Chinese demand for Australian dairy heifers dissipates

Heifer sales to China used to be a golden opportunity. But experts say new markets are needed for the shine to return. Here’s why.

A variety of southeast Asian markets are key to reinvigorating the dairy heifer live export trade after a slump in Chinese demand, analysts say.

Singapore, Malaysia, Thailand, Indonesia, Vietnam and the Philippines all present opportunities for the dairy heifer export trade, Rabobank says, with a new report highlighting the potential dollars from market diversification.

Rabobank dairy analyst Michael Harvey said China was a lucrative heifer export market for Australian farmers throughout the 2010s as the Chinese sought to establish a domestic dairy industry.

However, the 2020-21 coronavirus period followed by an oversupply in domestic milk production has dampened Chinese demand for Australian cattle considerably.

“The growth journey of China’s milk supply – a key driver of increased heifer exports – is at a critical juncture,” Mr Harvey said.

“The industry is grappling with an oversupply of raw milk, leading to falling local milk prices and lower farm profitability.

“For Australian dairy farm businesses engaged in the live dairy heifer export sector, this era of sluggish trade may require a reconsideration of breeding programmes and strategic goals.”

Mr Harvey said demand for dairy produce was growing in markets such as Malaysia, Thailand and Indonesia.

He noted dairy self-sufficiency rates in southeast Asia range from as little as one per cent to 50 per cent — far lower than China.

Chinese demand for Australian heifers has weakened in the past two years. Picture: Zoe Phillips

Dairy Farmers Victoria president Mark Billing said Chinese demand for Australian dairy heifers had dropped off considerably in the past two years.

“There was a time when it was a strong revenue stream for some farmers. China couldn’t get enough Australian heifers but the economic picture has changed there,” Mr Billing said.

“That’s been the case for a range of industries. For a time, it was the political relationship between Australia and China but that seems to have resolved.

“China has become more self-sufficient with its dairy production. At the same time, the Chinese economy is weaker than it was in the 2010s, so naturally that demand for heifers has fallen as a result.”

Based on Rabobank’s research modelling, southeast Asia’s combined import deficit totalled more than 10 billion litres of liquid milk equivalent in 2023.

“More recently there has been a renewed focus on local herd expansion and milk supply growth – through private and public investment – across some Southeast Asian economies to specifically address supply chain and milk price risks,” Mr Harvey said.

“This initiative secures a small but steady flow of live dairy heifer exports into the region.”