Lower dairy imports seen

MANILA, Philippines — The Philippines is expected to reduce its imports of dairy products this year due to a slowdown in demand amid the coronavirus pandemic, according to the United States Department of Agriculture (USDA).

In the latest report of the USDA Foreign Agricultural Service (FAS), the country is forecast to import 2.8 million metric tons of liquid milk equivalent this year, 5.7 percent lower than the previous year.

“Total imports in 2020 are projected to drop due to dampened consumer demand caused by the COVID-19 induced economic slowdown. Dairy imports in 2021 will likely increase marginally as the local economy recovers and purchasing power improves,” USDA said.

Total dairy imports stood at 1.35 million MT liquid milk equivalent (LME) as of end-June.

Skim milk powder (SMP) and whole milk powder (WMP) imports comprised about 41 percent of the total dairy imports.

SMP and WMP imports this year, while up in value, are seen to decline in volume due to rising global dairy prices and tepid demand for dairy products.

The food manufacturing sector is seen to recover next year, albeit at a cautious pace due to lackluster consumer demand for food products.

This year, liquid milk imports have dropped as the use of liquid milk in food service, particularly in coffee shops declined due to COVID-19 lockdowns.

Similarly, imports of butter and other dairy spreads as well as cheese, mainly coming from New Zealand and Australia due to the duty-free advantage of those suppliers, are expected to decline due to the economic slowdown and reduced food service operations.

The Philippines imports virtually all of its dairy products, especially milk powder, as domestic production cannot meet the country’s dairy demand of nearly three million MT LME per year.

Local milk production is projected to reach 26,000 MT this year and will likely hit 26,500 MT in 2021 due to growing local dairying capabilities and the implementation of new dairy development projects.

The average Philippine milk production per animal at eight liters per day remains low mainly because of poor feed and management practices, compounded with high production costs and a lack of adequate dairy infrastructure.

USDA said the Philippines is a large and rapidly expanding market for milk and dairy products with annual per capita milk consumption at 22 kilogram.