China's Dairy Industry: Current Landscape and Key Insights

Key Statistics

Number of Dairy Cattle (2023): Data unavailable due to recent agricultural reforms and ongoing updates.

Milk Production Volume (2023): Approximately 36 million tons/year.

Milk Processing Volume (2023): Estimated at 34 million tons/year.

Cheese Production Volume (2023): Data unavailable. Cheese consumption remains low, but domestic production is growing gradually.

Milk Powder and Whey Production Volume (2023): Increasing production of whole milk powder (WMP), while exports of skimmed milk powder (SMP) saw an 11.0% decline due to reduced demand from various regions including South Africa and the Middle East.

Key Enterprises

• Junlebao Dairy Group Co., Ltd.: Recently signed an IPO and listing agreement.
• Bright Dairy Holdings: Involved in potential bailout efforts for Synlait.
• Yili Group: Major player with extensive market reach.
• Mengniu Dairy: Another leading dairy enterprise in China.

Dairy Farms and Processing Plants

Data on key dairy farms is unavailable due to the fragmented nature of the industry and ongoing consolidation efforts.

Export and Import of Dairy Products (2023)

Export: Skimmed Milk Powder (SMP) saw an 11.0% decline due to reduced demand from various regions including South Africa and the Middle East.

Import: Despite oversupply, China continues to import specialized high-quality dairy products, but precise figures are not available.

Significant Events

• IPO and Listing: Junlebao Dairy Group Co., Ltd.
• Bailout Efforts: Synlait's approach to Bright Dairy Holdings.
• Production Measures: China introducing measures to curtail dairy and beef production to stabilize prices.
• Global Impact: China's subdued dairy product demand affecting global markets, particularly Poland's dairy sector.
• Market Trends and Forecasts: The sales of UHT milk in China are forecasted to grow at a CAGR of 6.5%, reaching USD 15.2 billion by 2034. However, the industry is also grappling with an oversupply of raw milk, leading to declining prices and relatively weak consumer demand.
• Recapitalization: China's Bright Dairy poised to take majority control of Synlait.
• Anti-subsidy Investigation: China launching an anti-subsidy investigation into certain dairy products imported from the EU.
• Fonterra's Strategic Decisions: Divestment of Chinese dairy farms.
• China Youran Dairy reported strong revenue growth.
• South Africa achieved a significant breakthrough in expanding agricultural trade with China following the signing of key market access agreements during the Forum on China–Africa Cooperation (FOCAC).
• Several A-share and Hong Kong-listed dairy companies have recently released their performance forecasts for the first half of 2024, revealing a challenging landscape for the industry. The majority are reporting losses or declines in net profit.
• China is seeing a shift from ambient milk to chilled milk, driven by health-conscious consumers who prefer the taste and nutritional benefits of chilled milk.
• China's dairy farms are grappling with an oversupply of milk as falling birth rates and a sluggish economy dampen demand.
• Mondelēz International has announced plans to acquire a majority stake in Evirth, a prominent Chinese manufacturer of cakes and pastries.

Summary

In summary, China's dairy industry is at a pivotal moment, balancing between robust growth prospects in certain segments, such as UHT milk, and challenges like oversupply and subdued demand. The industry is closely watched by global markets due to its significant influence on global dairy trade patterns. China's overall dairy import demand remains subdued, impacting major suppliers. Poland, China, Vietnam, and the Philippines were major buyers of whey from Ukraine. In the second week of August 2024, market monitoring data revealed mixed trends in the prices of livestock products and feed across China. While pork and poultry prices experienced an uptick, other key commodities like beef, lamb, soybean meal, and various feeds showed a decline.

Fonterra has strengthened its presence in China’s foodservice sector with the launch of its sixth food application centre (FAC), aiming to meet the growing demand for innovative dairy-based solutions from foodservice customers.

Modified: 2024/10/08

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