In early June, China Dairy Industry Association (CDIA) held its 29th annual meeting, where a large number of officials and professionals gathered. (Click for more information: Regulatory Insights from the 29th Annual Meeting of China Dairy Industry Association). Among all the insightful sessions, Kungang Song, Honorary President of China National Committee of International Dairy Federation (CNCIDF), brought a quite instructive and inspirational session for China's dairy industry.
In Song's session titled Dairy Industry Overview in 2022-Q1 2023 and Outlook for the Next Year, on behalf of CNCIDF, he not only shared a large amount of industry data and information regarding dairy production, import & export, and dairy quality, but also revealed the outlook and guidance to the future development of the industry, which would definitely have a significant impact in reshaping the Chinese dairy industry.
Eight Takeaways from Song's Outlook & Guidance to the Industry
1. Forming a more planned strategy for cow breeding
Dairy farming industry is encouraged and supported by the government. In addition to natural reproduction, China imports a certain number of dairy cows every year. From 2008 to 2021, a total of 2.03 million cows were imported. Currently, the Chinese dairy farming industry is developing planlessly and recklessly. Enterprises are suggested to improving their planning based on the prospects of expanding sales market. To maintain the healthy development of the dairy farming industry, it is recommended that the majority of dairy cows should be based on natural reproduction, with imports as a supplement, to ensure that the growth of raw milk matches the expansion of the market.
2. Building up new management concepts of cow breeding
In recent years, the business philosophy of dairy farmers in China has been centered around large-scale and super-large-scale operations, which rely on importing cows, grass, and feed, and investing heavily to pursue high production yields. This approach has resulted in high costs and low efficiency. To improve the situation, China should draw inspiration from the business philosophies and models of thriving dairy industries in Europe and Oceania, and develop moderately sized family farms that can supply feed locally to reduce farming costs and increase economic efficiency.
3. Working conscientiously on raw milk procurement
In 2023, the dairy consumption market is expected to pick up, leading to an increased demand for raw milk. However, the problem of surplus raw milk may still exist. Therefore, enterprises are recommended to take adequate measures to ensure the procurement of raw milk, fulfill business contracts, collect as much milk as possible to take social responsibility, and avoid wasting. In particular, it is of great importance to prevent milk dumping from happening.
4. Reshaping the production structure of milk powder, with more attention paid to adult formula
In 2021, infant formula accounted for half of the dairy products in China, followed by middle-aged and elderly formula, whole milk formula, children formula, sweetened formula, flavored formula, and maternal formula. Compared to 2018, there was a significant increase in the proportion of middle-aged and elderly formula and children formula, while infant formula and whole milk formula decreased. In addition to focusing on the development of complementary foods for infants and young children, the dairy industry should also prioritize the development of adult formula in the future, including middle-aged and elderly formula and maternal formula.
5. Expanding the category of specialty milk processing
In recent years, specialty milk has become a new growth point for China's dairy industry, with increasing production scale and expanding markets. However, the bottleneck effect has begun to emerge, which requires attention from relevant enterprises. It is necessary to vigorously expand product categories and increase the consumer market. Specifically:
(1) Goat milk: Develop liquid goat milk products, including sterilized, pasteurized, and fermented goat milk;
(2) Yak milk: Develop yak cheese, milk protein, and milk fat;
(3) Buffalo milk: Develop pure buffalo liquid milk and buffalo milk cheese;
(4) Camel milk: Develop pure camel liquid milk.
6. Emphasizing the development of cheese market
Since 2016, China's cheese production and consumption have grown rapidly, with cheese imports expanding yearly. Cheese has grown into a new sector of industry development bringing a hard-won new situation that the dairy industry should actively embrace. The development directions are as follows:
(1) Focus on developing cheese and reprocessed cheese products, especially adult flavors such as original, spicy, smoked, garlic, and scallion flavors in addition to children's flavors.
(2) Develop original cheese and choose globally popular varieties such as Cheddar, Gouda, Parmesan, and Mozzarella.
7. Highlighting the development of cream market
Dairy fat products have always been a niche product in China's dairy industry, with negligible production volumes. However, in recent years, with the development of coffee and tea drinks, Western-style pastries, and fast food, consumption of dairy fat products has grown rapidly, driving Chinese domestic production and imports. In response to the local demand, low-fat and high-fat cream should be the focus of dairy fat product development. To be specific:
(1) Cream for coffee, fruit toppings, desserts, and cereal breakfasts (10-18% fat content);
(2) Sweet (light) whipped cream for filling and stuffing in desserts, cakes, and bread (39-48% fat content).
8. Closely watching the development of plant-based milk market
Plant-based milk products refer to liquid and powdered products made from grains, beans, and nuts as the main raw materials, with or without added dairy, nutritional enhancers, and food additives. These products do not belong to the dairy category, but their appearance is in a "milky" state, such as oat, soy, and almond milk. These products do not contain lactose, but have the aroma of grains, beans or nuts, making them suitable for consumers who are lactose intolerant or not accustomed to the taste of cow's milk. Dairy enterprises are recommended to keep a close eye on the development of plant-based milk market.
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