The need would be 10-20% of demand this year, he predicted.
On a speaking tour around New Zealand, Chen said the gap between China’s domestic dairy production and consumption widened dramatically last year, from 5% to 20%.
NZ filled 90% of the increased import demand for milk powder.
“That means China and NZ have a mutual trade-concentration risk and some domestic processors are talking about diversifying their supply sources.
“But there aren’t many places to go for the quantities needed.”
Investment had accelerated into large-scale dairy farming but the incremental milk supply came at higher cost, he said.
High-quality milk powder cost US$7000 a tonne to produce in China and $5800 for lower quality, because of the costs of imported feedstuffs like alfalfa (lucerne) from the United States.
Dairy product demand had been curtailed by higher retail prices but was still strong for products like Fonterra’s Anchor UHT, which sold from NZ$4-$5 a litre.
The crackdown on the infant formula trade, domestic and imported, began with regulations set in April last year, Chen said.
Therefore the NZ authorities and exporters knew what was coming for a year before the recent May 1 deadline for plant registration.
To save face, the Chinese Government had to crack down on the “suitcase trade” of infant formula cans and the perception prices had risen too high, he said.
Almost all Chinese first-time mothers went back to work after their maternity leave and therefore toddlers were bottle fed, with stage three formulas pushed aggressively on claims of mental and physical development benefits, he said.
