decision regarding itsusehasnotyetbeenmade byCanadian health authorities.
Thequantity ofdairyproducts eligible forexport subsidies under theUSDairy Export Incentive
Program (DEIP) forthefirsthalfof1995wassetat156,000 tonsofmilkpowder, butter/butter
oilandcheese, allocated fargreater thanhalfofthe1994actual DEIP sales. (UScommitments
toreduce subsidized export quantities asaresult oftheUruguay Round negotiations began
asof1July1995.) Mexico andAlgeria remain themajor destinations forDEIP exports, but
certain Asian countries were targeted forthefirsttimein1995. However, allocations were
notfullyutilized, notably forbutter andbutter oil.InJune, allocations fortheperiod July
toSeptember 1995 were announced, totalling 73,500 tonsofmilkpowder, butter/butter oil
andcheese. Allocations were again mostly forAlgeria andMexico.IDA/W/7
Page8
WORLD MILK PRODUCTION AND CONSUMPTION
1. In1994, world milkproduction (including sheep, goatandbuffalo milk) fellby3million tons
to525million tons. Thisfollows adecline of1million tonsin1993, andcontinued thetrend ofrecent
years. Reduced output inEurope andtheformer USSR, wasnotoffset byrecord production inAustralia
andNewZealand. Forthedeveloping countries, overall production isestimated tohaverisen by
2percentto180million tons, withAsiaaccounting formost oftheincrease.
2. Provisional estimates suggest thatworld milkproduction willreach 526million tonsin1995,
TABLE 2
MAJOR MILK PRODUCERS
1994 Estimates
(Million M.T.)
EC(12)1111.0
United States 70.0
India263.0
Russia 42.8
Ukraine 18.2
Pakistan218.0
Brazil 15.5
Poland 11.6
New Zealand 9.0
Japan 8.5
Australia 8.5
Canada 7.5
China27.5
Mexico 7.5
1Production estimate. Deliveries reported as103million m.t.
2Cow andbuffalo milk.asimilar volume totheprevious year. Production inthedeveloped countries isanticipated todecline
asaresult oflower output intheCommonwealth
ofIndependent States (CIS) andEastern Europe.
However, output isexpected tocontinue torise
inthedeveloping countries, growing by
2percentfrom 180million tonsin1994 to
184milliontonsin1995,representing35percent
oftotalworld production.
3. Percapita consumption ofmilkandmilk
products attheworld levelhasremained around
75kgs.inmilkequivalents. Thislargely reflects
similar rates ofgrowth inpopulation and
production inthedeveloping countries. After a
stable period inthelasthalfofthe1980s, per
capita consumption hasdropped asaresult of
lower levels ofconsumption inEastern and
Central Europe, andOceania. There aremarked
regional differences inconsumption levels. The
highest levels ofconsumption arefound inNorth
America, followed byWestern Europe, Oceania
andCentral andEastern Europe. Among the
developing countries, thehighest levels of
consumption arefound inLatin America,
followed bytheNear East, Africa andthe
FarEast.
4. Thetrend towards higher value-added
dairy product linescontinued in1994. Since the
mid-1980s, increasing shares ofworld milk
production havebeenutilized inthemanufacture
ofcheese andwhole milkpowder attheexpense
ofskimmed milk powder andbutter, and
evaporated/condensed milk.IDA/W/7
Page9
MILK POWDERS
Skimmed Milk Powder
5. World production ofskimmed milkpowder in1994declined byafurther 1percentfromthe
previous yearto3.5million tons,duemainly toreduced milksupplies inmajor producing countries.
Production declined intheEuropean Community (12)andinCentral andEastern Europe whereas it
increased inNorth America andOceania.
6. World consumption ofskimmed milkpowder continued todecline in1994, asworld prices
remained relatively high. However, afterhaving declined in1993, world exports recovered slightly
in1994, increasing by1percentto990,000 tons. Exports from Oceania increased whereas those
ofEurope andNorth America decreased. Asregards imports Mexico, Algeria, Japan andBrazil
remained themain markets forskimmed milkpowder.
7. On1January 1995, world skimmed milkpowder stocks, at460,000 tons, were 4percent
more thantheirleveloneyearearlier. However, thedraw-down ofstocks insome producing areas
inearly1995hasreduced thesupplies normally available foranimal feeduse.Inthemiddle of1995,
skimmed milkpowder stocks inthemain producing countries weresubstantially lower thanoneyear
earlier. Itappears likely thatstocks willremain low,atleastfor1995.
8. Attheendof1994, themarket situation formilkpowders wasrelatively tight, withanincrease
indemandfacingreducedexportsupplies,particularlyforskimmedmilkpowderfromEuropeansources.
Thishasstrengthened prices forbothskimmed milkandwhole milkpowders during thesecond half
of1994 andinearly 1995. Reported prices ofskimmed milkpowder inthefourth quarter of1994
ranged between US$1,750 andUS$2,000 pertonf.o.b. Inthefirsthalfof1995, theworld market
situation formilkpowders wascharacterized byhighprices andtightsupplies. Reported prices of
skimmed milkpowder inthesecond quarter of1995werenearrecord levels ranging between US$1,950
andUS$2,300 pertonf.o.b. There hasbeenachange inpricerelativities, withskimmed milkpowder
often quoted athigher prices thanwhole milkpowder, reflecting thehighvalue ofmilkprotein. The
minimum export price effective 1January 1995 wasUS$1,200 pertonf.o.b.
TABLE 3
MAJOR SKIMMED MILK POWDER
EXPORTERSTABLE 4
MAJOR SKIMMED MILK POWDER
IMPORTERS
1994 Estimates 1994 Estimates
(Thousand M.T.) (Thousand M.T.)
Australia 191 Mexico 200
New Zealand 149 Algeria 128
EC(12)1129 Japan 86
Poland 69 Brazil 45
United States 49
1Excluding ECintra-trade.IDA/W/7
Page28
33. Thepaceofdecline ofdairy cownumbers inPoland isforecast toslowdown to2percentin1995.
During thefirstsixmonths of1995, milkdeliveries dropped by4percentto2.9million tonsfromprevious-
yearlevels. Cheese production slipped by3½percent.There wasamoderate increase inmilkandbutter
production, by1and4percent,respectively. Inorder toincrease milkdeliveries, theminimum milkprice
forthe1995/96 season wasincreased to0.40newzlotys perlitre,alevelslightly below theprevailing market
price. Thepricemechanism isalsothebasisforcalculating theintervention prices forbutter andskimmed
milkpowder.
34. Intheexpectation ofitseventual membership totheEuropean Community, Poland istheonly
East-European country tohavebound itsagricultural import tariffs atEClevels, andinECU terms. The
preferential tradearrangements concluded under theECAssociation Agreements willalsobring about new
developments inthePolish dairy sector. Aspartofarecent tariff quota agreement withtheUnited States,
Poland willbeabletoexport 1,625 tonsofcheese annually totheUnited States market.
Hungary
35. In1994, Hungary 'stotalfarmproduction increased by5percentinvalue terms. Thisupturn was
largely attributable tothelandreform which allowed 31percentofallarable landtobeprivately owned
bytheendof1994, compared to8percentin1990. Farm production isexpected togrow byanother
2to4percentin1995. Despite thecontinuing fallinmilkproduction in1994, therewasamoderate increase
inbutter andcheese production during thefirsthalfof1995.
TABLE 17:DAIRY PRODUCTION INHUNGARY, JANUARY-JUNE 1994/1995
('000metric tons, and()=%change)
Firsthalf
1994Firsthalf
1995%change
1995/94
SMP 2.0 2.9 45
WMP 2.9 2.2 -24
Butter 6.8 6.9 1½
Cheese 23.7 24.5 3½
36. Hungarian dairy exports increased by20percentin1994while imports ofdairy products increased
by15percent. Hungary 'scurrent agricultural policy isaimed atpromoting theproduction andmarketing
agricultural foodproducts. Thiseffort ismainly targeted towards themarkets ofWestern Europe. For
example, European Community quality standards formilkproduction were introduced onlarge farms in
January 1995 andonsmaller farms beginning inthesecond halfoftheyear. InMarch 1995, animport
surcharge of8percent,tobeimplemented initially foratwo-year period, wasimposed onagri-food products.
Thismeasure isexpected toimprove theprofitability ofthedairy sector andstabilize farmincomes.
Bulgaria
37. During 1994, cownumbers inBulgaria decreased by16percent, contributing toadrastic risein
theprice ofdairy products. Thistrend continued during thefirstquarter of1995. Theresulting levels
ofdomestic milksupplies wereestimated tobewellbelow demand, andtomeetabout 75percentofdomestic
demand in1995. Special incentives tostopthedecline incownumbers wereintroduced inJanuary 1995,
including duty-free import quotas forcattle, andsubsidies forpurchases oflivestock bymilkandmeat
producers. Inaddition, Bulgarian agricultural producers inselected sectors, including dairy, willbesupportedIDA/W/7
Page29
byminimum guaranteed purchase prices. This"safeguard" price, which isbased onaverage production
costs, athree-year average export price, plusapercentage profit margin, willbeintroduced during thesecond
halfof1995. Newcustoms duties onmilkpowder, butter andcheese ranging from 11to20percent, or
US$185 toUS$1,000 perton,were introduced on21July1995. During thefirsthalfof1995, cheese
production seemed torecover fromthesharp fallrecorded during thecorresponding period lastyear, while
domestic cheese consumption grew by39percent, triggering higher imports andreduced exports.
TABLE 18:BULGARIA -CHEESE PRODUCTION AND TRADE
(million metric tons, ()%from previous year)
First half
1994First half
1995%change
1995/94
Production 20.3 24.4 20
Imports 0.3 3.2 967
Exports 5.1 2.2 -57
Consumption 12.9 17.9 39
Czech Republic
38. Thedecline inthenumber ofdairy cows seems tohaveslowed down in1994. Nonetheless, milk
production in1994 wasdown by8½percentcompared to1993. Consumption offresh milkdecreased
by6percentin1994, while consumption oflong-life milkroseby15percent. Inthefirstquarter of1995,
milkproduction wasestimated at725million litres, 6percentlessthanforthesame quarter oftheprevious
year. Production ofmilkpowder andbutter dropped 19and20percent,respectively. Higher farm-gate
prices, up10percentduring thefirstthree months of1995, shifted consumer preferences from butter to
vegetable fats. Similar substitution effects, fromnatural andprocessed cheeses (down by16-18 percent),
topork, poultry meat, oreggs, were observed. Percapita consumption ofdairy products was200kgs.
(inmilkequivalents) in1993, compared to259kgs.in1989.
39. In1994, imports ofcheese andprocessed cheese roseby35percentcompared to1993. Thistrend
continued during thefirstquarter of1995, witha80percentincrease incheese imports, compared tothe
same period lastyear. However, overall imports ofdairy products decreased by20to30percentover
thefirstquarter of1995. Imports ofliquid milkandcream dropped by30percent. Exports ofdairyproducts
in1994 totalled 774million litres (milk equivalents), down 16percentfrom 1993 levels. Thisdecrease
wasmainly attributable tolower butter exports. Exports ofmilkpowders, at80,500 tons, were similar
to1993 levels. In1994, subsidized exports ofdairy products totalled 49,963 tons.
Slovak Republic
40. Livestock numbers fellby8percentduring 1994, contributing toa4percentdecrease inmilk
production. Milk deliveries reached 896million litres. Butter production wasestimated at14,000 tons.
Subsidized exports ofmilkpowder andcheese totalled 180million litres (milk equivalent). Imports ofmilk
anddairy products totalled 60million litres (milk equivalent) in1994, andbutter imports areforecast to
reach 1,800 tonsin1995. On1January 1995, amilkproduction quota system atguaranteed prices was
introduced inorder tostabilize milkproduction.IDA/W/7
Page30
41. ThenewCentral European FreeTrade Agreement (CEFTA), concluded inJanuary 1995, islikely
toinfluence thedairy sector inthemedium term, asPoland, Hungary, theCzech Republic, Slovakia and
Slovenia agreed toabolish tariffs onmutual tradeinagricultural products by1998. Thephasing-out process
isduetobegin on1January 1996, starting witha50percentreduction inapplied tariffs.
COMMONWEALTH OFINDEPENDENT STATES
42. Thecrisis inthelivestock sector aswellashigher demand forbeefcontributed toanincreased
slaughter ofdairy cows andbrought about anacute shortage ofdairy products inRussia during 1994.
Production ofbutter reached 491,000 tonsin1994, andwasexpected toremain between 120,000 and
200,000 tonsduring thefirsthalfof1995. Butter imports rosesharply in1994 andearly in1995, with
anestimated 60,000 to70,000 tonssupplied bytheEuropean Community. Butter imports in1994amounted
to171,300 tonscompared to70,000 tonsin1993. Milkpowder imports reached 37,400 tonsin1994versus
approximately 15,000 tonsin1993. InMarch 1995, government authorities estimated that,despite thefall
inpercapita consumption, anextra 3.5million tonsofmilkand80,000 tonsofbutter would benecessary
tomeetdemand in1995.
43. Tosupport domestic producers intheMoscow region, however, tariffs onpowdered milkandbutter
wereraised from2to10percentandfrom 15to20percent,respectively, asof1July1995. Following
anoutbreak offoot-and-mouth disease intheMoscow region inJune1995, theEuropean Commission and
Poland banned imports ofnon-heat treated livestock products fromRussia. Withregards todairy products,
thisbanmainly affects casein, ofwhich Russia exported around 25,000 tonstotheEuropean Community
in1994, aswellascertain cheeses. Atrade agreement withtheEuropean Community wassigned on
17July1995, andnegotiations onthecreation ofafreetrade zoneareduetobegin in1997.
TABLE 19:MILK PRODUCTION INTHE CIS
(million metric tons, ()%from previous year)
1993 1994
CIS 83.9 (-2) 79.1 (-5½)
Russian Federation 46.5 (-1½) 42.8 (-8)
Ukraine 18.4 (-4) 18.2 (-1)
Belarus 5.6 (-5½) 5.6 (-)
44. Throughout theCIS,thedeepcrisis thathasaffected thelivestock sector since 1991 hasledtoa
sharp reduction intotalcattle numbers. Duetodeclining supplies offodder, cownumbers fellby9percent
during 1994 to91,300 headinTadjikistan .Thiscaused adecrease inmilkanddairy product outputs by
10and23percent, respectively. Similarly, Moldova recorded fallsbyover20percentinallcategories
oflivestock numbers overthepastyear, resulting ina13½percentfallinmilkproduction. However,
theagricultural performance oftheMoldovan private sector improved anditmet30percentoftotaldemand
formilk in1994. Moldovan domestic demand formilk wasestimated at1.5million tonsfor1995.
Kyrgyzstan 'scattle numbers fellby14percent, causing milkproduction tofallby80,500 tonsattheend
of1994. OnlyTurkmenistan andUzbekistan sawtheirherdnumbers stabilizing. Privatization ofthedairy
sector progressed rapidly inUkraine during 1994andthefirstquarter of1995, with67percentofunprofitable
dairy unitssoldoff.Milkproduction in1994 wasestimated tobeonlyslightly below theprevious year's
level. Thequantity ofbutter senttoArmenia, Azerbaidjan, Georgia, Kyrgyzstan, Tadjikistan andMoldova
within theframework ofafood-aid programme bytheEuropean Community amounted to9,000 tonsduring
1994/95.IDA/W/7
Page31
BALTIC REPUBLICS
45. Milkproduction intheBaltic States isestimated at2.9million tonsfor1994. Milkproduction in
Lithuania in1994 amounted to1.2million metric tons, andfellby11percentinthefirstquarter of1995
to348thousand tons. Theleveloffarmsubsidies announced for1995 doubled compared to1994, with
milkproduction being allocated a25percentshare ofthetotalsubsidy amount.
46. Agreements between theEuropean Community andtheBaltic States wereconcluded inearly1995.
These included afree-trade agreement giving preferential tarifftreatment totheagri-food sector inthethree
Republics. Inmid-July 1995, theEuropean Community cuttariffs ondairy imports fromtheBaltic States
byupto60percent. Inaddition, trade concessions andtariff quotas willbegranted formilkpowders,
condensed milk, butter andcheese.
TABLE 20:TARIFF QUOTAS FOR IMPORTS OFDAIRY PRODUCTS FROM THE
BALTIC STATES INTO THE EUROPEAN COMMUNITY
(metric tons)
Estonia Latvia Lithuania
1995 1996 1997 1995 1996 1997 1995 1996 1997
WMP andSMP 1,000 1,250 1,500 2,000 2,250 2,500 2,900 3,200 3,500
Condensed milk - - - 150 175 200 200 200 200
Butter 700 750 800 800 850 900 100 1,100 1,200
Cheese 800 800 800 900 1,050 1,200 1,400 1,400 1,400
OCEANIA
Australia
47. Milkproduction in1994/95 (beginning on1July)wasestimated at8,200 million litres. While this
wasanincrease ofaround 2percentfrom1993/94 production andanother record level, itwasslightly below
theinitial estimate of8,300 million litres. Thelower thanexpected production wasduetoavariety offactors
including drought inseveral milkproducing regions andhigher feedgrain prices duetodrought ingrain
growing regions ofAustralia. Most dairying regions experienced verygood autumn conditions thereby
providing asolidbaseforbothlate1994/95 andearly1995/96 seasonal production. Assuming thatreasonable
seasonal conditions willcontinue, itisexpected that1995/96 milk production willbearound
8,500 million litres, anincrease ofaround 3½percentover1994/95 output. Other important factors
influencing1995/96productioninclude:lowerfeedgrainprices;increasedfarmgatepricesformanufacturing
milkduetothecontinued upward trend inworld prices formostmajor traded dairy products; some increase
inthenational dairy herd; and,general productivity gains.IDA/W/7
Page32
TABLE 21:AUSTRALIA -MILK DELIVERIES
(million litres, ()%change from corresponding period ofprevious year)
1992/93 (July-June) 7,327 (9%)
1993/94 (July-June) 8,076 (10%)
1994/95 (July-June) estimate 8,200 (2%)
48. Production ofmost manufactured products wasslightly lower in1994/95 thanin1993/94. This
wasduetothelower milkfatandprotein content ofmilkin1994/95 caused bythealtered feedregimes
indairying regions affected bythedrought. Theexception waswhole milkpowder which recorded arise
inproduction asaresult ofrecent increased production capacity andimproved market opportunities.
TABLE 22:AUSTRALIA -DAIRY PRODUCTION, CONSUMPTION AND EXPORTS
('000metric tons, ()%change from previous year)
Calendar year
1994SMP WMP Butter Cheese
Production 214.0 (15%) 114.0 (38%) 91.5 (32%) 227.0 (4%)
Consumption 41.0 (-5%) 23.0 (15%) 45.0 (4%) 157.0 (2%)
Exports 191.0 (62%) 85.0 (50%) 43.0 (6%) 104.0 (19%)
49. Inaccordance withtheAgreement onAgriculture, Australia 'sexport subsidy reduction commitments
forskimmed milkpowder, "other milkproducts" (including whole milkpowder), butter/anhydrous milk
fatandcheese came intoeffect inJuly1995. Asof1July1995, theMarket Support Scheme (which had
operated since 1986) wasreplaced bytheDomestic Market Support Scheme. Thislatter aimstoprovide
thedomestic dairy industry withthesameoverall levelofbenefit astheMarket Support Scheme, butthrough
directpaymentstofarmerstoensureconsistencywiththeUruguayRound.UndertheMarketSupportScheme,
thebenefits werepaidtomanufacturers andwerepassed ontofarmers aspartofmanufacturers 'farmgate
price formanufacturing milk.
NewZealand
50. Milkdeliveries through the1994/95 season (beginning on1June) wereerratic duetovariable weather
patterns. Inthefirstquarter of1994/95, milkdeliveries were14percentabove thecorresponding quarter
of1993/94, duetogood winter stock andpasture conditions. Unusually coldweather inOctober and
November 1994, theperiod ofpeakseasonal milkyields, eroded much oftheincrease. Thiswasfurther
exacerbated byadryperiod fromDecember 1994through February 1995. Withtheonset ofautumn, regular
rainfall andmildweather sawarecovery inmilkdeliveries, tolevels closetoandabove the1993/94 season.
Total milkdeliveries inthe1994/95 season wereestimated tobecloseto8,620 million litresor0.2percent
abovethepreviousseason,anotherrecordlevel.Cownumbersincreasedby6½percentbetweenthe1993/94
and1994/95 seasons.IDA/W/7
Page33
TABLE 23:NEW ZEALAND -MILK DELIVERIES
(million litres, %change from corresponding period ofprevious year)
1992/93 (June-May) 7,629 (2½%)
1993/94 (June-May) 8,600 (13%)
1994/95 (June-May) Estimate 8,620 (0.2%)
51. Incomparison withtheproduct mixinthe1993/94 season, production ofbutter andother fatbearing
products decreased by14percentin1994/95. Whole milkpowder production wassteady. Cheese and
skimmed milkpowder production increased by1and3percent, respectively, in1994/95.
TABLE 24:NEW ZEALAND -DAIRY PRODUCTION, CONSUMPTION, EXPORTS AND STOCKS
('000metric tons, ()%change from previous year)
Calendar year
1994SMP WMP Butter Cheese
Production 140.5 (27%) 304.5 (2%) 202.5 (2%) 191.0 (17%)
Consumption 0.0 - 0.0 - 31.0 (2%) 31.0 (1%)
Exports 149.0 (40%) 307.5 (5%) 191.0 (-2%) 159.5 (26%)
Stocks
(endofperiod) 45.0 (-43%) 27.5 (-48%) 39.5 (-33%) 54.5 (4%)
52. Allproduction fromthe1994/95 season wasfullycommitted tocustomers. Thelower thanexpected
production inthemiddle oftheseason meant thatformuch ofthelastsixmonths of1994/95, fewuncommitted
supplies wereavailable. Exports wereestimated at1.1million tonsofproduct, anincrease by7percent
from thelevelof1993/94.
53. Despite improving international prices, NewZealand 'sexport prices indomestic currency declined
withthefirmappreciation oftheNewZealand dollar. TheriseoftheNewZealand currency costtheindustry
anestimated NZ$0.35/kg. milksolids. Thefinalprice announced forthe1994/95 season forproducers
wasNZ$3.00/kg. milksolids. ThiswasNZ$0.60 above theadvance setatthecommencement oftheseason.
Theadvance priceofNZ$2.65/kg. setforthe1995/96 season was25centshigher thanlastseason 'sopening
price. TheNew Zealand Dairy Board expects afinalprice ofbetween NZ$3.00-NZ$3.10, reflecting
confidence infirmprices through thefollowing twelve months.
NORTH AMERICA
Canada
54. Inthe1993-94 marketing year, totalmilkproduction increased by2percentto7.6million tons.
Forcalendar year1994, production increased by3percentto7.7million tons. Inthe1994/95 marketing
year, itisestimated thatmilkproduction increased aswellastheproduction andconsumption ofdairy
products, reflecting thestrong recovery intheCanadian dairy economy. Consumption ofdairy products
inCanada continues tobestimulated through aprogramme tosellbutter andcheese atreduced prices to
foodmanufacturers, which hasputanendtothedeclining trend ofbutterfat consumption.IDA/W/7
Page34
TABLE 25:CANADA -MILK PRODUCTION AND LIQUID SALES
('000metric tons, ()=%change from previous year)
1993 1994 (provisional) 1995 (forecast)
Production ofcows'milk 7,500 (-4%) 7,700 (3%) 7,900 (3%)
Liquid milk sales 2,700 (-2%) 2,700 (0%) 2,800 (4%)
55. On1August 1994, theMarket Sharing Quota (MSQ) wasincreased by2½percent. On
17August 1994, theMSQ wasincreased byafurther 2percent,retroactive to1August 1994. Areview
ofyear-end milkproduction statistics, butter stocks andprojected domestic requirements prompted thequota
increase. Requirements werehigher while stocks werelower thananticipated inJuly1994. Withtheincrease,
thetotalMSQ forthe1994/95 dairy yearwasestablished at43.7million hlsat3.6kgs.ofbutterfat perhl
ofmilk.
56. TheCanadian Dairy Commission increased thetarget return fordairy producers for1995/96 from
Can$52.28 toCan$53.23 perhlofmilk, effective 1August 1995. Concurrently, thesupport price for
skimmed milkpowder wasraised fromCan$3,708 toCan$3,931 pertonwhile thesupport price forbutter
wasleftunchanged atCan$5,324 perton.
57. During 1994, skimmed milkpowder, butter andcheese production increased. Consumption of
skimmed milkpowder fellsubstantially, thatofbutter remained unchanged andthatofcheese increased
slightly. Exports ofskimmed milkpowder almost doubled in1994 while exports ofbutter andcheese
substantially declined. Imports ofcheese declined slightly.
TABLE 26:CANADA -DAIRY PRODUCTION, CONSUMPTION AND TRADE
('000metric tons, ()=%change from previous year)
1994 SMP Butter Cheese
Production 58.5 (14%) 90.0 (6%) 281.5 (4%)
Consumption 24.0 (-18%) 83.5 (0%) 292.0 (2%)
Exports 33.5 (95%) 2.0 (-65%) 8.5 (-8%)
Imports - - 21.5 (-2%)
58. Themanufacturers oftheyield-enhancing hormone bovine somatotropin BSTagreed todelay the
saleanduseofBSTuntil1July1995, while ataskforce made upofconsumers, government andindustry
representatives weretoplandefinitive regulatory action withrespect toBST. However, BSTremains under
review bytheBureau ofVeterinary Drugs atHealth Canada andcannot yetlegally beusedinCanada.
There arenoBST-related restrictions onimports.
59. With regard totheimplementation oftheUruguay Round commitments, tariffication wasinplace
asof1January 1995. Subsequently, theUnited States haschallenged theapplication oftheresulting tariffs
toimports ofdairy products formtheUnited States asbeing notcompatible withtheNorth American Free
Trade Agreement (NAFTA),and, on14July,brought aformal complaint under NAFTA 'sdispute settlement
procedures. AsfortheCanadian dairy programme, thedairy subsidy ofCan$5.43 perhlwillbereducedIDA/W/7
Page35
by30percentoverthetwodairy years 1995/96 and1996/97. Asof1August 1995, afirstcutby15percent
wasimplemented forthe1995/96 dairy year.
United States
60. USmilkproduction continues toexpand, although cownumbers haveremained stable. Following
a2percentincrease in1994, milkproduction in1995isforecast toriseby2½percentto71.4million tons.
Sales ofBSTintheUnited States haverecently stagnated astheresult ofanumber offactors, including
BSTmanagement problems byfarmers. Meanwhile, milkproduced withtheaidofBSThasceased tocause
major consumer concerns intheUnited States, although some distributors ofmilkanddairy products use
labels toindicate thattheproducts were produced without theuseofBST. Farmgate prices formilkare
forecast todecline by4-6percentin1995, which contrasts withthemore favourable price development
ontheworld market.
TABLE 27:UNITED STATES -MILK DELIVERIES
('000metric tons, ()%change from corresponding period ofprevious year)
January-December 1994 69,746 (2%)
January-July 1995 36,065 (2½%)
61. Theincreased milkflowisreflected inincreases ofallmajor products, inparticular whole milk
powder although thevolumes arecomparatively small. Theexpansion ofbutter production hasbeenrelatively
modest considering theattractive butter prices ontheworld market. Until mid-1995, domestic wholesale
prices ofbutter werenotsubstantially higher thantheCommodity Credit Corporation 's(CCC) support price
ofUS$1,435 perton,butprices increased toUS$1,700-US$1,900 pertonduring summer astheresult of
strong demand from theice-cream industry. Domestic consumption isforecast toincrease byanother
1½percentthisyear. CCC butter stocks began todwindle inlate1994 andwere almost exhausted by
July1995. USexports ofbutter andbutter oilwerefarbehind allocations under theDairy Export Incentive
Program (DEIP) inthefirsthalfof1995, which isanother indication thatUSproduction haslargely been
committed fordomestic use. Themain export destination forbutterfat thisyearhasbeenRussia, while
itwasAlgeria forthepastthreeyears. Export unitvalues fortheperiod January toMarch 1995forbutterfat
exports toRussia averaged US$1,675 perton.USbutter exports areforecast at98,000 tonsin1995, up
from 94,000 tonsin1994.
TABLE 28:UNITED STATES -DAIRY PRODUCTION AND WHOLESALE PRICES
Production CCC stocks Selected prices
January-July 1995
'000t.%
changeAugust 1995
'000t.%
changeSecond quarter
1995 US$/kg.%
change
SMP 310 (5½) 12.7 (245) 2.38 (-2)
WMP 40 (22) n.a. n.a.
Butter 323 (½) 0.6 (-100) 1.46 (2½)
Cheese 1,559 (3) n.a. 2.73 (-4½)IDA/W/7
Page36
62. TheUSsupport price program favours thenon-fat milkfraction, unlike theEuropean Community
andJapan, forexample, where thesupport prices arebiased towards milkfat.TheUSsupport price for
skimmed milkpowder iscurrently US$2,280 perton,onlyslightly above thecurrent world market price
level. CCC stocks ofskimmed milkpowder areathistorically lowlevels.
63. UScheese consumption continues togrow, albeit atamodest rate. Fresh andsofttypes ofcheese
arethemost dynamic segments intheUScheese market. By1994, fresh cheese production wasalmost
aslarge astheproduction ofhardandsemi-hard types ofcheese (mostly American cheese) while thesoft
cheese market segment isstillverysmall. TheUSsupport price forcheese iscurrently US$2,470 perton
butCCC'snetpurchases havebeeninsignificant inthefirsthalfof1995. USimports areforecast toreach
153,000 tonsin1995, some36,000 tonsmorethantheinitial tariffquota established under itsUruguay Round
commitments.
64. TheDEIP of1995includes thepreviously untargeted markets ofHong Kong, Indonesia, Malaysia,
thePhilippines, Singapore, Taiwan, Thailand andIndia. Thishasevoked considerable concern inAustralia
andNew Zealand. DEIP allocations intheperiod prior totheimplementation oftheUSquantitative
commitments onexport subsidies beginning on1July1995 werenotfullyutilized, notably forbutter and
butter oil.Allocations fortheperiod JulytoSeptember 1995 weremostly forAlgeria andMexico. The
allocation forAsian countries wassubstantially reduced inthethirdquarter (5,030 tonsofskimmed milk
powder and125tonsofcheese). Average DEIP bonuses (export subsidies) havebeenreduced progressively
overthelasttwoyears. TheUnited States iscurrently considering changes toitssystem ofexport subsidy
awards under theDEIP based oncompetitive bidding.
TABLE 29:UNITED STATES -THE DAIRY EXPORT INCENTIVE PROGRAM
FOR JANUARY-SEPTEMBER 1995 (TONS)
January-July
allocationsJanuary-July
awardsJuly-September
allocations
SMP 103,000 98,743 53,680
WMP 11,500 1,500 2,875
Butterfat 37,650 17,482 15,345
Cheese 3,850 883 1,655
LATIN AMERICA
65. InLatin America milkproduction roseby2percentin1994 toreach 47million tons. Output
benefited from favourable weather conditions, although inCentral America some countries wereshort of
rainandtheiroutput wasreduced. Economic growth inanumber ofLatin American andCaribbean countries
isexpected tostimulate demand formilkanddairy products andproduction could risebyafurther 2percent
in1995toreach 48million tons. Inparticular, output should recover insome Central American countries.
Furthermore, price liberalization inseveral countries willcontinue toprovide anincentive toproducers to
increase output.
66. Argentina 'smilkoutput increased by9percentin1994to6.5million tons. Continued strong growth
isexpected in1995 asrising demand indomestic andexport markets boosts producer returns.IDA/W/7
Page37
TABLE 30:ARGENTINA -DAIRY PRODUCTION, CONSUMPTION AND TRADE
('000metric tons, ()=%change from previous year)
1994 SMP WMP Butter Cheese
Production 25.0 (92%) 86.0 (21%) 43.5 (-12%) 348.5 (8%)
Consumption 19.5 (-10%) 80.0 (3%) 45.5 (-12%) 349.0 (9%)
Exports 8.5 (31%) 13.5 (198%) 1.0 (-33%) 10.0 (189%)
Imports 3.0 (-50%) 13.5 (259%) 2.5 (32%) 6.5 (132%)
67. InUruguay ,milkproduction in1994reached 872,000 tons,anincrease byasmuch as20percent
over1993. Production wasstimulated byhigher production prices combined withfavourable weather
conditions. Theproducer priceofmilkforconsumption isfixedevery fourmonths inrelation tomovements
inproduction costs.
68. InBrazil ,milkproduction in1994 again increased by1percentto15.7million tons. Small
productivity gains maintained thelowrateofexpansion. Skimmed milkpowder imports increased by
41percentto45,000 tonswhile cheese imports almost doubled compared to1993 reaching 15,000 tons.
Imports ofdairy products, particularly skimmed milkpowder andcheese areforecast toincrease byone
thirdduring 1995asaresult ofstrong domestic demand. Itisestimated thatbytheyear2000, Brazil will
needtodouble milkproduction inorder tomeetconsumer demand formilkanddairyproducts. Traditionally
theEuropean Community, Poland andArgentina havebeenmajor suppliers, however theimplementation
oftheMERCOSUR (Southern Cone FreeTrade Agreement) isexpected toboost trade withArgentina and
Uruguay.
69. After showing some signs ofrecovery in1993, Venezuela 'soutput isestimated tohavedeclined
in1994, asprices formilkfixed bythegovernment areproving adisincentive toproduction. Thesizeof
thenational dairy herddropped in1994 andafurther decline isforeseen for1995. Venezuela continues
tobeamajor importer ofmilkpowders.
70. Mexico 's1994 milkoutput, estimated at7.5million tons, remained almost unchanged compared
to1993. Amarginal increase isforecast for1995. Theabsence ofsignificant growth intheMexican industry
reflects thepoormonetary returns formost producers. However, larger dairy operations areimproving
productivity, mainly because ofbetter management. Mexico imported 200,000 tonsofskimmed milkpowder
in1994, remaining theworld 'slargest importer ofthisproduct. In1995, Mexican imports ofskimmed
milkpowder areexpected toremain at1994levels despite thesharp devaluation oftheMexican peso. Under
theNAFTA, Mexico isrequired toprovide duty-free access for41,200 tonsofUSmilkpowder in1995.
Thisduty-free quota willgrow by3percentannually. Thein-quota tariff rateiszero; theover-quota rate
isthegreater of139percentadvalorem orUS$1,161 perton.Theover-quota tariff willbephased out
asfollows: 15percentreduction overthefirstsixyears, andastraight-line phase-out overtheremaining
nineyears.IDA/W/7
Page38
ASIA
Japan
71. In1994, Japanese production ofrawmilkdecreased by2percentto8.4million tons. Asaresult
ofanunusually hotsummer in1994, demand fordrinking milkincreased considerably, which inturnled
toasharp decrease intheproduction ofmanufactured dairy products, notably skimmed milkpowder and
butter. Asudden riseindemand forskimmed milkpowder, forthemanufacture ofice-cream andmilk
beverages, ledtoarelatively tightmarket situation inearly autumn which wasreflected inarun-down of
stocks. Inorder tomeetdemand, theLivestock Industry Promotion Corporation (LIPC) opened emergency
import tenders for17,000 tonsofskimmed milkpowder which were imported between November 1994
andMarch 1995. Furthermore, inNovember 1994, themilkproducers 'organization setanadditional quota
of75,000 tonsofskimmed milkpowder asanurgent temporary measure forfiscal year1994. Inaddition,
themilkproducers 'organization decided toadjust themilkproduction reduction target from 2.9percent
to1.9forfiscal year1994. Asaconsequence, production ofrawmilkincreased slightly inthefirstquarter
of1995. AttheendofMarch 1995, theGovernment ofJapan decided nottochange thelevelofadministrative
prices andtheceiling quantity forthedeficiency payment forfiscal year1995.
TABLE 31:JAPAN -MILK PRODUCTION AND CONSUMPTION OFDRINKING MILK
('000tons, ()%change from corresponding period ofprevious year)
Milk production Consumption ofdrinking milk
FY1992/93 (April-March) 8,617 (3½%) 5,109 (-0.2%)
FY1993/94 (April-March) 8,549 (-1%) 5,031 (-1½%)
FY1994/95 (April-March) 8,388 (-3%) 5,265 (5½%)
72. Despite amarked decline inbutter production lastyear, themarket remains over-supplied. Stock
levels, albeit lower thanbefore, stillcover sixmonths ofconsumption. Japan'scheese imports, which exceed
domestic production, showed afurther increase, withvigorous growth particularly inthesecond halfof
1994. Imports ofnatural cheese increased by13percentinthefirsthalfof1995, withAustralia providing
overhalfthesupplies.
TABLE 32:JAPAN -DAIRY PRODUCTION, CONSUMPTION, IMPORTS AND STOCKS
('000metric tons, ()%change from previous year)
1994 SMP Butter Cheese
Production 184.0 (-17%) 80.0 (-26%) 31.0 (-9%)
Consumption 300.0 (6%) 96.0 (7%) 171.0 (2%)
Imports 86.0 (16%) 2.5 (-13%) 140.0 (4%)
Stocks (endofperiod) 26.0 (-60%) 36.0 (-25%) n.a.
73. Overall, theJapanese dairy market remains under pressure, astheresult oflarge supplies ofdairy
products (notably butter). Inaddition, Japan'sdairy farmers arefaced withthespillover effects from the
beefmarket. Tariff cutsaswellasastrong Yenhaveledtolower beefprices, inparticular forbeeffromIDA/W/7
Page39
dairy breeds. Thus, prices fordairy calves (Holstein), which areanimportant secondary income source
fordairy farmers, havebeenalmost halved overthepasttwoyears.
74. Japan'sUruguay Round market access commitments entered intoforce on1April 1995(beginning
ofthefiscal year). Japan hasprovided details ontheimplementation oftheUruguay Round tariff quota
for"designated dairy products forgeneral use"totalling 137,202 tonswhole milkequivalents (seeSpecial
Annex totheFifteenth Annual Report, page38). Beginning inApril 1995, nolessthan75percentof
theLIPC tariffquota isavailable forimports ofskimmed milkpowder andbutter. Given conversion factors
of6.48 forskimmed milk powder and12.34 forbutter, a75percentshare would allow forexport
opportunities of16,000 tonsofskimmed milkpowder or8,000 tonsofbutter (oracombination ofboth).
Other Asian Countries
75. Milkproduction inthedeveloping countries ofAsiaroseby1percentto114million tonsin1994.
InIndia,thelargest producer among developing countries, cowandbuffalo milkproduction isestimated
tohaveincreased by3percentin1994to63million tons,duetogoodpasture conditions andfodder supplies.
For1995, aproduction increase of4percentisexpected. Consequently, India might emerge asamajor
exporter ofdairy products, mainly milkpowder, toneighbouring countries suchasPakistan andtheMiddle
East.
76. InPakistan ,milkproduction hasrisenfrom11million tonsin1984/85 toover18million tonsin
1993/94. Production isestimated tohavefurther risen in1994/95. Some 72percentisbuffalo milk,
24percentcows'milkandtheremaining isgoatandsheep milk. Percapita consumption ofmilkstood
at113kgs.in1994. However, production doesnotkeeppacewithdomestic demand expansion withthe
result thatinthesummer, when lactation islow,large volumes ofmilkpowder areimported. BothIndia
andPakistan haveapproved BSTuse.
77. InthePhilippines ,production increased in1994andisexpected tocontinue togrowin1995following
alarge-scale government programme toexpand domestic supplies oflivestock products. IntheRepublic
ofKorea ,milkproduction increased by7percentto2million tonsin1994 duetothegrowth inthedairy
herdandinyields. Theoutlook for1995 isforafurther increase inproduction. Import liberalization in
Korea willboost tradeasthiscountry iscommitted under itsUruguay Round commitments toestablish tariff
quotas totalling some 24,000 tonsofdairy products for1995, rising tosome 56,000 tonsin2004. InChina ,
asecond yearofhighfeedprices resulted inlittlegrowth inmilkoutput in1994. Thissituation isexpected
topersist in1995 andhinder growth inoutput.
AFRICA
78. ForAfrica 'sdeveloping countries, favourable weather conditions inmostofWestern, Central and
Eastern Africa arebelieved tohaveresulted inincreased milkproduction in1994 (about 19million tons).
Information forthefirstthree months of1995indicates that,ingeneral, weather conditions inAfrica have
beenneartheseasonal norm. Consequently, assuming weather conditions remain favourable, milkproduction
inthisregion could expand in1995.
79. InSouth Africa, totalmilk production for1994/95 isestimated at2million tons. Domestic
consumption ofmilkduring 1994/95 isexpected todecrease by3percentfromtheprevious year, reflecting
lower consumption offresh milkandmilkusedforindustrial processes. In1994, production ofskimmed
milkpowder decreased while exports andconsumption increased, leading tothelowest levelofskimmed
milkpowder stocks forseveral years. Forwhole milkpowder, butter andcheese, production andconsumption
declined in1994. Imports ofbutter increased while exports registered asubstantial decline.IDA/W/7
Page40
80. Algeria continues tobeanimportant market fordairy products andinparticular formilkpowders
andbutter. In1994, Algeria imported 128,000 tonsofskimmed milkpowder, 98,000 tonsofwhole milk
powder, 30,000 tonsofbutter and20,000 tonsofbutter oil,despite internal economic difficulties. In1994,
Algeria wasthemostimportant destination forUSdairy exports under theDEIP forthethirdconsecutive
year. Exactly halfofthe174,000 tonsofDEIP dairy exports wenttoAlgeria, mainly skimmed milkpowder,
butter andanhydrous milkfat.Under theDEIP forthefirsthalfof1995, Algeria hasbeenallocated
30,000 tonsofskimmed milkpowder, 5,000 tonsofbutterfat aswellas1,200 tonsofcheese. Forthethird
quarter of1995, allocations were16,250 tonsofskimmed milkpowder, 3,125 tonsofbutterfat and550tons
ofcheese. Already considered oneofthelargest dairy importers intheworld, Algeria isexpected tocontinue
toincrease itsdemand forimported dairy products. However, thecurrent political situation inthecountry
mayresult inrestricted trade opportunities in1995.
81. InEgypt ,cowandbuffalo milkproduction remained unchanged in1994at2.5million tonscompared
to1993. In1994, Egypt imported some 25,000 tonsofskimmed milkpowder, 18,000 tonsofwhole milk
powder,30,000tonsofbutterand15,000tonsofcheese.Domesticproductionofcheesetotalled325,000tons
in1993 and330,000 tonsin1994. Percapita consumption ofcheese isaround 6-7kgs.perhead. Egypt
wasthethirdmostimportant destination fortheUSDEIP in1994. United States salestoEgypt under DEIP
totalled 15,000 tonsofdairy products.