China’s dairy sector, which has been under intense margin pressure due to overcapacity, subdued demand, and falling milk prices, is expected to take at least one more year to recover, according to market experts. The sector, which previously saw rapid expansion, especially post-pandemic, now finds itself in a correction phase. Many large farms are reporting losses on raw milk production due to oversupply and reduced retail demand.
In 2024, raw milk prices in China declined to multi-year lows, prompting consolidation among smaller players and renewed focus on cost-efficiency, herd optimization, and premium product differentiation. Though consumer interest in functional dairy products remains strong (e.g., probiotics, high-protein milk), overall volume growth has been stagnant. Export prospects are limited due to domestic saturation, and foreign imports—particularly from New Zealand and EU—continue to be strong competitors.
The Ministry of Agriculture has acknowledged structural imbalances and has hinted at support measures including targeted subsidies, inventory management tools, and potential supply-side regulation to ensure sustainable recovery.
Industry Insight:
China’s correction offers Indian and global exporters a short-term window to fill quality gaps, but sustained presence will depend on value innovation and strategic differentiation. Domestic players in India should watch China’s recovery model to preempt similar cycles in oversupplied segments.
Source : Dairynews7x7 July 14th 2025 Read it here