Philippines Dairy Imports to Rise in 2027 Amid Growing Milk and Cheese Demand

 

Philippines Dairy Imports Expected to Rise in 2027 as Milk and Cheese Demand Grows

The Philippines is expected to increase its reliance on imported dairy products in 2027 as consumption continues to expand, although higher production costs, currency fluctuations and logistical constraints could limit the pace of growth, according to the US Department of Agriculture (USDA).

In its latest report, the USDA Foreign Agricultural Service projected Philippine imports of skim milk powder (SMP) to reach 185,000 metric tons (MT) next year, up 2% from the estimated 181,000 MT in 2026.

SMP remains a major ingredient in the country's food and beverage manufacturing industry, accounting for approximately 40% of total dairy imports. It is widely used in producing condensed milk, ultra-high-temperature (UHT) milk, ice cream, gelato and infant formula, making it an essential raw material for several consumer food categories.

However, the USDA cautioned that elevated fuel prices, transportation expenses and a stronger US dollar against the Philippine peso could weigh on import activity. Since SMP is a key manufacturing input, exchange-rate volatility may increase procurement costs and influence purchasing decisions among local food processors.

Manufacturers May Favor Skim Milk Powder Over Whole Milk Powder

While SMP imports are projected to increase, shipments of whole milk powder (WMP) are expected to remain unchanged at approximately 15,000 MT in 2027.

The USDA attributed this outlook partly to higher international prices, which could encourage manufacturers to use more affordable SMP alternatives where product formulations allow. WMP, which contains more milk fat and calories, may instead be reserved for applications where its nutritional composition, richer flavor and texture are particularly important.

This potential shift reflects how dairy manufacturers manage ingredient costs while maintaining the characteristics of their finished products.

Ready-to-Drink Milk Imports to Expand

Imports of fluid and ready-to-drink (RTD) milk are also forecast to grow, reaching 171,000 MT in 2027. This represents a 3% increase from the projected 166,000 MT for 2026.

The anticipated expansion is supported by stronger household consumption and demand generated by the government's milk feeding program, which provides an additional market for ready-to-consume dairy products.

Domestic production is expected to provide some relief from import dependence. The USDA projects Philippine fluid milk output to increase by 4.3% to 48,000 MT next year, supported by the expansion of dairy herds among both small-scale and commercial producers.

Despite this improvement, locally produced milk will continue to account for less than 2% of the country's overall dairy requirements. The gap highlights the considerable challenge facing the domestic dairy industry as consumption rises.

Cheese Imports and Consumption Set for Further Growth

Cheese is another dairy category expected to record stronger demand in 2027. The USDA forecasts imports to increase by 5% to 63,000 MT, while total domestic consumption is projected to reach 64,000 MT, also representing a 5% annual increase.

Growing consumption among middle- and high-income urban households is a major contributor to this trend. According to the agency, approximately 82% of Filipino consumers in the surveyed market eat cheese at least once a week, reflecting its increasingly regular place in household diets.

Nevertheless, the USDA has adopted a cautious outlook because of transportation and supply chain difficulties, elevated fuel and production costs, and the ongoing El Niño phenomenon. Weather-related disruptions could affect agricultural output and manufacturing operations in countries supplying dairy products to the Philippines.

Import Dependence Remains a Key Industry Challenge

The projected increases across milk powder, fluid milk and cheese point to sustained growth in Philippine dairy consumption. However, the country's limited domestic milk production means international suppliers will continue to play a central role in meeting market requirements.

Expanding local dairy herds and improving production capacity could gradually reduce this dependence. For now, manufacturers and importers must navigate a market where consumer demand is growing faster than domestic supply, while remaining exposed to currency movements, global commodity prices and international shipping conditions.