Challenges for the Revitalization of China’s Dairy Industry and Dairy Consumption Trend

On the 11^th China Dairy Conference held on Oct. 11 in Shijiazhuang, deputy secretary general of Dairy Association of China (DAC) Zhang Zhishan delivered a keynote speech regarding “Development and Prospect of China’s Dairy Industry”. He pointed that there were three major challenges for domestic dairy revitalization:

1. Milk supply is still the weakest section in the whole industrial chain and milk self-sufficiency rate has dropped to less than 70%. Data shows that the amount of small-and-medium-sized dairy farms decreased from 22 thousands in 2014 to 6 thousands in 2019 ^[1].

2. The development of China’s dairy industry heavily relies on overseas supply, including the feed, cow, raw milk, final products, equipment etc. In this case, it is easily affected by the international trade environment.    

3. China has insufficient dairy consumption cultivation and the consumption structure needs optimization. Currently the consumption of liquid milk (UHT) still accounts for the majority and the development of pasteurized milk and cheese is comparatively weak. Additionally, the authoritative promotion of dairy consumption is still insufficient and the daily milk consumption per capita in China (less than 100g/day/person) is much lower than the global level (300g/day/person).

According to dairy industry development roadmap unveiled by the State Council in June 2018, China will promote the revitalization of its dairy industry including the whole industrial chain, from raw milk to final products. The raw milk self-sufficiency rate is targeted to be over 70% by the end of 2020, and the overall revitalization will be achieved by 2025. At present, 31 provinces across China has unveiled related local documents or working program to realize this goal. In addition, Hebei, Inner Mongolia and Heilongjiang have developed the implementation plan of “Tens of Millions Tons of Milk Project”. Zhang Zhishan said the output of milk kept growing and the increment was expected to hit 2 million tons this year.

During National People's Congress and the Chinese Political Consultative Conference (NPC&CPPCC) 2020, NPC members from dairy industry also stated that promotion of dairy consumption in China was still insufficient and they suggested it should be supported by government legislation and national strategies (please read NPC Deputies Earmark Increased Dairy Consumption as Key National Target for more details).

Consumption trend

According to the data unveiled by Dairy Association of China, as of 2025 the milk consumption per capita will reach 40.88 kg and the consumption amount will hit 58.3 million tons.

Data source: food and nutrition development research institution subordinated to Ministry of Agricultural and Rural Affairs

In 2019, cheese and butter account for the minority of the overall dairy consumption. However, considering the annual growth rate of cheese (19.7%) and butter (16.9%) from 2000 to 2019, Chen Guangyan, deputy director of special committee on dairy nutrition and consumption, anticipated that there would be a rapid growth for the cheese and butter market in the next 15 years. However, the market infant formula milk powder may drop by 30% as of 2035 due to the decrease of birth rate.

Prediction on China’s Dairy Consumption Structure 2019-2035

Data source: food and nutrition development research institution subordinated to Ministry of Agricultural and Rural Affairs