COUNTRY FOCUS ▶▶▶
Uncovering China’s dairy sector
China’s milk production is forecast to increase by 4.5% to 34.5 million metric tonnes in 2021, according to the United States Department of Agriculture (USDA). We take a deeper look at China’s dairy sector.
BY ZANA VAN DIJK
Imports of cheese to China are predicted to grow by 17% to 155,000 in 2021, due to strong demand.
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n addition to this increase, imports of dairy products and dairy ingredients are projected to rise as well, driven by demand from consumers and the food processing indus- try. According to the China Agriculture Outlook Report (2020–2029), dairy cattle productivity will continue improv- ing as a consequence of large-scale dairy farms (more than 100 head of dairy cattle per farm), said the USDA. Large-scale dairy farms have adopted state-of-the-art milk- ing facilities and feed management techniques, both of which have increased productivity. It has been reported that
these large-scale dairy farms account for nearly 70% of total dairy farms in 2020. The increasing disposable income in China is allowing a boom in more innovative products, diary consumption, changes in diet and health awareness – all while the industry transforms rapidly and more modernisation takes place. Cur- rently, China is in second position in terms of global dairy sales revenue after the US and is forecast to overtake the US by 2022. In August 2020, the Henan provincial government an- nounced it will make provisions for a subsidy of Chinese Yuan RMB5,000 (US$ 735) per head to farmers who build or expand their dairy farms with more than 100 head of cattle. Addition- ally, the Henan government announced subsidies for farmers to import dairy cows (RMB1,000/US$ 147 per head) and breeding embryos (RMB5,000/US$ 735 each). The 2020 China Dairy Data Report states that the Henan prov- ince is the sixth largest milk producer after Inner Mongolia, Heilongjiang, Hebei, Shandong and Xinjiang. These six prov- inces in northern China produce nearly 66% of China’s total fresh milk.
Trade and consumption China is the world’s largest importer of dairy products, and while China’s dairy production has been flat since 2008, growth in consumption is apparent; so far, the gap between supply and demand has been met by growing imports. Chi- na’s imports of fluid milk, mainly pre-packaged UHT milk, are forecast to be 980,000MT in 2021, an increase of 5% from 2020, urged on by continued demand from consumers and the food processing sector. According to a report by PWC, “UHT milk was the first dairy product to achieve widespread consumption, but fresh milk is becoming popular as cold chain distribution capacity grows and as consumers look for products viewed as more nutritious.” Chinese consumers’ daily intake of dairy products is reported to be 97g (fluid milk) in 2019 – the number shows a big dif- ference compared to the global average of 303g. However, market and consumer data organisation Statista mentions that surveys show that more urban Chinese consumers are willing to spend money on niche, high-end, organic and healthier products, hence slowly shifting the dairy industry development direction from scale growth to product
22 ▶ DAIRY GLOBAL | Volume 8, No. 1, 2021
PHOTO: LEX SALVERDA
PHOTO: SHUTTERSTOCK
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