China’s milk production set to decline again in 2025 amid global dairy shifts

CHINA – China’s milk production is expected to drop by 2.6% in 2025, marking its second straight year of decline, according to a recent report by RaboResearch. 

This forecast comes as the global dairy industry braces for a mix of challenges and opportunities, driven by trade tensions, rising milk prices, and shifting production trends. 

While top dairy-exporting regions like the European Union and the United States are increasing output, China’s dairy sector is shrinking, impacted by low farmgate prices and changing domestic policies.

Reported by Rabobank, Chinese milk production already contracted in 2024 after years of steady growth. 

With farmgate prices falling 15% year-over-year in February, farmers lack the motivation to boost output. 

“The economic pressure on Chinese dairy farmers is clear, and without better prices, we expect this downward trend to continue,” said Emma Higgins, a senior analyst at RaboResearch. 

At the same time, Beijing is showing signs of stepping in. In a rare meeting, President Xi Jinping recently sat down with private sector leaders, including dairy executives, for the first time since 2018. 

This move suggests possible stimulus measures to lift domestic demand, though details remain unclear.

Globally, the dairy market is poised for modest growth in 2025, fueled by rising export demand and steady supply increases. 

The Rabobank team reports that regions like the EU and the US will lead production gains, supported by higher milk prices and lower feed costs. 

Dairy farmers worldwide are optimistic about better revenues, but consumers might feel the pinch with higher retail prices on the horizon. 

New Zealand’s dairy sector, in particular, is thriving, with record-breaking milk prices sparking the strongest farmer confidence in a decade, as noted by Federated Farmers NZ.

Trade tensions are adding uncertainty. In the US, cheese exports to Mexico soared 30% in 2024, and China took 42% of US whey exports. 

However, starting March 10, 2025, China will slap a 10% tariff on US dairy products as part of retaliatory measures against American tariffs. 

“These tariffs could shake up global dairy markets and push US milk prices down,” warned a Rabobank expert. 

China’s probe into European dairy subsidies, triggered by EU tariffs on Chinese electric vehicles, might also restrict European imports by early 2026.

Elsewhere, South America’s dairy trade faces pressure from currency shifts, with Argentina’s stronger peso favoring domestic sales over exports. 

In Europe, animal health risks like bluetongue loom, though Germany recently contained a rare foot-and-mouth disease outbreak. 

Despite these hurdles, the global dairy outlook remains cautiously positive, balancing growth with geopolitical and economic challenges.

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