China’s mega farm splurge
The heavy investment in large farms could alter
China’s corporate dairy farming companies – many of them state-owned and several are public-listed entities – are investing billions in establishing and expanding a large number of dairy farm projects.
China Dairy Industry Statistics 2020 reported that the 25 largest farming companies of milk delivered 9.4 billion kg of the country’s production or close to 30%. These farming companies had 1.7 million dairy cattle or on average nearly 68 thousand animals each.
The expansions announced in the past couple of years will add a combined 1.5m cows to the dairy herd and rapid change the structure of the production sector. Research included in some recent IPOs of dairy farm companies suggests more than half the cows will be on large-scale farming units by 2024.
Large-scale free-stall production facilities are (even for the most experienced operators) highly challenging to get right and keep on track – not only in stabilising herd numbers and per-cow yields, but managing people, accessing quality forage and dealing with the waste streams on the massive sites that are being created.
Our LongView “business-as-usual” baseline and scenarios model a simplified make-up of China’s making assumptions for large scale farms that are based on the production inputs and parameters taken from benchmark facilities in the US and Australia. This modelling informs a projection of China’s dairy balance sheet over time. The LongView DTS integrates the potential outcomes from this farm expansion on Chinese markets and the flow-on impacts on global trade.
What does this impact?
If China’s farm managers effectively execute these new farm builds and expansion, the world market will feel it. The expansion in local milk production could alter China’s role in dairy trade and significantly reduce the dependence on imported ingredients, and its major supplier New Zealand.