Archive: Chinese dairy demand growth experiencing short term slowdown

Published 22 January 15

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Predictions for long term demand growth for dairy products in China remain positive, driving up import demand in the medium to long term. According to the World Bank, Chinese self-sufficiency in dairy products is predicted to fall from 86% in 2012 to 76% by 2030.

At the moment however, it appears that Chinese demand isn’t growing at the speed that had previously been expected. As a result it is taking longer than predicted to work through the accumulation of stocks which occurred at the beginning of the year. According to USDA data, Chinese imports of WMP and SMP are expected to fall by 5.7% in 2015.

A large proportion of dairy products imported into China are used for infant formula. The relaxation of the one-child policy in 2013 was widely predicted to create a ‘baby boom’ which would have increased demand for imported milk powder. So far, fewer Chinese couples have applied to have a second child than originally expected.

In addition, growth in the Chinese economy slowed to a 24 year low in the last quarter of 2014. While still reporting growth of over 7% year on year, this slowing in the economy may have temporarily dampened demand for dairy products by Chinese consumers.