Producers Get Ready to Milk a Thirsty Chinese Market

CHINA - With the Chinese economic boom making once unattainable products affordable, comes a desire to eat meat and drink milk. The force of growth in China is driving the global dairy industry forward, but the question is: who will get to reap the benefits of this change?
calendar icon 29 May 2008
clock icon 2 minute read

Michael Harvey is the international analyst with the industry service body, Dairy Australia. According to The Australian, he says Australia's milk production has fallen due to drought from a peak of 11.1 billion litres in 2001-02 to an anticipated 9.1 billion litres in 2007-08.

"We have less milk to export, but the world market is very short of products, so we are getting very good prices for the product that we do have," he says.

The two top dairy exporters are New Zealand and the EU and both have faced limitations, Harvey says. "There was a pretty poor season last year in Argentina, a drought in New Zealand this year, and the EU is capped by quotas still. You have all these major suppliers that haven't been able to grow milk supply. Only the US has been able to grow its milk production."

At the same time, Harvey says, there has been strong economic growth in India and China, "which is driving consumption. You also have the Middle East and emerging markets, which are demanding more dairy products". The key drivers of dairy demand are population growth, movement from rural to urban environments, income growth and the westernisation of diets, Harvey says.

"As consumers become more wealthy, they live in cities where there is cold storage and supply chains. They start to demand products like cheese and butter for pizzas and food service."

  • View The Australian story by clicking here.
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