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Chinese Demand Lead to Dairy Sector Growth in 2018

The huge demand for dairy commodities in Chinese market has reached nearly 3.3 billion pounds this year. China's imports of dairy products in 2013/14 also reached this figure, while proved to be an overestimation of market demand by Chinese buyers.

In the decade before the import bubble, the compound annual growth rate of Chinese demand for dairy commodities was about 12 % a year. Imports soared by 778 million pounds during the period of the bubble, then dropped by 732 million pounds after the bubble burst.

The growth of Chinese demand for dairy products is still around 12 % this year, which is a healthy development trend. It is in line with the national conditions of China's population growth, continuous urbanization and the overall improvement of national income.

Faced with consumer demand for high quality dairy products, the domestic dairy sector is maturing and the industry is moving from small farms to large - scale production base to meet demand. However, given access to severe grassland degradation and insufficient scientific reserve in grazing. China will continue need to rely on imports to meet demand. And two initiatives of China this year have also contributed to the development of dairy imports. In June, the United States and China signed a memorandum of understanding to address the problem of the backlog of U.S dairy suppliers' merchandise closed due to China's certification regulations implemented in 2014. In August, Chinese regulators granted a two-year grace period for the new certification of food imports. So far, China's dairy industry imports of commodities compared with the same period last year showed a growth trend, the development is bright, this is not another import bubble.