Pizza and cappuccino culture driving dairy demand in China

Foods such as pizza and cappuccino and the growing influence of the western diet, especially among younger people, is making dairy a staple food in China according to Li Shengli, Chief Dairy Scientist at the China Agricultural University.

He also said that the relaxtion of the one-child policy will see the demand for dairy products continue to grow in China.

Speaking at a recent Alltech dairy seminar, Shengli said that the current issues in the Chinese economy and stock market mean the Chinese economy may not recovery for another 12 months.

Dairy Demand

Over the past 14 years, he outlined how the Chinese dairy industry has grown – especially up to 2008, but levelled off since then. He explained that 2008 was the year the melamine scandal hit China, where almost 300,000 infants became sick after drinking contaminated infant formula.

The health incident saw the demand for dairy products in China plateau and from 2008 milk production levels were stable. Since 2008 milk production in China has only increased from 37m tonnes to 38m tonnes from 2008 to 2014.

However, the number of herds with more than 100 cows has grown rapidly in that time, Shengli said, as the number of farmers with small herds (five-10 cows) has reduced.

Since 2008 the number of herds of over 100 cows was 19.5% and in 2014 this grew to 45% of all dairy herds.

However, more than half the farms in China are still milking five to 10 cows by hand.

But, a drive to improve the quality of milk products, he said, means that the entire dairy chain is modernising with a focus on quality.

“We are encouraging dairy farmers to extend the dairy chain. Modern Dairy has started a whole industry chain development model from farmer right through processing.

“If you produce an unsafe product and the media reports it you go bankrupt.”

“Food security is heaven”, he said and it is the main concern when importing milk powder.

Chinese Agricultural Imports

New Zealand supplies 78% of milk powder, while the EU supplies 8% of China’s imports.

Nearly half of the heifers imported into China come from Australia.

China imports significant amounts of alfalfa (nearly 1m tonnes annually) with 96% coming from the US.

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