Fewer babies and economic cooling down imply lower demand and surplus milk, according to Reuters. Arla is also adjusting its strategy and trying to find product niches targeted at the elderly population in China.

Presently, China is experiencing a large surplus of milk, which is difficult to export – due to a combination of declining birth rates, lower demand, and a national food security strategy, resulting in more major milk producers.

According to Reuters (news agency), this development is linked to the Chinese government’s efforts to promote the country’s dairy sector, where farmers have been encouraged to expand their production. Over five years, production has grown by more than 25 percent to 41.97 billion kg milk in 2023.

However, despite the increased production capacities, the consumption of dairy products such as cheese, cream, and butter has decreased. For example, the consumption of milk per capita has been reduced from 14.4 kg in 2021 to 12.4 kg in 2022.

Since then, the Chinese Bureau of Statistics has not released updated data.

However, production has started to adapt in line with the milk prices having fallen significantly below production costs. This implies that many small and medium-sized dairy farmers are ceasing production.

Read the entire article on Reuters HERE

Furthermore, imports have also decreased, which impacts Arla Foods, among other companies.

Arla also challenged

The declining birth rate in China impacts not only the local milk production, but also Danish Arla Foods.

According to Simon Stevens, EVP, Arla Foods International, the development has created a need to focus on new growth categories. In an interview with FødevareWatch (food and food industry media) back in August, he explained: – There is no doubt that China’s general economic situation requires that we seek new growth areas, such as products targeted at the older part of the population. However, this will be a long-term strategy, the EVP underscored.