Editorial ¦ IDM
May 2020 ¦ international-dairy.com · 3
Months are lost
World dairy trade will continue to suffer
At the moment this commentary is being written, everything revolves around how the world,
people and, above all, economy can return to normal life from the rigidity of pandemic containment
without causing further damage. A further lockdown, which would undoubtedly
be imposed if the infection figures were to flare up again, would in all probability be the
death knell for large parts of industry and the economy.
But even so, there will be enormous upheavals when the world awakens from isolation.
The threat of millions of jobs being lost or already lost will not exactly encourage people
to spend money. People will have to economize on consumption and, by force, on everything
else. In addition, global milk exports will fall, because the oil-producing countries in
particular are short of money due to the drop in oil prices and will be unable to act develop
significant demand for the time being.
Incidentally, milk processors are affected by the pandemic in very different ways. There are
companies with a good mix in their portfolio that are not at all badly off even in the current
crisis. Others, on the other hand, do not know how and where to sell their products,
especially if they have focused on certain niches such as food service. These dairies/cheese
makers will certainly have great difficulties this year.
For the dairy industry as a whole, however, the crisis can still go without a total crash if the
food service sector gets back on track reasonably quickly. Canteens and catering facilities
are likely to be the driving force here if a return to some form of normality is successful.
However, in view of the requirements to combat epidemics, there will be no significant recovery
in sales of restaurants in the long term, especially since the threat of unemployment
is playing a role here to curb consumption and holiday travel may fall away completely. Trade
in B2B products is still affected by the disruptions in the logistics chain anyway, even if these
are now increasingly disappearing. A few months of trade are and will remain lost, and the
post-Corona worldwide bad economic climate will not allow any fast catching up.
Of course Covid-19 will have an impact on milk prices. As always with some delay, but all the
more lasting and possibly longer lasting. Revenues will only be supported by private storage
for a short period of time in the EU, with prices tending to move towards intervention levels.
Whether and when a recovery will take place is completely unclear at this stage. The only
consolation is that the dairy industry as a whole is still in a much better position than other
sectors such as tourism, Roland Sossna thinks.
Roland Sossna
Editor IDM
International Dairy Magazine
sossna@blmedien.de
international-dairy.com
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