Prior to 2014, the Chinese dairy market imported 20% of the total global trade in milk powder, i.e. more than 850,000 tonnes. It then cut spending drastically which led to a reduction in world milk prices as a direct consequence.
Reasons why this happened include the suffering of the Chinese economy and surplus stock. It should be emphasized that the gradual increase in the consumption of dairy products by Chinese consumers in recent years has gone hand in hand with the strong increase in the Asian giant’s gross national income.
But are there prospects for growth? The answer cannot be anything but positive for various reasons: China’s income per capita is expected to continue to increase together with the consumption of dairy products; urbanisation is continuing, and in urban areas the Chinese consume four times as much dairy products as they do in rural areas as a result of changes in diet.
What is more, last October China scrapped its decades-long one-child policy, entitling 90 million couples today to have a second child. There will therefore be potential new consumers and the fact the percentage of breastfeeding Chinese mothers is approximately 28% – significantly lower than the global average of 40% – means that the demand for milk powder will increase even more rapidly.
More and more foreign companies are investing in the country, first and foremost Australian and New Zealand companies such as the multinational Fonterra Cooperative Group.
Everything suggests that demand for dairy products in China will expand substantially. This increase will occur faster than the country’s production capacity, which is currently growing at an annual rate of 3-6% and is indeed insufficient to meet the needs of the enormous and increasingly demanding domestic market.