Chinese milk prices at just under €50 per 100 ltr - imports to rise again

High milk prices in China - China's milk imports grow again

China's dairy market is extraordinary from a number Marked characteristics. Until 10 years ago, the milk production and usage played a marginalized role.

1. A major cause is the genetic Milchlactose intolerance of most Chinese. The problem can be solve but through a simple procedure of processing.
2. In China, there is land shortages. The available agricultural land is 850 square meters per capita, less than half of a half football pitch area. Dairy farming is however faces intense and mainly little successfully competes with other market fruit.
3. Therefore, milk production has focused on less powerful locations in the North to the border with the Mongolian desert steppe. More important milk production sites in the North are oriented to big cities. The average milk yield is 4,500 kg per cow. The average milk prices are converted at less than 50 €/ 100 ltr.
4. Milk consumption takes place Two-thirds in southern of China in forms of canned milk powder, butter and cheese. Intensive rice cultivation with up to 5 crops predominates in the South in 2 years. A dairy farming is not competitive here.
5. A nationwide dairy farming is in China little promising.  The orientation on weaker sales distant production sites will remain.
6. A closed cold chain is only in its infancy. Therefore milk is used 40% of fresh milk for their own needs or for regional markets. For the transregional sale goes the way of full and skimmed milk powder. In the early days also butter and cheese production is emerging.
7. The growing demand for milk products comes from a growing middle and upper class with rising incomes in the conurbations that align their diet more on Western consumerism. The Chinese milk consumption far behind the European 285 kg milk equivalent is back with 32 kg milk equivalent per inhabitant. In India, it comes including cow's and buffalo milk consumption of 140 kg per inhabitant.
8. The Chinese melamine scandal has resulted in a sustained collapse in production and sales in the year 2008/09. A reconstruction has been initiated with government support but, whose swing but again has been something in the last few years.
9. The until 2014 steadily rising import of dairy products with growth rates of 20 to 45% declined in the year 2014. Reasons were slower growth, a depreciation of the purchasing power of the Chinese currency and establishing adequate inventories. The reduced import activities continued until the year 2015.
10. During 1st half-year 2016 , rising import figures are again observed. High growth rates are to determine when milk powder with just under 24% and 32% butter. Nonetheless, the volume of imports is still behind the years 2013/14 back. Most recent development is a growing import of UHT milk from the EU.

Conclusion: China's demand potential is still far from being exhausted. The production capacity of China's is limited, however. About milk production capacity, must firmly be invested in the field of processing and distribution. That takes time. According to income growth the Chinese imports of milk products will continue to rise and play a crucial role in the international milk market.