Dairy products are not usually the first thing that someone thinks about when considering Chinese cuisine. Despite the fact that milk production is not always associated with China, the industry is the second-largest consumer of milk and dairy in the world, along with being the third-largest producer of dairy products.
Evidence of a dairy industry being present in China dates to the 12th century. The industry began to formalize in 1900, however, when Western cattle breeds were introduced to China. Holsteins were up to 4 times more productive with milk than the native Yellow Cows in the country, leading to higher levels of investment for local farmers.
Even when there was government upheaval in China, with the founding of the PRC in 1949 and the eventual cultural revolution which followed, investment and development into dairy and milk products continues.
Interesting China Milk Industry Statistics
#1. In 2016, China had 8.5 million cattle in milk production. The national herd was able to produce 38 million tons of milk products. (U.S. Department of Agriculture [USDA])
#2. Over 50% of the dairy farms operating in China operated at a loss during 2016. Up to 70% of the fluid milk that is produced by the Chinese milk industry comes from large-scale dairy farms. (USDA)
#3. In 2016, estimates indicate that the total dairy herd population numbers in China were reduced by up to 10% due to small farms closing operations and large operations culling their herds. (USDA)
#4. New Zealand and the European Union together make up 97% of the imports that are created by China’s milk industry each year. (USDA)
#5. Domestic dairy consumption in China is much lower, per capita, than it is by international standards. The average person in China consumes about 33kg of dairy products each year, which is about 30% of the global standard. (USDA)
#6. About 900,000 tons of fluid milk imports to the European Union occurred in 2017, creating a 38% increase for the dairy industry in China. (USDA)
#7. The United States imports less than 1% of the overall market share that is produced by the milk industry in China each year. Two factors cause this issue: new food safety regulations in the U.S. and registration regulations in China that can take several years to complete. (USDA)
#8. In 2017, there were 611 operators working within the Chinese milk industry, generating total sales of CNY 359 billion. Profits reaches CNY 24.48 billion. Although sales were up 6.7%, profits decreased by 3.2%. (Reach24H)
#9. 110 firms operating with the industry were officially declared to be “unprofitable.” Reasons for expanding losses include higher white sugar costs, higher freight costs, and a larger volume of inexpensive imported dairy products. (Reach24H)
#10. About 2.43 million tons of solid dairy products were produced in 2017 by the industry, along with 1.21 million tons of milk powder. (Reach24H)
#11. Just 9 provinces in China, including Jiangsu, Sichuan, and Hubei, which are not part of the primary dairy regions of the industry, were able to achieve more than 1 million tons of liquid milk production in 2017. (Reach24H)
#12. In 2017, over 2.4 million tons of milk and dairy products were imported into China, which was an increase of 13.4% from the year before. The total value of the imports reached $8.54 billion. (Reach24H)
#13. Over 50% of the imported whey powder that was needed by the Chinese dairy industry came from the United States. Over half of the imported cheese brought into China originated from New Zealand. (Reach24H)
#14. The farm gate price of milk products from the Chinese dairy industry in 2017 was 45.68. It has declined each year since 2014, when it was 49.45. (NBS)
#15. 47% of the cattle herd present in China that supports the milk industry involves farms with 100 or fewer head. About 19% of the industry is supported by dairy farms which have 1,000 or more head of cattle. (Statista)
#16. The largest levels of growth in the industry have come from farms which support between 100-499 head of cattle. In 2009, farms of this size were 13% of the milk industry in China. In 2018, they were 24% of herds. (Statista)
#17. In 2014, there were $46.7 billion of dairy products sold in China. (Statista)
#18. In the developed world, the retail price for milk products is up to 200% greater than the current farm gate price. In China, the retail price is up to 500% greater than the farm gate pride. (NZX Group)
#19. The share of dairy imports in the form of milk powder, cheese, and whey increased from 7.5% in 1995 to 15% in 2000. In 2014, it reached 22%. (University of Vermont)
Chinese Milk Industry Trends and Analysis
In 2008, the milk industry in China took a major hit when 6 children were killed because of the presence of melamine in the supply chain. Thousands of others were sickened. Changes implemented by the Ministry of Agriculture, along with new regulations and inspections, have helped domestic consumption levels to begin returning to pre-2008 levels.
Consumption of dairy is rapidly growing in China, making it a dynamic market for local producers. The desire for cheap dairy products has also created an influx of imported milk-based items that have challenged local producers. Imports are still cheaper in many areas than domestically-produced milk items, which has caused the industry to struggle.
There are areas of success to find within the China milk industry. Domestic companies hold majority market shares for drinkable dairy products, shelf-stable yogurt, and in fresh products.
Through at least 2025, the expectation is that about 75% of the dairy products which are consumed in China will continue to come from domestic sources. The European Union and New Zealand will continue to dominate the export markets for the industry, with Australia playing a minor role as well.
The industry will continue to shift away from small producers to take advantage of pricing benefits when milk is produced on a large scale. Imports will continue to be necessary. Growth, however, is still very possible.