Thursday, June 14, 2007

Got milk?

"The price of milk is soaring worldwide as a drought-stricken dairy industry struggles to meet surging demand for milk products in China and the Middle East.

A doubling in the price of wholesale milk over the past year is creating havoc among food manufacturers, prompting warnings about food price inflation in the UK. Aid organisations have also raised concerns about the depletion of government stockpiles of milk powder.

Changing diets and rising living standards in Asia, notably in China and the Middle East, have caught international milk processors on the back foot. Greater wealth is leading to a change in the Asian diet, explained Carmen Suarez, chief economist at the National Farmers Union. “There is population growth and higher incomes, which leads to higher consumption of animal protein.”
So rapid has been the escalation in demand that the EU’s milk surplus has dried up and the butter mountain has been flattened. Historically, the European Commission has given European producers subsidies to sell dairy products into the world market."

There has been an increase in the number of dairy farms in Lebanon in the past few years, and the local trade in milk has been booming. Forage is also being produced locally (though at great water costs). A large number of small farmers have been investing in the ownership of a few cows (1 cow costs $2000, and provides about $100 per month). The milk is sold to small local industries that manufacture yogurt and labneh and white local cheeses. If the trends continues as above (and it is a trend we are observing with many commodities, especially grain), then farming will start to make sense again. And we should consider ourselves lucky that, against all odds and all government ultra liberal policies, farmers in lebanon have persisted in their endeavor. With increasing world prices of basic food commodities, it is the domestic food bill that increases, and the poor who suffer first.

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