China's milk hunger - China's milk production February 11, 2008

ARTICLE
China's milk hunger - China's milk production
Lior Yaron
Published: February 11, 2008
The Chinese dairy industry is expanding very rapidly to meet the demands of the rapidly changing dietary requirements of its huge population.
Local production will continue to increase but not at the same pace as demand, so import of milk products will continue.
The main limiting factors in Chinese milk production are: industry chain remains long and complicated, lack of experience and technology, land and climate limitations (central and south of China).
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Introduction
There are about 1.3 billion people in China, 745 million in the countryside and 555 million in the cities. The standard of life is increasing year by year, trying to reach that of the western world. The Chinese government considers milk to be an important part of the young person’s diet, and this, combined with the increasing western influence, is bringing a 10% yearly increase in dairy production – albeit from a relatively low base. Dairy production in China is changing rapidly and it will continue to do so in the near future. Milk production continues to grow rapidly in response to domestic demand, mainly in the urban sector.
Milk consumption
Twenty years ago China was not among the countries that were mentioned when we talked about milk consumption or production. The reasons for that were no tradition of milk products in the diet, that it it was an expensive product and the local people had low incomes, and lack of cooling facilities in the marketing chain. However in the last few years it has all changed dramatically. The urban population is growing rapidly, urban people have higher incomes which will be spent on high value food like milk. Government support for school milk and changing consumption habits. The average milk consumption in Beijing is about 46.2 kg per capita; even if only in the big cities people will reach this average, an additional 16 million tones of milk will be needed, equivalent to the total current New Zealand milk production (source: IFCN).
Milk production
There are today about 14 million dairy cows in China producing about 34 MMT of milk. The growth rate in cows and production is about 10% to 15% per year which comes mainly from increasing the number of cows. China is still importing a lot of dairy products mainly from the US, EU, Australia and New Zealand. The main regions for milk production are the North East, Central North and North West of China while in the meantime the main consumption areas are in the east and the south of China.
There are three different units of production:
1. Small private units – one to ten cow farm units are very common (60% of the cows) but at the same time there are also 50 - 100 cow units in this sector. The logistics problems with such small units are being resolved by a unique solution in China: a) Village Milk Centre (VMC) – in the middle of the village there is a milking centre and each farmer brings his cows to be milked there by a professional milkman.b) Hotel farm – all the farmers in one village bring their cows to one big dairy farm. They are shareholders in this operation but not working in it.
2. State owned farm – typically with 800 to 2000 cows. They normally require advanced equipment. They represent about 8% of the dairy cows.
3. Large dairy farms – owned by large dairies –typically with 1,000 to 10,000 cows. They normally require advanced equipment and they represent about 3% of the dairy cows.
The main challenges that the dairy industry will have in the near future are:
1. Milk quality – since the demand is much higher than supply the quality issue hasn’t yet come down to the farm level. Most of the dairy farmers are backyard farmers with other farming business and dairy is only one of them. Most of those farmers are new to the business with low levels of understanding of the dairy business; especially what milk quality is all about, cow comfort and nutrition of dairy cows.
2. Feeding cows – most of the know how about it came from mono gastric animals like pigs and chickens, there is lack of understanding of the importance of forage and forage quality in ruminants nutrition, and the farm structure is such that it is very difficult to get enough forage close to big cities. The increases in feed prices are creating big debates regarding crop production compared to milk production.
3. Support units for the farm and farmers: right now it’s very difficult to find any support units which can solve problems at the farm level: no extension service, herd book system, farmer association, dairy cattle breeder association, milk quality and mastitis control laboratory, or feed and forage laboratory.
Summary
The Chinese dairy industry is expanding very rapidly to meet the demands of the rapidly changing dietary requirements of its huge population.
Local production will continue to increase but not at the same pace as demand, so import of milk products will continue.
The main limiting factors in Chinese milk production are: industry chain remains long and complicated, lack of experience and technology, land and climate limitations (central and south of China).
This article was presented at the International Dairy Farmers' Congress 2008 in Berlin