China's milk imports vital to its dairy recovery
Due to last year's melamine-tainted milk scandal, China's milk powder imports increased 113 percent in the first quarter of 2009 as Chinese consumers turned to safer products and importers rushed to fill the gap in domestic supply.
It is now evident that Chinese imports are important in stabilising the dairy market in early 2009, according to the recently released Rabobank Dairy Quarterly.
During the period leading up to the commodity price boom and the melamine crisis, China and India accounted for about 50 percent of global dairy demand growth in volume terms. This shows the importance of the growth rate of Chinese dairy demand is for the global supply and demand balance, said Rabobank dairy analyst Mark Voorbergen.
Cindy Yang, a Rabobank analyst, said statistics showed that China's dairy industry has recovered following the melamine scandal with a growth rate of 12.04 percent from the fourth quarter of 2008 to the first quarter of 2009. In addition, the demand for liquid milk grew 15.64 percent during the same period.
Yang added that there were four main reasons behind the recovery in China's dairy sector.
Firstly, the central government has implemented several improved regulations such as passing the new Food Safety Law and other relevant regulations that are specific for China's dairy market. Secondly, there are now more investments by both the government and companies to secure the milk quality. Thirdly, the consumers' confidence in domestic dairy products is on the recovery path due toÂ production improvement and market promotion. Lastly, there is a huge potential for the future demand for dairy products.
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