Summary: 2024 saw China's dairy imports fall for three straight years, driven by eroded price edges, stronger domestic milk sources control, and shrinking demand. 2025 will see imports rebounding amid supply-demand recovery; expectations include rising imports, stable self-sufficiency, diverging prices, and high-end industrial development.
In 2024, China's dairy product import volume declined for the third consecutive year, with the largest drop in milk powder imports. The import volumes of fresh milk and yogurt both decreased by more than 10%.
There are three main reasons for this:
1.In May 2024, due to the oversupply of domestic raw milk, the price of domestic raw milk continued to decline. For the first time, the average price of imported bulk milk powder converted into raw milk exceeded the price of domestic raw milk. As a result, the price advantage of imported milk powder, fresh milk and other products disappeared, and domestic dairy enterprises shifted to purchasing cheaper domestic milk sources.
In the international market, major exporting countries such as New Zealand and the European Union were affected by rising feed costs and production capacity adjustments, and the prices of dairy products increased, further weakening China's motivation for imports.
2.Dairy enterprises have improved their control over milk sources by building their own pastures. From 2021 to 2023, China's domestic milk production increased from 34.40 million tons to 41.97 million tons (with a compound annual growth rate (CAGR) of over 6%), reducing the dependence on imported bulk milk powder.
At the same time, in 2024, due to losses (with a loss rate of 91.8%), social pastures accelerated the elimination of low-yield cows and the sale of replacement cows, resulting in a 42.0% decrease in the livestock inventory. However, the self-owned pastures of dairy enterprises maintained the basic stability of the total output through production capacity regulation, and the self-sufficiency capacity of domestic milk sources was enhanced.
3.From 2022 to 2024, China's apparent consumption of milk decreased from 61.50 million tons to 58.69 million tons, with a cumulative decrease of 4.6%. The contraction of terminal demand directly led to a decline in import volume.
At the import end, in 2024, New Zealand accounted for 42.0% of China's dairy product imports (38.7% in 2023), especially the import of bulk milk powder accounted for 82.0%. After the expiration of the special safeguard policy in the China-New Zealand Free Trade Agreement, the tariff advantage became prominent, replacing some imports from the European Union and the United States.
In the short term, the oversupply of domestic raw milk led to a sharp drop in prices, and imported dairy products lost their price competitiveness. The import demand shifted to the domestic market, directly pushing up the self-sufficiency rate.
In the long term, dairy enterprises have strengthened their control over the supply chain by building their own pastures, reducing their dependence on imported milk sources. At the same time, the withdrawal of social pastures has forced the industry concentration to increase, objectively improving the self-sufficiency capacity of domestic milk sources.
However, there are also risks in this situation.
The rebound of the self-sufficiency rate is the result of passive adjustment (relying on the contraction of imports rather than the expansion of demand). If imports rebound in 2025 due to a decline in international prices, or if domestic consumption continues to be weak, the self-sufficiency rate may face pressure again.
Combined with the current industry trends and policy orientations, the Chinese dairy product market in 2025 will exhibit the characteristics of "simultaneous rebound in imports and restoration of supply and demand, and deepening of structural adjustment".
The first point is the import volume.
Internationally, the milk source supply in New Zealand and the European Union has recovered, and the price of bulk milk powder is lower than that of domestic raw milk (after the price inversion in May 2024, the international price is likely to decline by 10%-15% in 2025).
Domestically, the decline rates of the demand for liquid milk and milk powder have narrowed, and the imports of processing raw materials such as cheese and whey have increased slightly due to the recovery of the catering industry.
Therefore, it is expected that the import volume of dairy products in 2025 will be between 2.85 million and 3.00 million tons (an increase of 3%-8% year-on-year), ending the three consecutive years of decline.
In terms of structure:
Bulk milk powder: The import proportion still exceeds 80%, but the growth rate will slow down (due to the release of production capacity of domestic self-owned pastures);
Fresh milk/yogurt: The import volume will continue to decline (due to high cold chain costs and the expansion of domestic low-temperature milk);
Cheese: The import volume will decline by 5%-10% (due to the improvement of domestic processing capacity, such as the construction of cheese factories by Miao Ke Lan Duo and Yili).
The second is the self-sufficiency rate.
The State Council has clearly defined that a self-sufficiency rate of more than 70% is the safety line. In 2025, the domestic production capacity will be supported through subsidies for large-scale pastures and adjustments of import tariffs (such as imposing a 10% tariff on dairy products from the United States).
With policy support, it is predicted that the self-sufficiency rate of dairy products in 2025 will be close to 70.9% in 2024.
The third is the price trend.
As the self-owned pastures of dairy enterprises take the initiative to reduce production capacity (eliminating 300,000 low-yield cows) and the 存栏数 of social pastures has dropped to a historical low, the contraction of supply, coupled with the stabilization of feed costs, the price of raw milk is likely to bottom out and rise, with an average annual price increasing by 5%-8% year-on-year.
As for liquid milk, due to fierce competition, the price increase will be limited.
High-end products such as organic milk and A2 milk will continue to maintain a premium status.
Imported milk powder brands will reduce prices for promotion, and domestic brands will maintain price stability through formula upgrades.
The fourth is the industrial trend.
From the plans of Yili and Mengniu to increase the livestock inventory of 200,000 dairy cows in Inner Mongolia and Hebei in 2025 and promote the joining of small and medium-sized pastures, it can be seen that dairy enterprises are accelerating the hierarchical management of "self-owned pastures + social pastures", and the proportion of self-owned pastures will increase to 60%, while social pastures will shift to the "contract farming" model (dairy enterprises provide technology/funds and lock in the purchase price).
Category upgrading: Probiotic yogurt, milk powder with lactoferrin, and GABA milk for sleep aid will become the main growth drivers, accounting for more than 40% of the new categories;
Localization: Regional dairy enterprises (such as Bright Dairy and New Hope) rely on low-temperature fresh milk (with a shelf life of within 7 days) to seize the markets in East China and Southwest China, and the market share will increase to 35%.
At the same time, Chinese dairy enterprises are also strengthening their overseas layouts. Mengniu has acquired an Australian milk powder enterprise, and Yili has expanded its milk powder factory in New Zealand to ensure the supply of high-end raw materials;
The pasture photovoltaic coverage rate of leading enterprises has reached 30%, and the degradability rate of packaging materials has increased to 15%.
In 2025, the Chinese dairy product industry will gradually emerge from the trough along the path of "policy support — production capacity clearance — demand restoration". The import volume will rebound slightly, but the self-sufficiency rate will still remain above the safety line. The industrial competition will shift from "scale expansion" to "value creation", and high-end, digital and green development will become the core growth poles.
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