Brazil to export dairy products to China from August

Brazil should start dairy products export to China this August according to Viva Lácteos (Brazilian Dairy Association).

The association claims China is the world’s largest importer of dairy products, with about 800,000 tons of milk powder. Brazil’s current production reaches 600,000 tons. The expectation is to be able to export US$4.5m in dairy products.

Last week, the Ministry of Agriculture announced that China has authorized 24 Brazilian plants to export dairy products to the country, including cheese, butter, condensed milk, and milk powder.

Last year, the Brazilian dairy sector exported to more than 50 destinations and has mainly advanced in cheese exports. In 2018, the Chinese imported 108,000 tons of this product and have grown at an average annual rate of 13% in the last five years. Last year, US$18m of worth were shipped, up 65.2% over the last three years.

“Brazilian companies will make cheese sales a priority. There is no way to sell milk powder, a commodity,” said Marcelo Martins, president of Viva Lácteos.

According to Martins, dairy companies from Brazil are eager to return their focus to export after more than a decade of China’s absence to serve the domestic market, which grew 4% per year between 2008 and 2014.

“The authorizations were a decisive step in creating demand for Brazilian dairy products and there’s nothing better than the opening of the Chinese market,” he said. “But we have work to do.”

Martins said freight costs and Brazil’s unreliable electricity grid, which is vital for maintaining and managing any profitable dairy operation, also pose challenges for future exporters.

Ian Lin, chief executive of Group Serpa, a market specialist in Shanghai, said in an interview that Chinese consumers are not used to buying “many” dairy products, but the culture can change.

A large percentage of China’s population is lactose intolerant, according to scientific studies, although marketing campaigns that boost it as part of a healthy diet have helped develop a sizable dairy market in the country.

Lin said imports dominate China’s dairy market, with New Zealand accounting for 51% of the country’s milk powder exported, which totaled around 800,000 tons in 2018.

According to Lin, Brazil will face competition from suppliers closer to China, as the cost of sea freight to ship 20 tons of dairy products from New Zealand to China is US$870. If the cargo comes from Brazil, the value becomes US$1,500.

On the other hand, China imports 110,000 tons of cheese per year, with annual growth of 13%.

Last year, total Brazilian dairy exports were US$58.2m, with Argentina, Chile, and Russia among the largest buyers according to data from Viva Lácteos.

Sources: Viva Lácteos e Reuters

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