China is currently the most populous nation on Earth; the country is also the world’s largest dairy buyer. But not even China can drink enough milk to prevent the coming “global milk glut.”
Quartz reports that “global output of raw milk will outstrip production by 2 million tons (1.8 million tonnes, or 2 billion liters) a year for the next five years, enough to fill 800 Olympic swimming pools.”
Between 1982 and 2012, global milk production increased by more than 50% from 482 million to 754 million tons, according to the UN Food and Agriculture Organization.
Ok, so we know that milk production is outgrowing demand. But how did milk become such a hot commodity in China—especially when the demand for dairy has dropped off or remained flat elsewhere?
Back in 2006, Chinese Premier Wen Jiabao visited a dairy farm. He then made what MoneyMorning.com.au calls “the 500 Gram Dairy Declaration,” where he said,
From then on, the Chinese governmental push for milk and dairy products boomed. Imported milk products are especially coveted, particularly in the wake of the 2008 tainted Chinese milk scandal.
Milk products aren’t everyday items in China, like they are here. Instead, they’re seen as high-value nutritional items, suitable for children, the elderly, and the wealthy. But China’s booming economic growth has meant a steadily rising number of people who couldn’t have afforded milk before are now eager for the stuff, according to MoneyMorning.com.au.
All graphs: Goldman Sachs via Quartz
Guardian columnist and author Xinran, author of What The Chinese Don’t Eat, offered this explanation of China’s changing perception of milk to the BBC: “They believe that Westerners had a better life based on meat and milk. They think white people or black people [in the West] are physically stronger.” Meanwhile, Harvard University anthropologist (and dietary specialist) Professor James Watson disagrees. “It doesn’t indicate they are becoming more Western, it just means they like ice cream.”
Elsewhere in Asia, milk’s popularity has leveled off or decreased over the same period of time.
Regardless of the reason behind milk’s popularity, what about lactose intolerance?
Milk is perishable, and even with industrialization extending its shelf life, it doesn’t travel well internationally. For this reason, a lot of milk shipped overseas is sold in powdered form. As the BBC notes, processed milk products—including powdered milk and cheeses in general—have very low lactose levels. Also, not everyone is completely lactose intolerant.
Compared to other countries in the world, Chinese milk consumption has ramped up so much, NPR reports that some German consumers refer to the Chinese as “the milk snatchers.”
Australian dairies have rushed to what Queensland Country Life calls “the White Gold Rush,” and have correspondingly ramped up their dairy production with their sights set on making a fortune in China.
Shanghai-based consumer markets specialist Sandy Chen told QCL,
Mr. Chen cautioned against setting prices too high, because even though China wants its milk, Chinese consumers won’t buy it at any price.
He added, “Right now in China we are seeing the impact of imported and domestic prices rising too fast….The Chinese industry has accumulated excess inventories after a period of vigorous buying, improved local milk production and weaker local sales.”
Meanwhile, Quartz reports that New Zealand-based Fonterra, which supplies a lot of milk to China, took in so much money last year that it’s amping up its milk production to an all-time high.
We think someone really needs to commission those Olympic swimming pools for excess leche.