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Are China's dairy prices on the slide?August 2014« back to listing

Are China's dairy prices on the slide?

This month in Dairy Products China News (DPCN) we cover a typical range of topics, here's just a few we've covered:

  • New entrants to China's retail dairy market from Europe and the US
  • Efforts by local businesses to reposition into new categories, raise expansion funds or extricate themselves from PR disasters
  • Government regulations impacting on the production sector
  • The impact of e-commerce

China is a country where we are used to figures going up almost as fast as the skyscrapers the country has become so fond of. It has been habitual to return from there with growth rates of 15-20-30% or more ringing in one's ears, in stark contrast to local expectations in Europe or the US. Even the slower GDP growth this year is still stellar by most international comparisons. 

The impact of falling prices

It is interesting, therefore, that this month we see two diverse but significant sets of dairy market numbers decreasing.

One has been the price of infant formulae being sold in the country's ever more important e-commerce sites - following the director of National Dairy Products Quality Monitoring and Inspection Center highlighting the reality that many foreign infant formulae retail in their home markets for a fraction of what they sell for in China. There are several factors behind this, but it's a change that will undoubtedly bring relief to local consumers.

Another change has been the recent slide in the country's farmgate milk price, while processors and traders sit on stocks. The market's fundamentals haven't altered, but as restructuring progresses apace, depending on how far they travel and how fast, both trends could have profound implications for international dairy trade and its key participants. 

To find out more about our monthly DPCN or to discuss the Chinese dairy market in general, please contact us