January 26, 2015

China imports of whole milk powder to decline 12% in 2015

Several factors including a slowdown in GDP [gross domestic product) growth and the unsatisfactory result from the easing of the one-child policy, which is supposed to fuel import demand, have contributed to China's sluggish imports of WMP, or whole milk powder, which are expected to decline by 12% this year based on a report by the US Department of Agriculture (USDA).

The USDA in its latest outlook for dairy markets in 2015 cited China's GDP growth that is expected to slow from 7.4% in 2014 to 6.5% in 2015 as partly responsible for the sluggish import growth outlook for WMP.

Also, it said that a demographic boom expected from the relaxation of the one-child policy has so far not materialized.

The USDA said dairy prices would be under pressure this year, adding farmers would face reduced margins. Milk production among major exporters is expected to slow, expanding by only 1%.

Dairy research firm DairyCo said China's relaxation of its one-child policy in 2013 was meant to create a "baby boom," which would have increased demand for milk powder. A large proportion of dairy products imported into China are used for infant formula.

However, it noted that fewer Chinese couples than originally expected have applied to have a second child.

Nevertheless, DairyCo said that the demand growth for dairy products in China remain positive in the long term to subsequently drive up import demand.