The Global Dairy Industry

About 378 billion litres of milk is processed each year by dairy companies around the world. Fonterra estimates that annual global trade in dairy ingredients is about 8 per cent of total production and was 11.5 million tonnes for the 2011 calendar year.


Everyday dairy nutrition products comprise almost all globally-traded dairy products. Skim Milk Powder (SMP) and Whole Milk Powder (WMP) together account for more than half of all globally-traded products. 

Global Growth

Global demand for dairy is continuing to grow. In particular, population growth, rising incomes, urbanisation and westernisation of diets, in developing countries such as China and India, are leading to increased demand.

However, milk supply in China and India, as well as countries within South East Asia and Africa, is not keeping pace with this growth. As such, these markets are becoming increasingly important for global dairy companies, who are helping to meet the demand with dairy ingredients, as well as locally produced consumer products.

Asia continues to be the major growth market globally accounting for 34 per cent of all dairy imports in 2011. Asia accounts for 53 per cent of the world’s SMP and 40 per cent of the world’s WMP imports.

In developed countries, where consumption is already high, there is a more consistent outlook, with demand expected to remain stable.

Regional demand trends



Source: Fonterra estimate

1Current volumes are represented by the area of  the circles displayed. Growth rates represent forecast compound annual growth rates.

2Although strong growth in demand is expected in India, the ability to supply this market is likely to remain limited. In the 12 months to May 2012, Fonterra exported 22,300 MT of product to India and total imports represented approximately 0.2% of consumption.


Dairy products

Processed milk falls under two broad categories:

1.    Everyday nutrition, out of home nutrition and advanced nutrition
Through manufacturing processes, commodity and ingredients products such as milk powders, cream products, wholesale butter and cheese, casein, lactose, whey powders and infant formula constituents can be created. These products are generally supplied to international food and pharmaceutical companies to be used as ingredients for higher value added products or consumer products.  

2.    Consumer branded products
Consumer products include branded dairy products, such as fresh milk, flavoured milk, nutritional milk powders, cheese, yoghurt, butters, creams and ice cream. Consumer products are produced either from domestic milk supply or imported dairy ingredients.
Fully integrated dairy companies, such as Fonterra, manufacture branded dairy products for domestic and international markets using their own milk supply source, whereas food and beverage companies typically rely on externally-sourced ingredients for the manufacture of consumer products.  

Global Dairy Trade

Set up by Fonterra in 2008, GlobalDairyTrade (GDT) is an online platform for Fonterra and certain other manufacturers' globally-traded dairy products, and has become a leading price reference indicator for the industry.

The auctions, which are referred to as trading events, are run twice each month. Currently, GDT hosts over 700 qualified bidders from 90 countries.

Reference: IDF/Fonterra analysis