China is “awash” with unwanted milk as falling birth rates and cost-conscious consumers reduce demand, reports Reuters. At the same time, dairy farms have expanded in recent years. China’s milk surplus highlights the unintended consequences of Beijing’s food security efforts to boost the dairy sector by encouraging consumption and expanding production.
The sluggish economy, which is weakening demand for higher-priced foods such as cheese, cream and butter, and an ageing population have led to China’s milk consumption falling from 14.4 kg per capita in 2021 to 12.4 kg in 2022, the latest year for which data is available from China’s National Bureau of Statistics. At the same time, milk production in China increased from 30.39m tons in 2017 to almost 42m tons last year, exceeding Beijing’s 2025 target of 41m tons.
Chinese milk prices have fallen below the average cost of production of around 3.8 yuan ($0.5352) per kg since 2022, prompting many loss-making farms to close and others to downsize their herds. Modern Dairy, one of China’s largest dairies, reported a halving of its dairy herd in the first half of this year and also posted a net loss of 207 million yuan ($29.07m).
