Food commodity : Milk

 History Largest milk producers in the world in 2018

 Humans first learned the consumption of milk Production
Rank Country
during the Neolithic Revolution or during the (metric tons)
development of agriculture. 1 India 186,143,000
 This development occurred globally from as early as
European
9000–7000 BC in Mesopotamia to 3500–3000 BC in 2 167,256,000
Union
the Americas.
 People first domesticated important dairy animals as 3 United States 98,646,000
sheep, cattle and goats. 4 Pakistan 45,623,000
 Then growth in urban population coupled with the
5 Brazil 35,539,000
extension of railway network in mid-19th century
which brought a revolution in milk production and 6 China 31,592,000
supply.
7 Russia 31,527,000
 In 1863, French biologist Louis Pasteur invented
pasteurization process, a method of killing harmful 8 Turkey 22,791,000
bacteria in beverages as well as food products which 9 New Zealand 21,372,000
brought a another revolution in food market.
World 842,989,000
How much milk prices have changed over 10 years?
How much milk produced and exported worldwide from 2014 to 2018
 Correlation between Dairy and Crude oil

Crude oil prices continue to have significant

impact on world economy and consequently on
world dairy supply and demand, but this
relationship between the two has been keep on
changing.

From a long time, crude oil prices and the price of

various dairy products, including whole milk
powder (WMP) and skim milk powder (SMP)
were closely correlated.

However, the relationship of prices between

crude oil and commodity milk powder is being far
less evident since 2015.
 Cost of milk production 2000-2014 in different countries

Germany representing an estimated 13% of the

farms and 46% of cows in the country

Poland represents about 10% of the farms

and 41% of the cows in the country

USA representing 10% of the farms and about

18% of the cows in the USA

Legend on farm types: US-500WI: 500 Cow family farm in

Wisconsin; DE-126N: 126 cow family farm in Germany-North;
PL-65: 65 cow family farm in Poland
 Cost of milk production 2000-2014 in different countries

Chinese farms represents 30 to 40% of the

farms and range of 200-500 cows

Argentina representing an average sized

farm in the range of 100-500 cows which
represents about 65% of the farms and
68% of the cows in the country

New Zealand representing an average

sized farm about 60% of the farms and
milk production in New Zealand

Legend on farm types: AR-170: 170 cow family farm

in Argentina;NZ-390: 390 family farm in New Zealand;
CN 340BE: 340 corporate farm I North China, Beijing.
 Cost Level of farms in different regions

Costs range in US$/100 kg ECM (4% fat; 3.3% protein)

 DEMAND AND ELASTICITY

Inelastic demand for milk and milk products.

In some countries the demand of milk

and milk products in fluctuating and
unexpected, so it is pretty normal for
the market to make the quantities
limited for sale.
 Price and quantity equilibrium of the Complement goods for milk

Equilibrium shows higher and

lower demand equation for
milk and cereals respectively.

Changes in quantity demanded and price after the

advertising campaign
 Demand and Supply Analysis

Dairy markets are very unique as they have a

potential to react in dramatic way to small
changes in demand and supply.
•When supply is high and demand is low
then, the price will be low.
•When demand is high and supply is low
then, the price will be high.

Theory of demand and supply

 Conclusion

•As the milk price are increasing, more consumers want to have milk in their diet.
•Increased incomes, new technologies and climate changes make the task of more
production of milk unachievable.
•Many consumers use milk as a fundamental ingredient in their diet and there are
large number of manufacturing companies use milk in their products.
•Milk mainly do not have any substitutes and that is one of the main reason of
demand elasticity in microeconomics.
•Changes in price of milk will not cause any shift in the demand curve. However
any increase in milk price will lead to an increase in total revenues, because small
reductions in demand of quantity is trifled as compared to the revenues gained
from the increased price.
 Refrences

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Nutrient Analysis Program: Food Sampling" . Journal of Food Composition and Analysis.: 379–89
2. Curry, Andrew (July 31, 2013). "Archaeology: The milk revolution". Nature. 500 (7460): 20–22
3. Baumol, W. J. & Blinder, A. S. (2008). ”Microeconomics: Principles and policy”. Boston: Cengage Learning
4. Quick MBA. (2011). ”Price elasticity of demand”. Quick MBA. Web.
5. Mankiw, N. G. (2017). “Principles of Economics (8th ed.)”. Boston,MA: Cengage Learning.
6. Hemme ,T.(2015) Milk prices and production costs world wide. IFCN.
7. Gerosa and Skoet (2012). "Milk availability – Trends in production and demand and medium-term outlook"
8. "World's No 1 Milk Producer". Indiadairy.com
9. "Milk and milk product statistics – Statistics Explained". European Commission.
10.Arnold, W. (2007). A thirst for milk bred by new wealth sends prices soaring. The New York Times. Web.