'Self-sufficient in dairy is a major challenge for China'

Although Chinese milk production was quite stable for years, it grew significantly in 2020. The total volume of milk produced in China increased by about 3%. The recently announced 5-year plan explicitly mentions an expansion of self-sufficiency. The fact that dairy imports did not decline despite rising production is due to the sharp increase in milk consumption in the country. In China, the focus on health has increased due to the corona pandemic, which promotes dairy consumption. How sustainable is this trend and what are the Chinese government's plans to increase agricultural production?

Agricultural attaché Karel van Bommel outlines the most important points of interest. Van Bommel is part of the network that supports Dutch companies and entrepreneurs in the agricultural sector with their international ambitions. The 10-person agricultural team at the embassy in Beijing and the consulates general in Shanghai, Guangzhou and Chongqing also promotes the further sustainability of agriculture in third countries. 

What is the Chinese government's overarching vision for food and agriculture?
"China works with multi-year plans. A few months ago, the country introduced the fourteenth 5-year plan. It sets out the agricultural vision for the coming years. For agriculture, the area in the picture is mainly the area in the picture. The size of land available for agriculture must be at least the same In addition, they want to become more self-sufficient in pork and dairy. They also focus on, for example, plant breeding, but also breeding in livestock farming. This means that knowledge development will be higher on the agenda."

How should that degree of self-sufficiency grow?
"The point of attention is the infrastructure. This needs to be significantly improved. 400 agrologistics parks are planned across the country. These are intended for the storage and transit of agricultural commodities. These improvements should benefit the quality of the products, but also reduce loss that arises in the current supply chain. Furthermore, I think that when granting permits and allocating land for certain destinations, some priority may be given to agricultural companies. Land is collectively owned, so that must be arranged through lease constructions. And in addition, the aforementioned investments in knowledge development. Arable farming and livestock farming naturally starts with good genetics. China imports a lot in that area, but now also wants to take steps in this area itself. I also understand from my network that importing semen, for example, is becoming increasingly popular. becomes more difficult, such as import certificates, veterinary requirements, etc. However, this will take time to further develop Chinese livestock. There are opportunities for the Dutch business community, which we also support from the embassy."

What developments exactly do we see in the dairy sector?
"We notice that a lot of money is flowing in from outside the agricultural sector. Parties that are fully investing in large, well-managed locations. These may or may not be companies that belong to the processing industry. The industry invests in dairy farms to ensure the quality of the supply is geographically speaking, the government is also trying to prepare land for arable farming and livestock farming, especially on the edges of the Gobi Desert. However, the development of arable farming (grains and rice) probably has a slight priority for the government, because this is the basis is of the food supply. The government's goal to keep the number of hectares of arable land at least the same also underlines this."

What most limits the development of the sector?
"In my view, there are two major obstacles. The first is the feed supply. Many raw materials are already imported, at relatively high prices. The second challenge is the climate challenge. The government has set the goal that agriculture will have CO2060 emissions by 2. must be neutral. In the future, this will undoubtedly lead to costs that could slow down the development of the sector. Here too, the discussion will play out about how we can control the environmental impact with technical measures."

How is dairy consumption developing?
"In the wake of the corona pandemic, the consumption of fresh milk in particular has increased sharply. And despite the fact that the number of infections in China remains quite low, awareness of corona is still high and the population is taking the actions they consider important. eight. The increased consumption therefore does not seem to be a one-hit wonder."

Will population development still have an influence on this?
"There is now a significant aging of the Chinese population. This is partly because parents are leaving the one-child policy. But also the fact that people, just like in the West, are having children at an increasingly later age. It is therefore expected that the population growth is stabilizing. It is difficult to say whether the number of people is also decreasing. Life expectancy is still increasing. However, the number of births is decreasing significantly. It is mainly people outside the big cities, inland, who are having children. This can also influence consumption patterns. We see that consumers from rural areas are more likely to choose products from their own country, including baby food. This is of course also important for the export of Dutch baby food to China."

Will the ambition shown by China mean that dairy imports will disappear?
"It will be quite a challenge to become self-sufficient in dairy, especially if consumption continues to rise. I therefore expect that the country will continue to rely at least partly on the import of dairy products in the long term."