Prospect of Dairy Product Industry Development Trend in China, 2017
At present, imported milk accounts for over one-third of the domestic market. Milk imported from New Zealand accounts for 64% of the imported dairy product for the factors such as transport cost. In 2016, the number of cows decreased by 2.1% in New Zealand. Now there is a rebound in prices of raw milk but the livestock of cows is estimated to be in a negative growth in New Zealand in 2017 due to periodicity of cows. Global raw milk supply will decrease with the decline of livestock of cows. According to CRI, annual raw milk supply decreased to 20,985,000 tons, down by over 2.5% in New Zealand in 2016.
Between 2011 and 2015, China imported 694,600 cows, adding over 6 million tons production capacity of raw milk, up by over 15%. Milk shortage resulted from the “Melamine” incident drove upstream dairy product enterprises to build new pastures and expand pasture scale, which caused a further obvious growth in national livestock of cows in 2014 and the supply also rose dramatically. Therefore, there was another serious surplus in production capacity of dairy products in the second half of 2014. Entering 2015, upstream dairy product enterprises began to eliminate low-yield cows actively and to introduce high-yield cow breeds so there was an obvious decline in supply and domestic livestock of cows was in negative growth in 2015 and 2016.
It is estimated that national output volume of raw milk will keep in negative growth in 2017 but the drop will be steadier compared to that of traditional dairy product producers such as New Zealand, so the rise in prices of domestic fresh milk will be limited.
Influenced by the macro environment and development of the industry, domestic consumption of dairy products is in a downturn at present. We estimate that the growth rate of total domestic consumption of dairy products will not exceed 2%, and such low growth rate will not change in the middle stage. In addition, consumption of those star products including high-end organic milk, yoghourt and crème which are launched under structure upgrade is expected to strive for to exceed consumption expectation in dairy product industry.
Reference Reports:
China Infant Milk Powder Industry Overview, 2017-2021
China imports large quantities of infant milk powder each year due to unstable quality control over domestic milk powder and its high prices.
Liquid Milk Industry Overview in China, 2011-2020
The output volume of liquid milk continuously increased in China in recent years, from 20.61 million tons in 2011 to 24.98 million tons in 2015, while the annual growth rate had a declining trend.
Research Report on China Dairy Industry, 2017-2021
According to CRI, China’s per capita consumption of dairy products in 2015 was only about one third of the world average level, and there was still room for growth.