China wants to gain more control over milk production now that the country is confronted with quite large surpluses. The country has been taking regulatory measures for the pig herd for years and now dairy farming is also having to deal with it after rapid production growth in recent years.
The Chinese Ministry of Agriculture announced this week that the country is considering production-limiting measures in dairy and cattle farming. The reason for this is persistent imbalance in the markets. Due to the cooling economy, the consumption of animal proteins such as milk and meat is under pressure. While production has picked up sharply in recent years.
A lot more milk
According to Chinese statistics, milk production increased by 6,7% to 41,97 million tons last year, after rapid growth in previous years. In the first half of this year, milk production increased by 3,4%. However, growth is leveling off somewhat this year. In the second quarter there was an increase of just under 2%, while an increase of 4,5% had been forecast.
Overall, the oversupply in China has grown to 2 million tons. This volume is mainly powdered. Chinese dairy industry insiders indicate that 25% of the country's total milk production is dried into milk powder. This is more or less out of necessity, because drying milk is a loss-making activity. Milk prices are also affected by this and have fallen by more than 10% in the first half of this year, meaning that dairy farmers can no longer cover their costs.
Reduce herd size
China thinks it can reduce the milk surplus by motivating dairy farmers to reduce their dairy herds. Old and low-yielding cows should be culled. In addition, production must be better tailored to the market in the future. By culling cows, China is encouraging the beef surplus, even if temporarily.