China drives global dairy markets up
China is having an ever bigger impact on global dairy prices, according to the National Dairy Council's annual review.
It shows that milk production levels in China are not able to keep up with the country's phenomenal rate of growth.
Since the melamine scandal rocked its dairy sector in 2008, China's milk production has dropped by more than 13pc, which is equivalent to the entire Irish milk output.
As a result, China has become the biggest importer of dairy products worldwide, hoovering up a seventh of globally traded dairy products. This demand for imported product is expected to continue for several reasons. China's economy continues to grow at rates close to 10pc a year.
In addition to the extra disposable income that this creates, China's population also continues to grow. Not only is it growing in number, but it is also growing in terms of the dairy consumption per person.
At the moment, the average Chinese person consumes just 20kg of dairy products a year. The Government is actively encouraging its citizens to drink more milk, but they have a long way to go before they hit the Food and Agriculture Organisation's (FAO) recommendation of 180kg/hd/yr.
It is with a view to this potential for growth that Chinese companies are now eyeing up dairy companies around the world. Shanghai-based Bright Dairy is apparently leading a six-bidder race for a 50pc stake in yoghurt giant Yoplait.
At the same time, the Chinese beverage company Wahaha is reported to be interested in acquiring Japanese dairy Megmilk. If both are successful it could mark a new era in the expansion of the China dairy industry, according to Bord Bia's Asia Manager, Breiffini Kennedy.