Chinese Market For Dairy Ingredients Grows

ASIA - Asia is by far the fastest growing region within the global food sector, according to Michael Hussey, Food and Beverages Division, Bord Bia – the Irish Food Board.

17 October 2011

2 minute read

Accounting for around 30 per cent of the world’s population, it is also home to one of the fastest and challenging dairy markets. Economies within the region vary from a per capita GDP of $200 to $30,000.

The range of dairy ingredient usage is just as wide.

China and India are the biggest markets for both whole and skimmed milk powders. Producers in both countries have been increasing production to cater for the increase in local demand.

China itself is a major producer of both skimmed and whole milk powder and produces more than two thirds of WMP/SMP in the entire region.

However, due to food safety fears as a result of the melamine scandal a number of years ago, imported product is seen as safer than Chinese products.

Imports of WMP from Fonterra of New Zealand peaked in May 2011 at 60,000 tonnes and have since fallen back to around 12,000 tonnes, reflecting a build up of stocks, which are reported to be now falling again. The trend in imports since 2009, particularly WMP, has been one of strong growth.

Imports from the other major supplier, Australia, also followed the same pattern although they are running at about 10 per cent of the New Zealand level.

July and August saw the average Fonterra auction price fall towards US$3,400/tonne whilst China’s average import price of New Zealand WMP was around $4,000.

Import demand is expected to improve towards the end of the year as Chinese buyers are currently holding back in the hope of softer prices.

According to Fonterra’s annual results published, China accounted for nine per cent of the company’s $15.52bn revenue, while the rest of Asia accounted for 29 per cent of sales.

The report also indicated that Asian markets have remained very strong with double digit sales growth in Sri Lanka, Middle East, Malaysia, Thailand, Hong Kong and Taiwan. While New Zealand has a preferential tariff agreement with China there are opportunities in the region for Irish dairy suppliers of both standard and specialised ingredients.