China Processors Value Imported Over Domestic Milk
Even though China has gone to great lengths to build up domestic milk production, dairy imports are on the rise. According to the Dairy Association of China (DAC), China imported 52,825 tons of milk in July of this year, a 35% increase over July 2015.
Even though cheaper hay imports have helped drop prices for domestic milk, those prices are still much higher than foreign product—as much as 40% higher than U.S. milk, according to Shanghai-based analyst Laurel Gu.
“This explains why Chinese dairy companies continue to purchase more imported dairy products, especially liquid milk and baby formula,” Gu says. “The imported products are not only cheaper but also perceived by consumers to be of better quality and safer to use.”
This increase in imports follows trends by Chinese private industry to establish relationships with foreign dairy suppliers. Last summer China’s New Hope Group established an alliance with Moxey Farms and Freedom Foods to create Australian Fresh Milk Holdings. According to Liu Yonghao, chairman of New Hope Group, the partners plan to build the first 10,000-head dairy in Australia, followed by two more over the next 10 years.
Liu said at the time of the announcement that the alliance was about improving food quality and safety in China.