October 17, 2013

China's corporate dairy farming on the rise

A Rabobank report says China's dairy industry is undergoing a great restructuring, as traditional small farmers depart to make way for large-scale commercial dairying operations.

The report also says the rapid changes taking place in China will have an impact on its demand for imports.

Co-author Hayley Moynihan says the restructuring is limiting China's domestic milk flow. She says as the supply chain restructures, it is put under pressure in terms of its ability to increase the volume of quality raw milk supplies.

The Chinese Government has taken significant action to improve milk quality since the melamine crisis in 2008 which meant more regulation in the system and certainly higher expectations for milk quality, Moynihan says.

She says high beef prices have also made it attractive to leave the dairy industry and the biggest growth has been in very large scale farms with several thousand cows or more.

The report also tells New Zealand farmers that China has challenges in producing high quality raw milk, and that developing farms in China is not easy. She explained that the cost of raw milk in China is relatively expensive on a global scale and it also means that the demand for imports from China is likely to continue to grow for some time.