During December China imported more than 84,000 tonnes of whole milk powder (WMP), nearly twice as much as the same month the previous year. In 2013 China brought nearly 620,000 tonnes of milk powder, a 53% increase on 2012. New Zealand supplied 91% of the milk powder imported by China.
Demand for imported milk powder rocketed up in the final quarter of 2014. The strong demand is due to a slow down in domestic milk production in China combined with continual growth in demand for dairy products.
This year some parts of China have had to cope with adverse weather conditions and outbreaks of disease such as Foot & Mouth. These factors combined with high prices for beef cattle resulted in a reduction in the size of the national dairy herd.
Small scale farmers are typically paid a lower price for their milk than the larger scale farms are. The relatively low milk prices combined with high feed prices has resulted in some peasant farmers selling their cattle and joining the population drift to the major urban centres.
New Zealand remains the main supplier of WMP to China but has lost market share. During Q3 2013 China, New Zealand did not have sufficient product available to meet the volumes required by China. Stocks in NZ ran very low during the southern hemisphere winter due to a poor end to the 2012/13 NZ milk production season. During Q3 2013 NZ's supplied just 80% of the WMP imported by China but this figure did rebound to 87% in the final quarter of the year. China sourced greater volumes of milk powder from Europe and Australia this year than previously.
China's imports of skim milk powder totalled just over 235,000 tonnes in 2013. This was a 40% increase on 2012. NZ supplied just over half of the SMP imported by China last year, the United States supplied about 23%, 16% was imported from Europe and Australia supplied less than 6%. Demand for SMP has been very strong since the middle of 2013. During both Q3 and Q4 2013 import volumes more than doubled from the corresponding time periods in 2012.
