China is on track to become the world’s third-largest producer of cow milk this year. Despite its high worldwide milk production rating, the nation remains the top dairy importer owing to its vast population, which continues to increase per capita dairy consumption, according to Rabobank.
China is on track to become the world’s third-largest producer of cow milk this year. Despite its high worldwide milk production rating, the nation remains the top dairy importer owing to its vast population, which continues to increase per capita dairy consumption, according to Rabobank.
Domestic per capita consumption has a great possibility to develop further, since it is now just one-third of the worldwide average, according to those experts.
According to Rabobank, China’s milk supply will increase from 41.5 million metric tons in 2023 to 47.4 million metric tons liquid milk equivalent (LME) in 2032, with a compound annual growth rate (CAGR) of 1.5% by volume.
Annual demand in the nation is predicted to climb 2.4% on average between 2023 and 2032, with dairy consumption reaching 62.2 million metric tons LME by 2032, according to the report.
“China will continue to play an important role in the global dairy industry, with the import deficit expected to widen further.” Imports are expected to reach 15 million metric tons LME by 2032, according to Michelle Huang, a dairy analyst at Rabobank.
According to a recent Dutch bank dairy analysis, China’s self-sufficiency rate ranges between 70% and 80% and is unlikely to improve much, implying that domestic dairy output will not meet increasing demand in the long term.
“The most important swing factors influencing domestic supply will be production costs, land, water, heifers, and capital availability, and future government policy.”
“On the demand side, downside risks include weaker income growth, slower economic growth, and sluggish consumer demand,” Huang said.
Production that is highly focused
China’s milk production is extremely concentrated, with the majority of it located in the country’s north. The dairy agricultural belt includes areas like as Inner Mongolia and Heilongjiang.
The country’s milk sector has grown as a result of a change in food security awareness caused by China’s recent geopolitical difficulties. The country’s ministry of agriculture and rural affairs (MARA) enacted a five-year strategy for the domestic dairy industry in February 2022, outlining major measures that the government would support, such as the development of large-scale modern dairy farms.
The share of the Chinese dairy herd on farms with more than 1,000 head climbed from 24 to 44% between 2015 and 2020. Dairy farms with more than 1,000 head are predicted to increase and dominate the Chinese dairy landscape by 2025, accounting for 56% of the country’s herd.
MARA is also working to develop domestic breeding and genetics skills, to help dairy farming’s digital revolution, and to stimulate vertical integration of the dairy value chain.
Forage availability
Another important goal mentioned by the agriculture ministry is to enhance the availability of high-quality fodder.
“In China, dairy cows are typically fed one of three types of rations: forage grass/alfalfa, concentrated feed, and supplementary feed.” According to the Rabobank analysis, “alfalfa plays a critical role in increasing milk yield and protein content, and China’s dairy farms rely on imported alfalfa from the United States.”
According to dairy industry experts, the government has created multiple high-yielding alfalfa farms in Inner Mongolia, Gansu, and Ningxia provinces to minimize dependence on imported alfalfa and boost local supplies.
