When the Chinese giant drinks milk, the world market dries up and prices rise

China’s strong economic growth, nearly 11% last year, continues to cause the prices of most agricultural and agri-food products, such as milk, to rise.

Although China is one of the main milk producers in the world, it still imports large quantities, and this growing demand is significantly altering the state of the world market. The implementation by the Chinese government of programs encouraging the consumption of milk in schools is the reason for this increase in demand. The international market must therefore adapt to the fact that millions of Chinese school children are now drinking milk in their canteens! This trend illustrates a change in the food behavior observed in emerging countries, where the consumption of animal products is rising because of the increase in average incomes.

The milk market is also under pressure because of supply difficulties: Australia, the main exporter, is experiencing a drastic decrease in production because of serious drought.

A growing need and decreasing supplies is all it takes for milk prices to surge. How much longer can this go on? Nobody can predict precisely, because we know that agricultural markets are extremely volatile… And let us not forget that, in a long-term perspective, real agricultural prices continue to follow a downward trend.