China is one of the world's largest markets for milk products and the third largest milk producer in the world.
Last year, China produced a total of 34 million tonnes of milk, but only 70 percent of its domestic demand. Considering the increase in per capita disposable income of Chinese in the future, the demand for milk products in China will also continue to grow. Therefore, China's milk production capacity is facing a relatively large gap.
<h1 class="pgc-h-arrow-right" data-track="3" > China's fast-growing milk market</h1>
China is the fastest growing milk market in the world, with annual per capita milk intake in China at just 6.8 litres, compared to 50 litres in the United States, according to Euromonitor International.
As China's future per capita income increases, the potential of the milk market is enormous. The data shows that China's demand for low-temperature milk climbed 21% in the first 11 months of 2020, and the demand for ambient milk increased by 10.9%. In addition, the consumption of cheese and other milk-based foods is also increasing rapidly.
However, china's current production is unable to meet the rapidly growing demand, resulting in high milk and dairy prices. The current price of fresh milk in China is about $2 per liter, about twice the price in the UK and the US.
Domestic production is insufficient, and can only rely on imports. According to Chinese customs data, in 2020, China imported a total of 3.2812 million tons of various dairy products, an increase of 10.4% year-on-year, and imports of 11.706 billion US dollars, an increase of 5.2% year-on-year, equivalent to 18.75 million tons of fresh milk, an increase of 8.3% year-on-year.
<h1 class="pgc-h-arrow-right" data-track="8" > expanding the supply of milk faced with the dilemma of insufficient cows, and the West stuck China's neck on the issue of breeding cattle</h1>
To expand milk production, new and expanded pastures must be built. But expanding the farm will require a large number of cows. This is a major challenge for many milk companies in China.
Driven by rising raw milk prices and spurred by government subsidies, China planned more than 200 new ranch projects last year. There are more than 150 dairy farms that need to raise more than 10,000 cows, adding a total of about 2.5 million cows in the next few years, about half of the current number of dairy cows in China.
China's dairy cows rely on their own breeding and imports.
In Chinese history, there was no special dairy breed of dairy cows, mainly breeds used for service or combined with meat. After the founding of New China, the introduction of Holstein cattle and local cattle hybridization, and then bred China's own dairy cattle breed - China Herstein cattle, in the current China raised nearly 10.44 million dairy cows, more than 85% of the Chinese Holstein cattle. However, at present, there is still a big gap between China's dairy cow breeding technology and the international level.
It is estimated that about 500,000 new cows will be born in China's domestic cattle over the next two years, which will only meet one-fifth of the demand for dairy cows, and the rest will be fully dependent on imports, mainly from Australia and New Zealand. China imported nearly 200,000 heifers last year and could double to 400,000 this year.
But New Zealand's decision in April to suspend live cattle exports for the next two years put pressure on China's dairy cattle imports. So China may need to import more cows from Australia. China's dairy cattle importers also include Chile and Paraguay, but South America's long transit times and low milk production are not China's preferred choice.
Therefore, in the future, China may need to strengthen imports from Brazil, the United States and Europe, and the Sino-US trade negotiations promised to negotiate the import of breeding cattle, but there is no clear progress at present.
In fact, Western countries tend to restrict the import of China's dairy cattle breeding cattle, this is because they do not want to lose the Chinese market, China's milk market is a cornucopia of many foreign dairy powers, because China's dairy industry is not strong overall competitiveness, the technical level is not high, the breeding ability is backward, and there are frequent credibility problems.
Therefore, on the issue of breeding cattle imports, it is often stuck in China's neck, that is, it hopes to continue to occupy China's high-profit and fast-growing milk market, especially the high-end milk market.