world dairy outlook€¦ · presentation outline. dairy farmers of canada. 1. canadian dairy...

World Dairy Outlook

DAIRY FARMERS OF CANADA

Annual Policy ConferenceFebruary 2018

PRESENTATION OUTLINE

DAIRY FARMERS OF CANADA

1. Canadian Dairy Industry Statistics (2017)

2. The World Dairy Market in 2017

3. 2018 Market Outlook

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1. INDUSTRY PROFILE

DAIRY FARMERS OF CANADA

10, 951- 3.0 %

Number of Farms

2017 dataSources: Canadian Dairy Information Centre, Statistics Canada, 2017

37 M+ 1.3 %

Canadian Population

86+ 4.7 %

Avg. Cows per Farm

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1. INDUSTRY PROFILE

DAIRY FARMERS OF CANADA

+11 %Cream

+3 %Cheese

+7 %Butter

Total Consumption figures, Percentage change 12 month data ending October 2017

Source: Statistics Canada, Canadian Dairy Commission

-2 %Fluid Milk

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1. INDUSTRY STATISTICS

DAIRY FARMERS OF CANADA

$7.1 B+ 6.4 %

Total Revenue

8.9B L+ 6.0 %

Total Production

12-month data ending November 2017Sources: Canadian Dairy Commission

$79.28+ 0.4%

Avg Farm Gate Return

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1. INDUSTRY PROFILE

DAIRY FARMERS OF CANADA

$3.8B+25%

In Tax Revenues

221K+3%

Canadian Jobs

$19.9B+31%

To Canada’s GDP

2015 data% change: 2015 vs 2009Source: EcoRessources

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2. International Market

DAIRY FARMERS OF CANADA

IFCN Milk Price Indicator- Theoretical price of milk assuming world

prices, and standard operating costs

- Significant price drop 2014 2016- Early 2017: better than expected

production, trade uncertainty, etc.- Mid 2017: increased trade, high demand- Late 2017: over-production, high stocks

The IFCN indicator is the weighted average of 3 indicators: SMP & butter (35%), Cheese & whey (45%), WMP (20%)

ECM = 4.0% fat; 3.3% protein

$31.90

$40.74

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

2014

-01-

01

2014

-03-

01

2014

-05-

01

2014

-07-

01

2014

-09-

01

2014

-11-

01

2015

-01-

01

2015

-03-

01

2015

-05-

01

2015

-07-

01

2015

-09-

01

2015

-11-

01

2016

-01-

01

2016

-03-

01

2016

-05-

01

2016

-07-

01

2016

-09-

01

2016

-11-

01

2017

-01-

01

2017

-03-

01

2017

-05-

01

2017

-07-

01

2017

-09-

01

2017

-11-

01

USD/100 kg ECM CAD/100 kg ECM7

2. International Market

Source: Average Oceania price, USDA AMS 8

DAIRY FARMERS OF CANADASources: CDC, USDA, DCANZ, Eurostats, Statistics Canada (exch. Rate)

Figures presented in natural composition.

Volatility in Gross Revenues per HL by Region (Jan 2014 Price =100)

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IMPORTS & EXPORTS DASHBOARDImports (All dairy / All countries) Exports (All dairy / All countries)

Source: Statistics Canada 10

DAIRY FARMERS OF CANADAAll milk in Canada is rbST FreeFresh milk = Pasteurized fresh milk (i.e. does not include UHT milk)Source: Nielsen Fresh Milk Price Report (2017)

Global Retail Fresh Milk Price 12-months ending October 2017 ($CAD/L)

$0.88 $0.99 $1.00

$1.12 $1.15 $1.23 $1.23

$1.50 $1.57

$1.64 $1.77 $1.83

$2.21

$2.58

$2.74

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Poland GreatBritain

Mexico USA Russia Germany SouthAfrica

Canada Australia USA -rbST free

France NewZealand

Vietnam China Norway

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DAIRY FARMERS OF CANADA

Retail Price of Beverages Comparison: Canada12-month period ending October 2017 ($CAD/L)

Exchange Rate: 1.3101 USD/CADSource: Nielsen (2017)

$0.92

$1.50 $1.51 $1.96

$2.18 $2.23 $2.28

$2.84 $3.23

$6.33

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

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DAIRY FARMERS OF CANADA

$1.51

$9.34

$13.98$13.64

$4.09

$4.97

$1.27

$10.77

$14.81$14.27

$4.27

$6.62

$1.64

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

MILK* BUTTER NATURAL PREPACKAGEDCHEDDAR

NATURAL PREPACKAGEDMOZZARELLA

CREAM YOGURT EXCL. FROZENYOGURT

Retail Price Comparison: Canada-US12-month period ending October 2017 ($CAD/kg/l)

CANADA UNITED STATES (CAD) UNITED STATES (rbST Free milk)*All milk in Canada is rbST FreeExchange Rate: 1.3101 USD/CAD

Source: Nielsen (2017)12

2. World MarketRegion 2017 Market Developments

Canada- Supply management- Strong demand for BF- CETA, CPTPP, NAFTA 2.0

USA

- Over-production- Dumping of milk (Michigan, NE)- Strong domestic demand for BF- NAFTA 2.0

Europe

- Over-production- SMP Intervention Stocks (380,000 tonnes)- Voluntary Production Reduction Programme (CAP)- CETA, EU-Japan Free Trade Agreement

Oceania - Aggressive environmental commitments- Concessional loan programs

China - Increase in dairy imports (versus 2016)- Slashing tariffs on US dairy products

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3. 2018 Market Outlook

DAIRY FARMERS OF CANADA

Domestic

Positives

- Strong market growth

- Increased investment

Challenges

- CETA, CPTPP, NAFTA 2.0

- Government of Canada’s “Healthy Eating Strategy”

International

- BF: Strong production & stocks

- SNF: Rising stocks of NDM (US), EU SMP stocks

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THANK YOU

DAIRY FARMERS OF CANADA