Waikato Milking Systems is riding the same wave that is driving demand for NZ-sourced dairy cattle being live-shipped to China this year, the firms China sales manager David Morris says.
“After what has been a bit of a plateau in expansion the Chinese dairy sector appears to be off on another strong growth phase and it has been pushed harder by its government in the past few months.”
There has been a concerted effort by the Communist Party since the covid-19 epidemic to emphasise the health-giving properties of dairy. Consumption of both fresh milk and liquid yoghurt is encouraged.
Between 2008 and 2018 while raw milk production volumes were relatively stable there was a massive shift from small to large-scale dairy units.
The shift put Waikato Milking Systems as the number three rotary platform company in China, typically providing 60-80 bail rotary platforms.
The average dairy farm scale tripled over that time while farm numbers tumbled by 75%. Herds of more than 1000 cows now form 25% of the national total.
Farm production and raw milk processing have also become tightly integrated.
“It seems they are now pushing hard for more numbers and more yield per cow with private investors putting in funds up front then securing government loans to develop from there.”
The government has a goal to increase annual domestic production by 40% above 2018, pushing greater productivity on fewer, larger dairy farms.
But the national herd has fallen by 15% since 2008 and subsidies and incentives are needed to meet stricter environmental and health standards and keep the sector appealing to investors.
This next wave includes improved genetics, greater automation and precision crop-growing capabilities.
A renewed focus on genetics accounts for the interest in live dairy cattle from NZ and Australia, two of only five countrie China can import livestock from because of biosecurity risks.
Dairy cow numbers in China have stabilised at about 6.4 million over the past two years and efforts are on to increase per-cow productivity.
“They appear to appreciate the robustness of the Kiwi cows while Australian cows tend to have a higher volume,” Morris said.
Often these genetics are crossed with big US Holstein bloodlines in China to further boost milk volume capability, getting closer to US levels of per-cow production.
“Increasingly, our platforms are being used to milk cows four times a day. This is giving them about an extra 10% volume yield but does shorten the cow’s milking lifespan.”
Morris has been selling equipment into China for almost eight years and has noticed the latest wave of demand is also underscored by a need for dairy automation.
“It used to be they did not want that. They would simply put more people in to do the job but it is no longer as easy or as cheap to simply do that when so many have moved to work in the cities.”
But the newest wave of growth for dairy is coming out of the sheep and goat milking sectors.
Morris, with Waikato’s installation team and NZ technical support, is overseeing the final stages of construction of 11 goat platforms capable of milking 60,000 animals.
Three processing plants have been built to process the farms’ milk, with a capacity for milk from 200,000 goats a day.
NZ has about 90,000 goats in its milking herd.
Morris is also liaising with a client wanting to milk 50,000 sheep who has completed the processing plant and is about to build the farm platform.
As with cows, Chinese investors are also keen to ramp up the genetics in dairy goats and sheep and are prepared to pay a premium for them with imported dairy goats worth US$1600 a head.
“Our people are telling us there is an intense and competitive interest in livestock, with inquiries coming to NZ for goats as well.”
Two-thirds of sheep and goat milk is committed to high value infant formula production.
Morris said the new projects have opened an exciting opportunity for the company to secure ongoing business with Chinese clients, beyond simply building the platforms.
“Increasingly, with the goats in conjunction with our dealer we have moved to more of a project management role, completing the entire planning and execution of the project rather than just the construction of the dairy.”
With raw milk in China costing 45% more to produce than that from NZ the country has been working to try to lower feed costs.
Significant areas in northern China have been committed to growing vast areas of grain, often planted alongside biodegradable plastic that warms the ground, making earlier planting feasible.
Despite continued expansion domestically in dairy production, Morris assures NZ farmers there remains plenty of opportunity to continue exporting quality products there.
It is an observation supported by a 2018 PWC report showing increasing reliance on exports to fill the gap, despite the production gains.
“Productivity is growing but demand continues to exceed that growth,” Morris said.
