Paul Niven provides an insider's view of China's dairy industry

By Paul Niven
January 16 2022 - 7:30pm
Paul Niven has worked in the dairy industry in China for more than six years.

Key points

  • China is about 65pc self-sufficient in milk production
  • In 2019-2020, China bought almost $1.2 billion of Australian dairy
  • Shedded systems in three main regions



WITH 1.4 billion people, China is in the top five dairy markets in the world- for volume and value. This is vast, considering per capita dairy consumption is around 15 per cent of what is in Australia. China is about 65pc self-sufficient in milk production, meaning it buys about half of all globally traded dairy products.

China is a fascinating country, with more than 5000 years of history and culture. Prior to the COVID-19 pandemic, more Australians had the opportunity to visit the "Middle Kingdom" to see and experience it for themselves.

For those of us in the dairy industry, we understand how important China is for our industry. In 2019-2020, China bought almost $1.2 billion of Australian dairy, representing 37pc of Australia's dairy exports.

China has a large dairy industry, which has really grown in the past 10 to 15 years. Australian's often ask me about the farms, cows and milk.

The farms

China has large-scale confinement dairy. It is modelled on the US system of freestalls, corn silage based total mixed ration (TMR) and sand bedding.

Generally, China has large-scale confinement dairy. It is modelled on the US system of freestalls, corn silage based total mixed ration (TMR) and sand bedding. Cows are milked three times per day, and in recent years, four-times-a-day milking has become more common.

Dairy farms are spread all across the country but are concentrated in three main regions: the north China plain, Dongbei (north-east) and the west. These areas all grow corn in the summer, as corn silage forms the basis of the TMR.

The north China plain stretches most of the way from Beijing to Shanghai. Most of the area is also considered to be in the Yellow River delta. The area has an elevation of under 200 metres, sandy loam soils and (depleting and increasing salinity) underground water reserves. The rainfall is around 550 millimetres per year (Jinan), with around 85pc falling in June, July and August (making it ideal for cropping corn). Summers are warm and wet (maximums around 35 degrees, overnight lows 15-20 degrees. Winters are cold- from December to February, usually below freezing, with overnight lows of -10, with two or three snowfalls per year.

In this region, barns are usually open, but may have curtains for young stock, which are used in the winter. Cow cooling is very important, with sprinklers and fans essential in the waiting area of the parlour and along the feed-face.

Generally, the Australian cattle are preferred, as they are larger and have higher yields.

- Paul Niven

The Dongbei (northeast) region sits between Mongolia, Russia and North Korea. This area has been a focus of Chinese development for a few hundred years, with many families relocating from Shandong and southern China three generations ago to farm the rich black soils and work in factories. Summers are mild, into the mid 20s, but winters are bitterly cold, daytime temperatures of -25 degrees. Generally the farming system is the same, but the barns can be fully sealed to keep animals warm in the winter.

Western China starts with Shanxi province and extends through Inner Mongolia, Ningxia, Gansu and Xinjiang. This area is elevated, with mild to hot summers, and bitterly cold winters. Building designs vary considerably - with many of the older designs closed, but newer buildings with roofs that open for cooling in the summer.

The cows

Per cow milk production in China sits around 8000-10,000 liquid kilograms per year.

Most of the original dairy cattle were black and whites imported from Australia and New Zealand. In recent years, cattle from South America have been imported. Generally, the Australian cattle are preferred, as they are larger and have higher yields.

New Zealand cows are well-liked, but although the imported cows were black and white, there is obviously Jersey genetics in some. There are a limited number of Jersey-only herds. Per cow milk production sits around 8000- 10,000 liquid kilograms per year.

Australian farmers often question me on this, but if we consider that these cows are fed ad lib TMR, walk less than 500m to be milked and milk for 305 days per lactation, its not surprising. There is a real focus on genetic improvement, with most farms using imported semen from the USA (and, in the past, Canada).}



The consumer market

China is diverse. More than half of the population live in rural and remote areas, with low salaries (less than $A800 per month).

At the other end of the scale, residents of tier 1 cities, such as Beijing, Shanghai and Guangzhou, are wealthy, driving Teslas, Mercedes and BMWs. Those who can afford it will buy premium and imported food products. Milk and dairy products are seen as nutrition and health products, not as a staple food as they are viewed in the west. Therefore, people are looking for safe, nutrition for themselves and their families.

Despite the relaxation of the one-child policy in 2016, and now the promotion of having a third child, birth rates continue to drop. There is a correlation with Chinese zodiac for a year and birth rates, with some years seen as more or less favourable. We are expecting to see more babies born in 2022 - the year of the Tiger - and may hit the 20 million mark. Yes, there are around 15 to 20 million babies born each year in China.}

Chinese dairy products

Like every market in the world, China has developed some dairy products. UHT sweetened drinking yoghurt is now a large category since it started around 2014. There is also the "superfresh" category - where milk is on the shelf within 24 hours of milking and is only on sale for 24 hours. In a country where cold supply chains are not fully reliable, the concept of super fresh is preferred.

The 'lollipop cheese' market has exploded in the past three years. I would describe this as sweetened, flavoured manufactured cheese, which parents see as a healthy (healthier) alternative to lollies. These and individual portion packs, usually 200/250 millilitre UHT milk with a straw, are consumed by millions of children daily as they travel in their prams.}



*Paul Niven leads Cows First (China), an independent dairy advisory business. He works across all parts of the dairy supply chain, from raw milk production to retail. Mr Niven has worked in the dairy industry in China for six-and-a-half years, and was the founding general manager of Pure Source Dairy Farms, a joint venture between Fonterra and Abbott (USA). He managed the establishment and operation of two large scale (4000 adult cows each) dairy farms and 2000 hectares of double-cropped irrigated land near Jinan, the capital of Shandong province. Before working in China, Mr Niven the business manager-dairy at Van Diemen's Land Company, when it was owned by the New Plymouth Council from New Zealand, with 25 farms and 20,000 milking cows.

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