World Milk Price Increases
Published 9 February 2007

Recent analysis by the International Farm Comparison Network (IFCN) shows that world milk prices have increased by 30% to around $24/100kg between 1996 and 2006.

 More recently prices are reported to have increased even further to around $29/100kg. This is thought to be due to the current world shortage of milk due to lower than expected output in many countries including Australia. (The current drought in Australia is expected to result in yields down 17% on the previous year.)

 Although this recent upward movement of world milk price is thought to be a spike caused by the current tight supply situation. The increase in price seen over the past 10 years is thought to have been caused by demand increasing faster than supply due to both world population growth and increases in per capita consumption in countries such as China.

 For net exporting countries, such as most of Oceania and South America, an increasing world market milk price can lead to higher farmgate prices. In countries with trade protection such as USA, Canada and the EU, a high world market price acts to close the gap between national prices and the world market prices, reducing the need for support mechanisms such as export refunds.