China 39 s Dairy Industry Present Status and Future Prospects

With economic development and lifestyle changes, the demand for dairy products in China keeps rising
China 39 s Dairy Industry Present Status and Future Prospects

In 2014, the output of dairy products was 26.518 million tons in China, decreasing 1.23 percent year on year. And such major producers as Inner Mongolia, Heilongjiang and Shandong all reported a decline in diary production.

Dairy production fell for the first time in 2014 over the last three decades. Since 2009, annual output of dairy products slowed down its growth which used to be at an average rate of 15-20 percent. For instance, the average annual growth rate was reported at 12.7 percent during the period of 2009-2011, 8.1 percent in 2012 and 5.2 percent in 2013. The reasons for this include weak consumption growth resulted from high price and high cost of production; shock brought about by the large imports of cheap dairy products and frequent disclosure of security incidents which lowered some consumers’ confidence of domestic dairy products.

Milk production in 2013 declined by 5.7 percent, i.e. 2.12 million tons compared with 2012 while cow stocks decreased about 10 percent which led to milk shortage at the turn of the year. Compared with 2013, milk production rose by 5.5 percent to 37.25 million tons. And the average purchase price of milk rose from CNY 3.62 per kilogram in 2013 to CNY 3.29 per kilogram.

There were about 630 dairy producers in 2014 in China that brought in sales of CNY 329.77 billion with a year-on-year growth of 18.07 percent and profits of CNY 22.532 billion with a year-on-year growth of 25.63 percent.

In recent years, frequent security incidents of domestic dairy products have made consumers, especially parents of infants, turn to imported ones. According to the statistics of customs, 2.0519 million tons of dairy products were imported into China in 2014, increasing 12.30 percent year on year with a total value of USD 8.487 billion which increased 19.75 percent year on year. Specifically, the import volume of milk powder was 0.9237 million tons and its import value was USD 4.437 billion, respectively increasing at 8.11 percent and 23.77 percent year on year; the import volume of infant milk powder was 0.1231 million tons, increasing at 0.31 percent year on year; the import volume of whey powder, a raw material of infant milk powder, was 0.4044 million tons with a year-on-year decrease of 6.83 percent which signaled the decrease in domestic infant milk powder. Besides, 66,000 tons of cheese and 80,400 tons of cream were also imported into China in 2014, respectively increasing at 39.43 percent and 53.74 percent compared with last year. Clearly, imported dairy products have become an important part of the Chinese diary market.

The reasons for rise in dairy import in recent years include increasing dependence on imported dairy products as a result of the crisis of confidence caused by frequent security incidents of domestic dairy products and higher raw milk price in domestic market than in international market which prompted the big increase in milk powder import.

With economic development and rise in per capital income, the demand for dairy products in China will keep increasing, so does the demand for imported dairy products. Therefore, China will become increasingly important in the next few years for dairy producers around the world.


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