Chinese consumption of dairy imports falls in 2023

China’s appetite for Australian dairy has been a multimillion-dollar money spinner, but times are changing in the near north.

Chinese consumption of imported dairy dropped by 12 per cent in 2023, new figures have confirmed, as the economic powerhouse loses lustre.

Figures compiled by the Data Trade Monitor show Chinese purchasing power of imported dairy now sits at around 2019 levels, following a surge in demand during the coronavirus years of 2020 and 2021.

Rabobank industry analyst Michael Harvey noted Australia’s dairy exports “fell of a cliff in 2023”, not only to China but more broadly.

“The calendar year of 2023 represented a big change for Australian dairy. Export volumes were down double digits across most products,” Mr Harvey said.

“The biggest declines were liquid milk, which was down 41 per cent year-on-year.

“Butter was the biggest drop, down a massive 52 per cent. There are cheaper sources out there, as has been seen with the influx of New Zealand butter into Australian retail.”

The most recent available Dairy Australia figures show Greater China was Australian dairy’s biggest customer for the 2021-22 financial year, with 303,397 tonnes exported during the 12-month period.

United Dairyfarmers of Victoria president Bernie Free said weakening Chinese demand was a diminished factor in farmgate pricing considerations come mid-year.

“Australia used to have all its eggs in one basket with China up until a few years ago – not just dairy, all types of agriculture,” he said.

“It’s not the same these days. You’ve got the mandatory code of conduct now, you’ve got a shrinking milk pool here in Australia.”

Baby milk powder is sold in a supermarket in Beijing, China, on Wednesday, Aug. 19, 2009. Photographer: Adam Dean/Bloomberg News

Mr Free said many farmers approached Chinese Government figures with some scepticism, given the trade dramas between Beijing and Canberra over the past four years.

He noted the Global Dairy Trade index had lifted at every fortnightly trading session since Christmas 2023.

“Trade figures coming out from China, you have to approach with caution,” he said.

“China isn’t the be-all and end-all for Australian dairy farmers and you only have to look at the GDT and how it’s lifted every fortnight this year so far.”