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China 13.02.2024

China Poised to Claim Third Spot as World's Leading Milk Producer

Source: The DairyNews
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China is on the brink of becoming the world's third-largest milk producer, surpassing its current status as the top global dairy importer. Despite ranking high in milk production, the country's immense population continues to drive per capita dairy consumption, making it the largest importer, according to a report by Rabobank.
China Poised to Claim Third Spot as World's Leading Milk Producer
The analysts highlight a substantial opportunity to further increase domestic per capita consumption, which currently stands at only one-third of the global average. Rabobank forecasts China's milk supply to grow from 41.5 million metric tons in 2023 to 47.4 million metric tons liquid milk equivalent (LME) by 2032, with a 1.5% average compound annual growth rate (CAGR) by volume.

Anticipated annual demand growth of 2.4% between 2023 and 2032 is expected to propel dairy consumption to 62.2 million metric tons LME by 2032. The report suggests that China will continue to play a significant role in the global dairy industry, widening its import deficit, which is projected to reach 15 million metric tons LME in 2032.

According to Michelle Huang, a dairy analyst at Rabobank, China's self-sufficiency rate hovers between 70% and 80% and is not likely to substantially increase. This implies that domestic dairy production may not meet rising demand in the long run.

Factors such as production costs, land and water availability, heifers, capital, and government policy will influence domestic supply, while downside risks on the demand side include weaker income growth, slow economic expansion, and sluggish consumer demand.

China's concentrated milk production is primarily based in the northern part of the country, with regions like Inner Mongolia and Heilongjiang forming the dairy farming belt. The growth in China's milk industry has been spurred by a heightened focus on food security due to geopolitical challenges.

The Ministry of Agriculture and Rural Affairs (MARA) implemented a five-year plan in February 2022 to boost the domestic dairy sector, emphasizing actions like promoting large-scale modern dairy farms. From 2015 to 2020, the percentage of the Chinese dairy herd on farms with more than 1,000 head increased from 24% to 44%, and such large-scale farms are expected to dominate, comprising 56% of the country's herd by the end of 2025. the supply of high-quality forage, with efforts underway to reduce reliance on imported alfalfa through the development of high-yielding alfalfa farms in Inner Mongolia, Gansu, and Ningxia provinces.
Becky Smith
Becky Smith
Analyst (Livestock) AHDB
China is an important buyer on the world dairy markets, with a strong influence on global demand that plays into price dynamics. Imports of dairy products to China continued to decline in 2023, driven by increased domestic production and weaker consumer demand.
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Keith Woodford
principal consultant at Agri food Systems Ltd.
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