16 Oct 2013

Chinese dairy demand to continue

6:52 am on 16 October 2013

Chinese demand for imported dairy products will continue to increase for the next few years at least, a report says.

But the Rabobank report also warns New Zealand is also going to be facing a lot more competition in its biggest dairy market.

Co-author Hayley Moynihan says the Chinese domestic dairy industry is rapidly evolving, with small-scale, backyard farmers making way for large corporate farms. Despite that, the Chinese dairy industry still won't be able to meet the demand.

"The growth in large-scale farms will start to outweigh the contraction in small-scale farms over the next two to three years and provide positive net milk supply growth to China," Ms Moynihan says.

"But we don't expect that China will become self-sufficient in its milk production in the foreseeable future, and there will always be a reliance on imports, at least for a small percentage of their demand."

However, it will no longer be able to rely on one dominant supplier, which New Zealand has been, because New Zealand will not be able to meet its demand, she says.

It is therefore likely Chinese buyers will diversify their import sourcing, which will mean more competition for New Zealand.