23. 09. 2024 | Natalie Bezděková

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China’s dairy industry is in a severe crisis caused by various factors, including a declining birth rate, a slowing economy and overproduction of milk. This situation has serious implications for farmers, importers and consumers.

Falling milk prices and farm closures

Milk prices in China have fallen below the cost of production, which is around 3.8 yuan (CZK 12.18) per kilogram. This slump is forcing smaller farmers to shut down operations and reduce livestock numbers. For example, Modern Dairy, one of China’s largest milk producers, has halved the number of dairy cows and posted a loss of 207 million yuan (CZK 663 million) for the first half of the year.

Overproduction and falling demand

China’s milk production rose to nearly 42 million tonnes last year, up significantly from 30.39 million tonnes in 2017. This growth was driven by 2018 government support, which encouraged the establishment of new farms and increased production. At the same time, however, demand for dairy products has been declining, with per capita milk consumption falling from 14.4 kg in 2021 to 12.4 kg in 2022.

Impact on imports and exports

China’s dairy imports, mainly from New Zealand, the Netherlands and Germany, fell 13% year-on-year to 1.75 million tonnes in the first eight months of the year. Milk powder imports fell 21% to 620,000 tonnes.

Despite China’s efforts to increase milk powder exports, this is limited by lingering negative memories of the 2008 contaminated milk scandal. Chinese consumers continue to favour foreign brands, despite government efforts to improve food standards and restore confidence.

Photo source: www.pexels.com

Natalie Bezděková

I am a student of Master's degree in Political Science. I am interested in marketing, especially copywriting and social media. I also focus on political and social events at home and abroad and technological innovations. My free time is filled with sports, reading and a passion for travel.