• By The Financial District

CHINA SEEKS TO MILK THE MILK MARKET BUT THERE AREN’T ENOUGH COWS

China has come to crave milk. Demand that had been steadily growing has spiked further after doctors touted its health benefits amid the coronavirus pandemic and dairy firms across the country have embarked on a farm-building frenzy, Dominque Patton reported for Bloomberg News.

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But quenching that thirst will be problematic, not least because finding the millions more of cows needed for planned new and expanded farms will be challenging. China is the world's third-largest milk producer, but last year's 34 million tons of output only met about 70% of domestic needs.


Complicating matters are feed costs at multi-year highs, while land and water are also in short supply, making the country a costly place to produce milk.


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Spurred on by near record highs for raw milk prices and government subsidies, just over 200 new Chinese dairy farm projects were announced last year, according to consultancy Beijing Orient Dairy.


Its analysis shows that 60% of the new projects have set their sights on 10,000-plus cows and in total the plans call for some 2.5 million cows - roughly half of China's current milking herd - to be added in the coming years.


On the face of it, China's dairy market, worth some $62 billion in annual sales, is ripe for development. The government has heavily promoted milk and its benefits - in part to support the rural dairy industry - boosting consumption.


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Even so annual per capita intake is only 6.8 liters compared to 50 liters for the United States, according to Euromonitor International."


Average per capita consumption is still very low," Gao Lina, the CEO of China Modern Dairy Holdings Ltd. told Reuters.


"The potential is huge." She said Chinese people, especially children, have begun eating more cheese which will further inflate demand. A kilogram of cheese generally requires 10 kilograms of milk to make.



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