May 29, 2008

China's dairy sector to entice more producers
 

China's growing middle class will intensify the demand for dairy products, particularly milk, analysts said.

Carlo Caiani, from Australia's Caiani and Company, said China's demand for dairy products will increase incredibly in the next five to 20 years.

Underpinning this is the growth in GDP and per capita income. The middle class now is about 250 million, which will move to about 400 million to 500 million by 2010 and easily about 600 million by 2020, Caiani explained.

Middle-class earnings of about US$US5,000 per capita, will increase the consumers'ability to eat better, which will move dairy products, he added.

Michael Harvey, international analyst with Dairy Australia, noted that there has been strong economic growth in India and China, which is driving consumption.

Harvey pointed out that in China, urban dwellers eat 10 times more dairy products per capita than the rural population.

He expects that many food supply chains and restaurants being set up to cater for visitors to the Beijing Olympic Games to stimulate interest in dairy products.

Caiani says cheese consumption in China is moving strongly, at 50,000 tonnes total consumption. He added that only about 20 percent of Chinese agriculture is efficient, with 80 percent left to be desired.

Australia and New Zealand have been exporting live dairy cattle to China, but even though China has a lot to gain through improved productivity, it will not be able to expand agricultural production at the necessary rate, Caiani concluded.

China is currently in the top 15 for Australian dairy exports, worth more than US$80 million in 2006-07.