Opinion

The cost of milk: Dissecting global milk production costs

23 January 2025 15:38 RaboResearch

Milk production costs have surged, widening the gap between producers. Despite some relief in 2024, costs remain high, making cost control crucial for survival.

Intro

Milk production costs have risen across many dairy-exporting regions, creating a widening gap between the highest and lowest cost producers. Although 2024 has brought some relief, average costs remain above the five-year average. China, the largest dairy importer, has become more cost-competitive, while Oceania has the lowest production costs. The next decade is expected to see more expensive and variable operating costs due to regulatory pressures, energy transitions, climate change, and higher interest rates. Dairy producers are increasingly vulnerable during milk price downturns, making cost control crucial for survival. Meeting medium-term demand will require wider producer margins, and efficiency-focused producers will be best positioned to navigate future challenges.

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