China’s Dairy imports slide amid growing domestic output

CHINA – China experienced a significant 12% decline in dairy product imports during 2023, citing a surge in domestic production and subdued consumer demand as key contributors to the dip.

According to data from USDA, the country still imported a substantial 2.6 million tonnes of dairy products, with reductions seen particularly in milk powders, liquid milk, and cream.

Notably, whole milk powder (WMP) volumes saw a substantial 38% year-on-year decrease, while skimmed milk powder (SMP) imports experienced a modest 3% growth compared to 2022.

The data highlighted a remarkable increase in Chinese milk production, reaching 41 million tonnes in 2023. This marked a 4.6% rise from the previous year and a notable 28% surge compared to 2019.

Analysts, including Becky Smith from the Agriculture and Horticulture Development Board (AHDB), pointed to shifts in the Chinese economy influencing consumer demand, especially in the foodservice sector.

They revealed that the post-Covid economic recovery fell short of expectations, leading to a cautious consumer outlook and reduced spending, particularly in areas where dairy is a significant component.

Meanwhile, according to analysts, the increasing domestic production of milk in China has led to a diminished need for importing liquid milk and powders.

The trend is expected to have a lasting impact on the global dairy trade, reducing demand and potentially softening prices.

New Zealand retained its position as the largest exporter of dairy products to China in 2023, holding a substantial 42% market share, largely comprising powders, with milk and cream contributing an additional 30%.

Other notable dairy exporters to China include the US, Germany, and Australia, with the UK holding a 1% market share in 2023.

The UK’s imports to China decreased, totalling 16,000 tonnes, with 72% being milk and cream.

Import volumes for key regions into China declined across the board, prompting considerations of alternative markets or diversification strategies, such as venturing into cheese production.

Looking ahead, the slowdown in Chinese population growth is anticipated to result in sluggish consumption growth, particularly for liquid milk and powders.

However, analysts noted that opportunities may arise in the production of high-value dairy products like cheese and butter, constrained by processing capacity.

According to analyst Becky Smith, Chinese cheese consumption has exhibited a robust 16% compound growth rate between 2012 and 2022, and Rabobank predicts that China’s cheese import demand could reach between 270,000 and 320,000 tonnes by 2030, presenting potential openings for UK exports.

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