China Cow Milk insights

Farmer Liu Bingyong used to make a tidy profit selling milk but is now leaking cash — hit by a dairy sector crisis that embodies several of China’s economic woes. Milk is not a traditional mainstay of Chinese diets, but the Chinese government has long pushed people to drink more, citing its health benefits. The country has expanded its dairy production capacity and imported vast numbers of cattle in recent years as Beijing pursues food self-sufficiency. However, chronically low consumption has left the market sloshing with unwanted milk — driving down prices and pushing farmers to the brink — while a baby bust threatens to cloud its future prospects. “The current state of China’s dairy industry has been long in the making,” said Liu, a veteran farmer in the eastern province of Shandong. “We always knew things were going to get worse if the industry didn’t adjust,” he said. A few years ago, Liu typically skimmed a profit of about 5,000 yuan (US$697) per day from his yield. Howeve

China is doing everything it can to reduce its import needs of milk and milk products. For now, however, it is dependent on imports.

As happened in 2024 across the globe, a slight increase in milk prices is expected, driven by complications in Chinese production, which will allow a balance between supply and demand for this product. According to a study by Rabobank, the upward trend in prices will remain in line with what 2024 is leaving. According to the report interpreted by the Argentine Dairy Chain Observatory (OCLA), slight increases in international prices are expected. “Global supply is having difficulty starting a new expansion cycle in most regions and even shows clear signs of exhaustion in China, which has been the main contributor to the growth of global production in the last three years,” said the financial entity that usually surveys the movements of this rural sector. Among the factors that will influence this equation, it was mentioned: “Additional regulations