China proposes amendments to ban reconstituted milk in sterilized products

CHINA – China’s National Food Safety Standards and Monitoring and Evaluation Division has proposed new amendments to its regulations on sterilized milk, which were announced in October 2023. 

These changes, following extensive public consultation, will prohibit the use of reconstituted milk in shelf-stable milk products, marking a significant shift in the country’s dairy industry.

Under the new rules, sterilized milk must be made exclusively from raw sources, including buffalo, yak, camel, cow, and sheep milk. 

Milk powder will also be banned as an ingredient in sterilized milk, and the requirement to label products containing milk powder as “reconstituted milk” will be removed.

These changes are expected to impact production costs for manufacturers and retail prices for consumers. 

While the ban on reconstituted milk could improve consumer confidence in product quality, experts warn that higher raw milk prices may lead to increased production costs, which could be passed on to consumers. 

The dairy industry is monitoring these developments closely, as they could also affect demand and the management of the current raw milk surplus.

Historically, reconstituted milk made from milk powder has been used in shelf-stable milk as a cost-effective solution, especially during times of supply shortages. 

The proposed ban would mark a significant shift in the industry, potentially raising production costs for dairy manufacturers, which could be passed on to consumers.

Song Liang, a well-known dairy expert, acknowledged that while the changes may boost consumer trust in product quality, higher raw milk prices could lead to increased retail prices for sterilized milk products.

Chinese consumers have reacted positively to the proposed amendments, with many preferring more natural, less processed dairy products. 

However, concerns have been raised about how these changes might affect the price of shelf-stable milk. 

YoYo, a resident of Guangzhou, expressed optimism about the focus on natural products, reflecting the general sentiment among consumers.

The dairy industry, however, remains more cautious. Fresh milk, considered nutritionally superior to reconstituted milk, could see increased demand, but the new regulations may also disrupt the market. 

Li Shengli, the chief scientist of China’s dairy industry, noted that the ongoing oversupply of milk has led to a significant decline in milk purchase prices in 2024. 

The new rules could help balance the raw milk surplus by restricting the use of reconstituted milk in sterilized products.

Another potential impact is on the demand for milk powder. With the elimination of reconstituted milk from sterilized milk, companies may need to adjust their use of milk powder, which could lead to changes in the market for dairy ingredients. 

While this shift may help balance raw milk supplies, Song Liang warned that rising raw milk prices could once again drive up production costs, putting upward pressure on sterilized milk prices.

The changes will require stronger monitoring mechanisms to ensure compliance. Despite the prohibition of reconstituted milk in sterilized milk, other dairy categories like yogurt and formulated milk will still be allowed to use milk powder.

Major dairy companies, including Yili, Mengniu, New Hope Dairy, and Sanyuan, have not yet commented on how the proposed regulations might affect their product lines, particularly those that currently incorporate reconstituted milk.

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