A Chinese political cartoon depicts how successful milk powder imports are doing in the Chinese market (right) relative to domestically made milk powder (left). Image: H.T. NU. LAND.

China and US States Raise a Glass to New Dairy Partnerships

Asia China

Poised to become the world’s largest dairy market by 2017, China’s ever increasing demand for all things dairy is a boon to US producers. In 2013 the United States exported $700 million worth of dairy products to China and exports are expected to increase. The first quarter of 2014 saw US dairy exports to China grow by 39% and US companies have taken notice, with 235 businesses expressing interest in exporting to China in the Food and Drug Administration’s July Quarterly update.

On November 12th, Dairy Farmers of America (DFA) and China’s Inner Mongolia Yili Industrial Group announced their joint venture to build a powered milk factory in Kansas. As China’s second largest dairy producer, Yili will invest $30 million in the venture, with DFA contributing $70 million. The factory is expected to produce 80,000 metric tons of milk powder a year. With milk consumption in China expected to increase at a rate of 10% annually, the joint ventures are both necessary and increasingly prevalent amid lingering doubts among Chinese consumers concerning the quality of domestically produced milk powder.

Exporting to China is just one aspect of the emerging dairy partnership. In October, Kentucky-based animal nutrition company Alltech partnered with Nestlé to create a training center at the Dairy Farming Institute in Shuangcheng, a city in Heilongjiang province, China. In addition to teaching agribusiness best practices, Alltech established a feed evaluation laboratory in China. In this laboratory, Chinese dairy producers will be able to “evaluate the nutritive value of total mixed rations” in order to determine the best feed for their dairy cows, as well as lowering the environmental impact of feed cultivation by maximizing yields.

This is not the first project that Alltech has had in China regarding dairy products. In March, it celebrated 20 years of business partnership with China. Under its “China Now” plan, Alltech has partnered with numerous Chinese universities and research institutions to reach the goal of Alltech becoming a $500 million business in China by 2020. Its partners include the Chinese National Feed Quality Control Center in Beijing, Northwest Agriculture and Forestry University, Zhejiang University, South China Agriculture University, Jiangnan University, Ocean University of China, and the Ministry of Agriculture Feed Industry Centre.

Sarah Batiuk is a Program Assistant at the East-West Center in Washington.