News Dairy
Chinese government wants to control milk production
China wants to gain more control over milk production now that the country is faced with quite large surpluses. The country has been taking regulatory measures for years for the pig population, and now the dairy industry must also face it after a rapid production growth in recent months.
This week, the Chinese Ministry of Agriculture announced that the country is considering production-limiting measures in the dairy and cattle farming sectors. The reason for this is the persistent imbalance in the markets. Due to the cooling economy, the consumption of animal proteins such as milk and meat is under pressure. This is happening while production has increased significantly in recent years.
Significant increase in milk
According to Chinese statistics, milk production increased by 6.7% last year to 41.97 million tons, following a rapid growth in previous years. In the first half of this year, milk production increased by 3.4%. However, the growth is slowing down this year. In the second quarter, there was a growth of just under 2%, while an increase of 4.5% was forecasted.
In general, the oversupply in China has grown to 2 million tons. This volume is mainly converted into powder. Insiders from the Chinese dairy industry indicate that 25% of the total milk production in the country is dried into milk powder. This is more or less necessary because drying milk is a loss-making activity. The milk prices are also affected by this and have dropped by over 10% in the first half of this year, causing dairy farmers to no longer break even.
Reducing livestock
China aims to reduce the milk surplus by motivating dairy farmers to downsize their dairy herds. Old and low-productive cows should be culled. Furthermore, production in the future should be better aligned with the market. By culling cows, China is also exacerbating the surplus of beef, although this is temporary.
