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No Let-Ups From China Expected on Dairy Demand

24 June 2014

CHINA – Chinese dairy demand is on a sure footing and the outlook remains positive, despite analysts forecasting a slow-down in economic growth for 2015, says the US Dairy Export Council.

International Monetary Fund (IMF) predictions see China’s economy growing 7.3 per cent next year, down from the typical 10 per cent.

IMAGE NAME/DESCRIPTION

Brad Gehrke director of global trade analysis at USDEC. Photo courtesy of USDEC. 

This is the lowest percentage growth since 1990, but analysts at USDEC have said that China’s dairy appetite remains ‘robust’.

USDEC’s message is that domestic production, hindered by the slow development of larger farms and the cost of farming, will not be able to keep pace with demand.

An ever expanding infant population, on track to grow by 16 million this year, middle class expansion, urbanisation and overall population growth will be unfettered by economic growth rate.

By 2024, dairy consumption is expected to grow 42 per cent from 43 million tons of liquid milk to 61 million tons – almost the annual output of New Zealand.

This is according to global trade analysis director at USDEC Brad Gerhke who played down the effect of smaller economic growth.

He said that, working on an ‘absolute increase per capita’, a smaller percentage growth is still higher than when the country was ‘soaring’.

“Growth rate of gross domestic product (GDP) can be a misleading benchmark with which to estimate China’s dairy consumption and import trends,” said Mr Gehrke.

“The nation’s GDP growth rate is slowing, but because the base has increased, the absolute increase per capita or per household is still greater.”

He added that domestic production ‘is not likely to become self-sufficient’ and that the demise of small scale farms would hold back overall production as large-scale operations developed.

China’s imports rise in the coming years will be a ‘sizeable’ eight to 10 million tons, added Mr Gehrke.

However, he understands the concern over China’s future as it is such a huge player in the market, buying 16 per cent of imported dairy.

Summarising future Chinese demand, he said: “Imports will remain key to feeding the additional mouths, despite hundreds of millions being spent to build bigger, more efficient dairy farms.

“No doubt there will be ups and downs in its (China's) buying patterns. But while purchasing may vary month to month and even quarter to quarter, the long-term outlook remains very positive indeed.”

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms

 


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