How is China’s growing milk supply affecting global dairy exports?
Dairy supply has been a key policy cornerstone for the Chinese government since 2018. The country set out to increase its milk production by 10 million metric tons from 2018 to 2025, a target achieved in 2023.
According to Rabobank estimates, this increased China’s milk supply self-sufficiency from 70% to 85% - further reducing the nation’s dependence on imports.
So which dairy commodities and product categories have been hit the most?
Whole and skimmed milk powder
WMP imports have been the most notable category affected by China’s strategic focus on dairy production, given the country’s position as the world’s largest powder importer. While imports more than doubled from 2010 to 2022, from 325,000 metric tons to nearly 845,000 metric tons, they slipped to just 430,000 metric tons in 2023.
According to Rabobank’s forecast for 2024, these imports are set to increase to 460,000 metric tons and stabilize to around 500,000 metric tons by 2025.
The USDA Foreign Agricultural Service (FAS) expects weak market demand for skimmed milk powder (SMP), higher domestic WMP and SMP production and higher domestic WMP inventory to temper demand and lower Chinese SMP imports in 2024.
According to Rabobank’s Trade Data Monitor, China has been the largest WMP importer in average volume terms between 2018 and 2022 with 670,000 metric tons. Algeria comes a distant second with 245,000 metric tons.
Liquid milk and cream
The bank’s Trade Data Monitor also highlights that a substantial decline in imports of liquid milk and cream has taken place – impacting supplying countries including Poland, Germany, Australia, and to a lesser extent, New Zealand.
Whey
Whey volumes exported to China fell 38,700t in the first half of 2024, according to AHBD. The USDA FAS estimates that whey and whey product imports in 2024 to decline as demand shrinks in both food use and feed use owing to declining birth rates and a lower piglet inventory.
Cheese and butter
China’s domestic production of these two commodities is limited by processing capacity, while consumer demand, particularly from more affluent urban consumers, is increasing. That said, the USDA FAS suggested in its May 2024 report that production this year remains limited and revised its cheese imports forecast to stay at 2023 levels due to expected declines in Chinese retail sales and increase in consumption in foodservice. Similarly, butter imports are set to decline from 2023 due to lower consumption.
