A change in market forces is starting to have an impact on dairy expansion in China, according to reports from UK dairy levy board AHDB Dairy.
A recent report by Rabobank highlighted how declining profitability has led to some new large-scale farm investments being cancelled or postponed.
Similarly, Fonterra has announced that it is to postpone its goal of developing its own milk pool of 1bn litres in China.
In light of this, the cooperative took the decision not to invest any further in a current dairy farming joint venture, which is producing 400m litres of milk a year, after the business recorded a loss of NZ$44m. In 2014, Fonterra and Abbott (a pharmaceuticals business) announced plans to milk 16,000 cows by 2017, although, due to other difficulties, this project has failed to get off the ground.
However, despite the current market challenges, Rabobank is expecting dairy demand in South East Asia to increase by 3bn litres between 2014 and 2020.
Source – Dairy Site