the dairy world after covid-19 ifcn supporter conference ... · the dairy world after covid-19...

IFCN Supporter

Conference 2020

New Opportunities:

The Dairy World after COVID-19

Dairy

Knowledge

DayŁukasz Wyrzykowski

General Manager

Veit Becker

Lead Sales

Your moderators today:

EXECUTIVE

SUMMARY

Day 1 and Day 2

9/10/2020 IFCN Dairy Research Network 1

2

Programme

Networking with Leaders (CET)

14:00 - 14:15 Welcome and opening & Summary of Day 1: Dairy Knowledge Day

14:15 - 15:00 Dairy Leaders' Panel - Milk Processors: The Dairy World after COVID-19 -

What is new, less and more important?

15:00 - 15:30 Dairy Leaders' Views - Farm Input Companies: New Opportunities in the Dairy World after COVID-19

15:30 - 15:50 Knowledge of the Crowd

15:50 - 16:00 Summary and closing

Dairy Knowledge Day (CET)

14:00 - 14:20 Welcome and opening

14:20 - 15:00 Status of the Dairy World and Outlook 2021

15:00 - 15:20 Dairy Outlook 2025 and 2050 - What will the Dairy world look like?

15:20 - 15:50 Reality Check 2025 - Knowledge of the Crowd

15:50 - 16:00 Summary and closing

TOD

AY

TOM

OR

RO

W

9/10/2020 IFCN Dairy Research Network

39/10/2020 IFCN Dairy Research Network

Executive Summary

What do we know about the dairy world and its future?

9/10/2020 4

2019: Milk production growth at a record low +1.3%

2020: Fear of COVID-19 bigger than the actual impact on dairy sector

2021: World milk price below 35 USD in 2021 with growing milk production

2025: Technological progress and adaptation needed to manage the risk

2050: +60% milk production and demand likely to happen

What milk demand growth do you expect in 2021? Dairy demand and “Dairy Alternatives” in 2050

1.5-2.0%

+ 50% dairy

+ 10% alternatives

IFCN Dairy Research Network

For internal use only © IFCN 2020

The Dairy World after COVID-19 – what's new, what will be more and what will be less important?*

9/10/2020 5

• “Local for local” is strengthened as a concept, and resilient supply chains will be needed.

• Affordability: Reduced purchasing power and more online access characterise the new consumer.

• There is a growing focus on more collaboration in the dairy chain.

• The awareness towards food safety and health will increase.

• There is a need for food systems to demonstrate integrity and sustainability in production.

From the processor perspective

• New technologies, digitalisation and robotization in a dairy chain.

• Online connections within the dairy chain, on farm between workers, but also towards consumers.

• There is a growing focus on more collaboration in the dairy chain, also real-time connectivity through apps.

From the farm perspective

*based on the panel outputs from day 2

Milk processing - quotes

9/10/2020

Dr. RS Sodhi,

MD

Amul (GCMMF Ltd), India

Hans Jöhr

Head of Agriculture

Nestlé, Switzerland

Frans Keurentjes

Chairman

Friesland Campina, Netherlands

Tim Leviny

SVP Dairy Foods

Land O'Lakes, USA

“Milk is gold and its nutritional value is biggest secret to

many people and we need to bring it to them.” Frans

“During COVID-19 in India, demand for trusted and

affordable brand will grow and dairy will shift from

unorganized to organized market.” Sodhi

“Processors had innovative way to help each other and

keep milk flowing for benefit of dairy farmers.” Tim

“Dairy farming has to be positioned as being part of a

solution for society.” Hans

IFCN Dairy Research Network 6

Farm perspective - quotes

9/10/2020

“COVID-19 has re-awakened consumers and their

need to get back to basics. And when you think of

basics, what is more basic than a milk.” DougAlmut Hoffmann

Senior Director Global Dairy

Marketing

Elanco; Germany

Tim Taylor

CEO

Vyla

USA

Tom Lee BauerPrincipal Industry Specialist

IFC/World bank

USA

Aidan Connolly

CEO

Cainthus

Ireland

Doug Young

Dairy farmer

Spruce Haven

Farm, USA“Doing things differently doesn’t need to be

more expensive.” Almut

“Real milk is cheaper with real innovation.” Tom

“Pandemics forced us to see opportunities

where we haven’t had them before.” Aidan

“What will be different about dairy industry post-COVID-19, is

more information, decision making and real-time connectivity

through apps on dairy farms, leadership, worker and supplier

level.” Tim

IFCN Dairy Research Network 7


What’s the biggest opportunity for the dairy sector until 2025?*

N = 234 people

38%

32%

16%

14%

Farming sytems + policy design Farm Management

Digitalisation of the dairy supply chain Consumers trust

Digital channels, ways of delivery Other

• The golden triangle of SDG: Science, Dairy and Government.

• Let’s reconnect consumers and farmers.

• Let’s be proactive to approach and solve issues. Traceability is key.

• Acceleration of implementing innovation and new technologies to become more proactive rather than reactive.

• The rising demands from society and government will come at a cost. Products should be marketed to better reflect their value.

• Change is possible and we shall use the spirit of it.

For the whole dairy supply chain

0% 0%*based on the panel outputs from day 2

9/10/2020 8

99/10/2020 IFCN Dairy Research Network 9

Key slides from the conference

Annex 1: Dairy World 2019 ................................10-11

Annex 2: Status 2020 ........................................12-16

Annex 3: Short-term Outlook 2021 ....................17-19

Annex 4: Dairy Vision 2025 ................................20-25

Annex 5: Long-term Outlook 2050 .....................26

Annex

For internal use only © IFCN 20209/10/2020 10

Exceptionally low milk production growth of 1.3%

Low growth, but higher than supply at 1.6%

Increase of 9%

2019

Supply

Demand

World price

2019: Key dairy developments


-5

0

5

10

15

20

25

199

7

199

9

200

1

200

3

200

5

200

7

200

9

201

1

201

3

201

5

201

7

201

9

Oceania

North America

Latin America

Western Europe

Eastern Europeand CIS

Near & MiddleEast

Africa

East & SoutheastAsia

South Asia

11

Drivers: Climate and farm economics• South Asia • Africa• Latin America• Oceania

Impact: Stable dairy situation and „easier“ to handle COVID-19 situation

Milk production 2018 2019

World +3.0% +1.3%

India & Pakistan +5.4% +1.6%

World excl. IN&PK +2.0% +1.1%

Annual milk supply growth

Ø +2.5% or 18 mill t

2019: Slowdown milk production growth

9/10/2020

mill

t S

CM

(so

lid c

orr

ecte

d m

ilk: 4

% f

at,

3.3

% p

rote

in)

Legend

For more information and data, please check

the IFCN Dairy Report!


Weaker, stocks up

9/10/2020 12

No major impact yet, regional differences

2020

World price

Demand

Supply

2020: Current impact of COVID-19 on dairy

Normal growth so far

For internal use only © IFCN 2020 13

Farm-gate milk price in

national currency

change in %

Jan-Aug 2019 vs Jan-Aug 2020

+6%

+3%

-1%

EU-28

-2%

2020: National farm-gate milk price stable or up

Devaluation brings increasing national

milk prices to low level in USD

+37%

9/10/2020

Seasonal price 2020/21: decrease

For more information and data, please

check our monthly real-time product!


2020: World market price drivers during COVID-19

14

COVID-19 is a resilience test for whole dairy industry/supply chain with different impact levels

So far no major impact yet on production –fear of impact was bigger

As of today, negative drivers are outweighing positive ones

Positive Negative

9/10/2020


0

10

20

30

40

50

60

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Ja

n-1

5

Ja

n-1

6

Ja

n-1

7

Ja

n-1

8

Ja

n-1

9

Ja

n-2

0

2020: World milk price -1.9% YoY

9/10/2020 15

World Market Price* for Dairy Products IFCN World Milk Price Indicator

US

D/

me

tric

to

n

Financial crisisQuota abolishment and

ban on Russian imports

US

D /

100

kg

SC

M (

so

lid c

orr

ecte

d m

ilk: 4

% fa

t, 3

.3%

pro

tein

)

Lowest price spread between dairy commodities since 2014

COVID-19 impact -15% to 33.6 USD vs Feb

• July price up due to “special drivers”

Reasons for drop in milk price:

• Milk supply growth stable in 2020

• Weak demand, partly covered with stocks

*SMP/WMP/Butter/Cheese: monthly weighted average of bi-weekly Oceania export prices; Whey Powder: monthly average of weekly German Whey powder prices

Ø2020:

36.5 USD


2020: Moderate impact of COVID-19 on trade

169/10/2020

Top 6 Importing Countries:

-3% YoY Jan-June 2020

0

2

4

6

8

10

12

14

16

Jan-June 2017 Jan-June 2018 Jan-June 2019 Jan-June 2020

Egypt Indonesia Japan Mexico Russian Federation China

mill

t M

E (

milk

equiv

ale

nts

)

*June 2020: provisional data -0.4

-0.2

0

0.2

0.4

0.6

0.8

Ja

n-1

7

Apr-

17

Ju

l-1

7

Oct-

17

Ja

n-1

8

Apr-

18

Ju

l-1

8

Oct-

18

Ja

n-1

9

Apr-

19

Ju

l-1

9

Oct-

19

Ja

n-2

0

Apr-

20

mill

t M

E (

milk

eq

uiv

ale

nts

)

Fresh

Dry

Condensed

Butter & Ghee

Cheese

+4.4% or +1.1 mill t

+6.5% or +1.7 mill t

YoY change of Top Importers* imports*Top importer: RU, CN, JP, MX, EG, ID

Annual % YoY

+8.4% or

+2.3 mill t

For internal use only © IFCN 20209/10/2020 17

• Lower milk prices for next 6 months with V-shape recovery

• 2021 world milk price of 34 USD

2021

World price

Supply

Demand

• Slightly below normal +2.1%

• Q3/Q4 lower demand growth expected

• 2021 avg. demand growth needed to

keep the milk price around 34 USD?

2020 and 2021: IFCN Dairy Outlook Q4


US

D /

100

kg

SC

M (

so

lid c

orr

ecte

d m

ilk: 4

% fa

t, 3

.3%

pro

tein

)

28

30

32

34

36

38

40

42

44

46

Ja

n-1

7

Ja

n-1

8

Ja

n-1

9

Ja

n-2

0

Ja

n-2

1

IFCN World Milk Price

IFCN forecast 09/2020

18

IFCN World Milk Price Indicator

9/10/2020

2021: World Milk Price in Outlook

Forecast of the IFCN outlook model today

Possible decrease of -18.5%

price drop in Q4 2020 towards a level 30 US$;

25 EUR/100kg SCM, 13 USD/cwt, 6.1 NZD/kg solids

Key driver: Weaker demand growth & stocks

Mid 2021 price recovery to 35 US$ level


2021: Status and short-term

11%

40%

44%

5%

Higher than average (>2.2%)

Average growth (about 2.2%)

Lower than average (1.5%-2.0%)

Much lower than averagegrowth (<1%)

46%

42%

12%

Optimistic (better than2020)

Average (like 2020)

Pessimistic (worse than2020)

N = 250 people N = 250 people

How is your mood when you think about 2021? What milk demand growth do you expect in 2021?

9/10/2020 19

2025: Outlook Matrix

9/10/2020 20

Vaccine + we can move back to “normal”

No Vaccine – we stay in a COVID-19 restricted world

Normal

innovation

speed

Status quoWorld before COVID-19

Pessimistic scenario

COVID-19 Tech scenario

New growthscenario

Faster change

in innovation

+ technology

+ adaptations

43%40%



Status quo

GDP back to normal (3.4 - 3.7% /year)

+ dairy preference like in 2017- 2020

+2.2%/year demand + production

Milk price ~35-40 USD (but more volatile)

GDP growth

Dairy demand + production growth

Dairy trade

Milk price -10-20% lower

Pessimistic

scenario

2025: Outlook Matrix

219/10/2020

Faster change

in innovation

+ technology

+ adaptations

Vaccine + we can move back to “normal”

No Vaccine – we stay in a COVID-19 restricted world

Normal

innovation

speed

GDP growth


Dairy trade ? Depend on policy focus on self sufficiency

Milk price -5-10% lower

COVID-19 Tech

scenario

New growth

scenario

GDP growth


Dairy trade

Milk price stable or higher

Arrows represent deviation to the IFCN Scenario


N = 237 people

2025: Vision of future scenarios

0%

3%14%

71%

12%

-- Very negative - Negative 0 Indifferent

+ Positive ++ Very positive

41%

0%15%

44%

0 Status quo: Vaccine & normal innovation

- Pessimistic: No vaccine & normal innovation

+ COVID-19 Tech: No vaccine & fasterinnovation/adaptation++ New growth: Vaccine & faster innovation/adaptation

N = 235 people

How is your mood when you think about

2025?

Which scenario is most likely until

2025?

9/10/2020 22


2025: Innovations ahead of us

N = 239 people

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

It speeds themup

It has no impact

It slows themdown

25%

11%

21%

2%3%

14%

14%

9%

1%

IT farm management

Carbon farming (dairy farms will become “carbon farmers” and benefit out of it)Robotization of farming

“Super” cow - GMO tech

Logistics: self-driving anddrones

New dairy product portfolioand processing technologies

Transparent and traceableproduct origin

Reduced cost protein fromlab/plants to substitute dairy

N = 239 people; multiple choice possible

24%

18%

13%

14%

18%

3% 3%

6%1%

Self-sufficiency / food safety &security

Sustainability requirements /Environmental policies

Investments on farms andstructural changes

Tracebility & transparency ofthe supply chain

E-commerce and directretailing

Dairy alternatives

Certification & consumerbrands

Food preservation: longershelf life

Other (specify in the chat)

Which innovations are there to come in

different segments of the dairy chain?

What is getting more important after COVID-19

times?


Does COVID-19 speed up or slow

down innovations and

technological progress?

9/10/2020 23


2025: What will be more important?


24%

18%

13%

14%

18%

3%

3%6%

1%What is getting more important after COVID-19 times?

Self-sufficiency / food safety & security

Sustainability requirements / Environmentalpolicies

Investments on farms and structural changes

Tracebility & transparency of the supply chain

E-commerce and direct retailing

Dairy alternatives

Certification & consumer brands

Food preservation: longer shelf life

Other (specify in the chat)

9/10/2020 24

9/10/2020 25

2025: COVID-19 - New opportunities

2025: Technological progress and adaptation needed to manage the risk

1. Vision of future scenarios:

• Status quo or new growth scenario most likely

• 83% are in a positive mood looking to 2025

• Innovation and technological progress will speed up

2. Innovations ahead of us:

• Innovations mainly at the farm: IT farm management (53%) and robotization (44%)

• Initiation mainly by farm input companies

3. Important topics of the future:

• Self-sufficiency/ food security (50%)

• Sustainability/ environmental topics (23%)

• Investments on farms and structural changes (11%) will be more important until 2025


For internal use only © IFCN 2020 26

+60% more demand & supply

= +514 mill t (5x US today)

392 mill dairy „cows“

+5%

3.5 t milk / animal / year

+49%

61 mill dairy farms

-45%

147 kg „milk“ consumed / capita

+24%

9.8 billion people

+28%

145 mill t ME milk traded (excl. EU-intra trade)

+140%

9/10/2020

Source: D3.2 Annual Dairy Sector Data – with IFCN Long-term Dairy Outlook based on Pro dairy scenario; published 3/2020

2050: Dairy World in 30 years

the dairy world after covid-19 ifcn supporter conference ... · the dairy world after covid-19...

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