Milk overproduction in China

China’s dairy industry is currently struggling with a significant surplus, producing 42 million tons of milk amid falling demand. This is reported by DairyNews.today.

It is noted that this situation has arisen due to the country’s desire for food self-sufficiency. As a result, milk production has increased from 30.39 million tons in 2017 to almost 42 million tons in 2023, exceeding the 2025 target of 41 million tons. This increase has been supported by significant investment in farms and imports of high-yielding cows.

At the same time, demand for dairy products has not met expectations. Per capita consumption fell from 14.4 kg in 2021 to 12.4 kg in 2022, affected by a decline in the birth rate, an aging population and a weakening economy. These factors have reduced the market for infant formula and led to more cost-conscious consumer behavior, which has affected sales of more expensive dairy products such as cheese and butter.

The mismatch between supply and demand has led to a collapse in raw milk prices, which in 2022 fell below the average cost of production of 3.8 yuan per kg. This price drop has put pressure on domestic producers, and many small farms have faced financial losses, reduced livestock or closed down. One large Chinese dairy producer has reduced its livestock by half in a year, illustrating the widespread financial difficulties in the sector.

Against this backdrop, analysts note that China’s demand for imported goods such as liquid milk and milk powder could decrease, potentially affecting the dynamics of global dairy trade.

Tags: China