Cow's milk production in China in 2022 increased by 6.8% and amounted to 39.32 million tons. The growth of raw milk production in the country is explained by the active state support of the dairy industry, large-scale investments of dairy companies and imports from New Zealand and Australia of more than 1.3 million heads of high-quality cattle (about 80% of the dairy sector) in 2018-2022.
At the same time, against the background of a lockdown, an increase in domestic production of raw milk and a high level of stocks, Chinese imports of dairy products in 2022 showed a decrease of 18.9%. In the structure of China's dairy imports, the largest share is occupied by the supply of dry and drinking milk. Internally, the production of milk powder in China is not able to fully meet consumer demand, so about half of all milk powder consumed in the country is imported.
Most of the milk powder production capacity in China is concentrated in Heilongjiang Province. A significant part of the factories are also located in the provinces of Shaanxi, Hebei and Inner Mongolia.
In 2022, 1.1 million tons of milk powder were produced in China (including 24 thousand tons of skimmed milk powder and 1,050 thousand tons of whole milk powder), while consumption was about 2.1 million tons. It is worth noting that the average growth rate of consumption in 2018-2022 exceeded the growth rate of production — 3.5% per year versus 2.2%, respectively.
The level of self-sufficiency in powdered milk in China in 2022 was about 51%. In 2022, the consumption of milk powder in China decreased by 6.6%, including skimmed milk powder by 19.7% and whole milk powder by 3.3%. The main reasons for the decline in milk powder consumption in the country are long-term covid restrictions and, as a result, losses and a reduction in demand for these products in the bakery sector. In addition, the reduction in the consumption of powdered milk in the country was facilitated by a decrease in the consumption of infant formula (a decrease in the birth rate, government promotion of breastfeeding, stricter labeling and control of the production of these products).
Due to the processing of more seasonal surpluses of raw milk in 2023, China is expected to increase domestic production of whole milk powder by 7.1% compared to 2022. It is expected that the production of skimmed milk powder will remain stable at the level of 24-25 thousand tons.
In the structure of China's milk powder consumption in 2022, whole milk powder prevailed: its share was 83.0% (1.7 million tons) against 17.0% (358 thousand tons) of skimmed milk powder consumption. The average annual growth rate of catfish consumption for 2018-2022 was at the level of 4.6% per year, while the consumption of catfish grew by 3.3% annually.
China's Milk powder Imports
China imports almost half of all milk powder consumed. In 2022, imports amounted to slightly more than 1.0 million tons worth 4.43 billion US dollars. In 2022, there was a decrease in import volumes relative to 2021: by 18.8% (-240,0 thousand tons) in physical terms and by 3.6% (-165,3 million US dollars) in value. During 2018-2022, the import of milk powder on average increased annually by 6.6% by weight and by 16.2% by value.
The main share of China's milk powder imports in 2022 was whole milk powder, which accounted for 67.6% of imports. The share of skimmed milk powder was 32.4% of imports by weight and 30.4% by value.
The structure of Chinese imports of milk powder in 2018-2022 was dominated by the supply of products from New Zealand. Despite the decline in supplies in 2022, the country's annual share in the total volume of Chinese milk powder imports was at the level of about 70%. In 2022, New Zealand exported 738.7 thousand tons of products to China (121.0 thousand tons of skimmed milk powder and 617.7 thousand tons of whole milk powder). The second place in 2022 was taken by Australia with volumes of 89.5 thousand tons (8.6% of China's milk powder imports), of which 65.0 thousand. tons accounted for the supply of skimmed milk powder. The share of supplies from the USA, Uruguay and other countries was less than 4%.
The average import price per ton of whole milk powder in 2022 amounted to 4,402 US dollars, an increase of 15.9% compared to 2021. According to GACC data, in April 2023, the average import price of whole milk powder was $4,119 per ton of products, which is 4.9% lower than the price level in April 2022, the most expensive products were supplied from Australia ($9,050 per ton, which is 2 times higher than the average price) and the Netherlands (USD8,304 per ton, which is 88.6% higher). The lowest prices were shown by deliveries from Argentina — $ 3,786. USD per ton (14.0% lower than the average price), Uruguay — 3,875 USD (12.0% lower) and New Zealand — 4,166 (5.4% lower).
The average import price per ton of skimmed milk powder in 2022 amounted to $4,021, an increase of 25.0% relative to 2021. According to the GACC, in April 2023, the average import price of skimmed milk was $3,398 per ton of products, which is 4.3% lower than the price level in April 2022.
Among the main supplier countries, the most expensive products were imported from the Netherlands at a price of US$ 7,972 per ton, which is 98.2% higher than the average price. The cheapest products were purchased from the Republic of Belarus at a price of US$ 3,355 per ton (16.6% lower than the average price).
