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Deregulation Pushing Dairy Farmers Into Africa

Deregulation Pushing Dairy Farmers Into Africa

U.K. dairy farmers are in a hurry to access emerging African markets before 2015 when the European Union ends production quotas — a change expected to flood the market with milk and push down prices, according to a Reuters report.

Dairy cooperative Arla Foods has nearly doubled the number of British farmers that are owners in its business as the company works to raise sales in international markets in Africa and China, where demand for dairy products is growing, according to Reuters.

Arla has added 1,300 farmer-owners in Britain for a total of 2,800 farmers; about 3,000 in Denmark, 3,000 in Sweden, 2,000 in Germany, 500 in Belgium and 200 in Luxembourg.

“Farmers are looking to the future,” Ash Amirahmadi, Arla’s head of milk, told Reuters.

With annual turnover of $3.3 billion, Arla generates 75 percent of its sales from Europe, and the rest from international markets such as China, Africa and the Middle East. It hopes to double the size of its international business.

In Africa, Arla runs a mobile factory the size of a shipping container that processes bulk milk powder, fortified with vitamins A and D, into individual seven-gram sachets that are distributed by local vendors.

“We literally cannot make enough at the moment in terms of the demand,” Amirahmadi said.

“The key question for a dairy farmer is, post-2015, ‘What is my plan for where my milk is marketed? If my current milk buyer doesn’t have access to these local markets, or hasn’t got the ability to convert my milk into more premium dairy products, then I am at risk,'” Amirahmadi said.