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China Dairy Market Review & Outlook Proposal 2010-2011
Beijing Orient Agribusiness Consultant Ltd, Feb 2011
This report presents a panoramic view of China’s dairy industry in 2010, including raw milk and dairy production, dairy products consumption, dairy products trade, raw milk and dairy products price trends, the running of China’s dairy industry, competition situation of China’s dairy market, operating performance, investment of dairy companies, the world dairy market trends, the production, consumption and trade of main dairy producing and trading countries, the impact of the world dairy market on China’s dairy industry, and predict of the development trend of China’s dairy industry in 2011.
Research Background
2010 was an unusual year for China's dairy market. The cost of dairy cattle forage, fuel power and labor are general on the increase which lead to higher raw milk prices. By the cost-effective point of view, China has become one of the countries having the highest raw milk prices in the world. An extravagant price of raw milk not only weakened the competitiveness of Chinese dairy industry in the international market, but also brought enormous cost pressure to the domestic dairy processing enterprises. Gross margin of the dairy industry is declining. According to the financial reports of listed companies, both corporate gross margin and sales profit have decreased in varying degrees. The melamine incident in 2008 and the world financial crisis led to global raw milk and dairy prices fell to a new low of recent years in 2009. In 2010, the global economy began recovery, consumer demand for milk and dairy products quickly picked up. Strong demand and short supply drove raw milk and dairy products prices to rise. Domestic raw milk and milk-based raw material prices remained high, processors began to seek for greater recourse in the international market. In 2010, the whole milk powder and skim milk powder China imported from New Zealand is expected to exceed 0.4 million MT, bringing a major impact on milk powder industry and even the entire dairy industry of China, which is facing tough market environment. The resurgence of the melamine incident in 2010 sounded the alarm to dairy quality and safety once again, directly impacting on the sustainable and healthy development of domestic market consumption and the industry. The Chinese government has increased efforts to regulate the industry and the industry significantly increased barriers to entry. In view of policies introduced of the year, the government support and preferential policies tilted for the scale farming; the needs of dairy products processing enterprises for controlled milk origin is further enhanced, enterprises entirely dependent on imports of foreign brands are facing unprecedented challenges, the unreasonable ''national treatment'' policy for foreign investment is cancelled, all these will enhance the competitiveness of domestic enterprises and foreign enterprises and ''the right to speak'' impact of foreign investments in high-end formula milk powder market will be affected.
In 2010, domestic and international market environment that China's dairy industry faces experienced major changes. The industry is reflecting and a growing number of dairy companies are rethinking of the survival and development ways, particularly major dairy companies are adjusting their corporate strategies to respond to new market and policy environment. In 2011, the Chinese dairy industry will face a more severe market environment, raw milk prices and dairy prices will continue to rise on the current high level. With the newly introduced policies implemented in 2011, a large number of dairy processing companies are expected to withdraw under the improved threshold for the industry. The industry concentration will increase.
This report presents a panoramic view of China’s dairy industry in 2010, including raw milk and dairy production, dairy products consumption, dairy products trade, raw milk and dairy products price trends, the running of China’s dairy industry, competition situation of China’s dairy market, operating performance, investment of dairy companies, the world dairy market trends, the production, consumption and trade of main dairy producing and trading countries, the impact of the world dairy market on China’s dairy industry, and predict of the development trend of China’s dairy industry in 2011.
This report is the result of collective wisdom of the dairy research group of BOABC. The senior dairy analysts of BOABC dairy research group are members of relevant government sectors and association think tank, maintaining a good relationship with relevant government departments and a good relationship with national key dairy companies, associated industries and enterprises. These resource advantages provide a unique and valuable professional support for the writing of the report, and ensure the data cited are accurate, authorized, scientific and forward-looking. BOABC believes that the report is an important reference for domestic and foreign investment companies, dairy companies, dairy ingredient suppliers, relevant equipment suppliers to make strategic decisions, and an important reference for industry associations, research institutions and other organizations.
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