ASIA – Milk production in China and Japan is set to increase as more heifers enter production and productivity per cow improves, a new report by the Foreign Agricultural Service of the US Department of Agriculture (USDA) has revealed. 

For China, raw milk production is forecast to reach 36.7 million metric tons (MMT), a 3 percent increase, as milk production per cow improves. 

Other factors driving this uptick in dairy production, according to the USDA, include the addition of more dairy facilities and the expansion of the country’s dairy herd. 

Whole milk powder (WMP) production in 2022 is forecast to increase gradually to 970 thousand metric tons (KMT) as raw milk production rises.  

Skim milk powder (SMP) production is, on the other hand, forecast to increase to 24 KMT, due to increases in cheese production. 

 Domestic cheese production is forecast to reach 19 KMT while imports rise to 220KMT driven by demand for cheese in the hotel, restaurant, and institutional (HRI) service sector and as an ingredient in bakery products. 

As the bakery sector expands, USDA forecasts a higher demand for butter where imports are projected to reach 170 KMT and domestic production rises to 12 KMT. 

USDA however notes that China cannot produce as much butter to match demand due to limited production capacity and expertise. 

In 2022, imports of whey and whey-related products (mainly as ingredients for infant formula products and animal feed) are expected to slow compared to 2021 as declining birth rates and low hog prices reduce demand. 

Japan dairy production expands 

In Japan, the FAS projects milk production to rise about one percent in 2022 as a greater number of heifers enter milk production. 

According to Japan’s National Livestock Breeding Center, the registered number of dairy heifers and cows which will start milking in 2022 is up 3 percent from 2021, creating prospects for higher total milk production. 

FAS however projects weak demand for dairy products in the HRI sector to push surplus drinking milk toward further processing into butter, non-fat dry milk, and cheese, for which ending stocks will finish higher in 2021. 

In turn, imports of butter and NFDM are projected to fall or remain flat through 2022, at which point the easing of COVID-19 travel restrictions should release pent-up demand and require a gradual increase in imports. 

Philipine, Chile appetite for imports rise 

Still in the Asia Pacific region, USDA forecasts the Philippines’ demand for dairy to recover in 2022 as the economy reopens, most of the population is vaccinated, and customers return to restaurants. 

Skim milk powder imports are forecast to reach 175,000 MT in 2022, 6 percent higher than the previous year, while fluid milk imports rise 4 percent to 115,000 MT over the same period.  

Cheese imports in 2022 are expected to continue the growth seen in 2021, increasing 4 percent in 2022 to 52,000 MT. 

Meanwhile, Chile’s domestic demand for dairy products remains strong, pushing up total imports 35.8 percent in MY2021.  

The United States is currently the main supplier of dairy products to Chile with a 21.6 percent market share in MY2020.  

In MY2022, Post estimates that whole milk powder production will increase by 10.8 percent to reach 72,000 metric tons while imports will also increase to 9,000 MT to cover domestic consumption.  

Post projects MY2022 skim milk powder production to increase by 6.3 percent to 17,000 MT, while imports remain flat at 10,000 MT. 

In September 2021, the New Zealand company Fonterra announced its plans to sell all assents in Chile and focus on extracting more value from New Zealand milk.  

Fonterra currently owns 99.89 percent of the shares of Soprole and Prolesur, and is the second-largest dairy producer in Chile, processing more than 20 percent of Chilean milk production. 

Its withdrawal, which is estimated to take about 2 years, has already caused jitters in the country’s dairy industry with many dairy producers concerned about their future market. 

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