NAME: ABASTAR, ELLONAH F.

3BPA-C January 29, 2018

INTRODUCTION

The dairy supply situation for 2017 is characterized by increasing local milk production and
decreasing imports and exports of milk and dairy products. The net supply stood at 210.76 million kg.,
more than 3% lower than the same period of last year’s net supply of 218.06 million kg. Local
production grew by 11% while imports and exports declined by 6% and 33% respectively. For 2017,
imports of milk and dairy products decreased by 6% (from 222.78 million kg. to 209.25 million kg). In
terms of value, it went up to 12% (from total dairy import bill of US$403.22 million to US$453.56
million) indicating an increase in unit import cost of 20% and 27% in dollar terms and in pesos
respectively.

Milk powder constituted the bulk of imports contributing 59% to the total milk and dairy
products imports. Skimmed milk powder comprised 35%, whey powder at 13%, whole milk powder at
3% and buttermilk powder at 8% of milk imports. Of the milk powder, only buttermilk powder posted
with a highest increase of 10%, followed by whey powder of 9%. On the other hand, skimmed milk
powder and whole milk powder recorded a drop of 18% and 52% respectively. Of the total dairy
product imports, 84% were under milk and cream products. Curd, butter and butterfat, buttermilk
powder and whey powder recorded the highest increase in volume among imported dairy products at
1,461%, 11%, 10% and 9% respectively (please refer to dairy industry data as Annex 1). Ready to
drink milk decrease by 11% and 16% in volume level and in value respectively. It accounted for 14%
of the total dairy import volume. The increase in local production of 11% accompanied by a decrease
in imports of liquid milk by 11%, resulted in 29% share of local production to total liquid milk supply
(higher than the previous year’s level of 25% share). Hence, local production contributed more than
one glass out of four glasses of liquid milk supply. In terms of sources and value share, New Zealand
remained to be the leading source of imported dairy products, accounting for 43% to total dairy import
bill. USA ranked as second supplier, followed by Germany and Australia with 23%, 5% and 4%
respectively. The volume of exports reached 10.19 million kilograms, lower by 33% compared to last
year’s volume of 15.26 million kilograms. Ice cream and mixes, condensed milk and ice drops were
the big export items during the period. Skimmed milk powder, evaporated milk and cheese posted
also an increase. On the other hand, liquid milk, whole milk powder, butter/butterfat recorded
decrease in exports.

Malaysia and United Arab Emirates were the top market of Philippine dairy products, both
accounting for 15% respectively of the entire dairy export value. Next was Singapore that took around
14% of the total value and with other countries of destination that include Vietnam and Canada with
shares of around 12% and 9%, respectively. Dairy registered with a double digit expansion both in
volume and value of production, 11.70% and 20.51%, respectively. Total dairy production reached
11.70 thousand MT-level and grossed more than P411 million at current prices. Based on the report of the
Philippine Statistical Authority (PSA), the noted intervention by the National Dairy Authority (NDA) and
Philippine Carabao Center (PCC) for cattle, carabao and goat milk production coupled with higher demand for
cow's and carabao's milk resulted into higher milk production and better pricing. Local milk production comes
from the dairy animal (herd) inventory of 56,837 head. Of this inventory, dairy cattle registered a number
of 25,697 head and the number of dairy carabaos reached to 17,802 head. Goat inventory totaled to 13,708
head. By animal source, 63% of the total volume of milk produced came from dairy cattle, 34% from carabao
and 3% from goat. Of the total milk output of 21.16 million liters, production from NDA-assisted/monitored dairy
farms accounted for 73% or a total of 8.48 million liters. Daily milk production increased from 58.23 MT to
64.64 MT. Gross earnings in the dairy sector recorded around 21% increase from P341.25 million in 2016 to
P411.24 million this year. The dairy sector accounted for 0.05% and 0.30% of the total agricultural and
livestock production value (at current prices) of Php829.97 billion and Php137.33 billion, respectively.