This paper reviews trends in global production and consumption of dairy products as well as the drivers behind increasing production and consumption. The past decades have seen rapid growth in consumption of dairy products in several parts of ' but not all of ' the developing world, driven by economic growth and rising income levels. However, large differences in levels of per caput consumption among developing country regions and countries persist. Increasing consumption in developing countries has been accompanied by a major expansion of production in several developing countries, significantly outpacing production growth in the developed country group. In addition to growing demand, production growth has been driven by technological change in the sector, which has permitted major increases in productivity and the emergence of large-scale commercial dairy farms. However, small-scale dairy producers in several developing countries have remained at the margin of these developments. Also trade in dairy products has expanded due to technological development in processing and shipping, which has facilitated product movements. However, due to the perishability of dairy products the bulk of dairy production is consumed domestically without entering international trade. The potential for future expansion of dairy consumption remains significant, as income levels continue to grow in developing countries, especially in countries where levels of per caput consumption are still relatively low. Nevertheless, the rate of growth is expected to slow down somewhat relative to those experienced over the past decades. The rapid expansion and transformation of the global dairy sector contributes to growing threats to the environment and to human and animal health as well as to increasing pressures on the livelihoods of small-scale dairy producers. These issues require attention in order to allow the continued development of the sector in a sustainable and socially balanced way.