China's dairy markets: trends, disparities, and implications for trade

Purpose – The purpose of this paper is to review the growth and regional disparities of China's dairy market since 1980, examine urban consumer demand for three major dairy products (fluid milk, yogurt, and milk powder), analyze China's import patterns of major dairy products since 1995, and discuss China's potential roles in the world dairy market and implications for trade. Design/methodology/approach – While the most recently available time-series and cross-sectional data from China are used to analyze the trends and disparities of China's milk production and dairy product consumption through graphical and regression analyses, China's custom data from 1995 to 2008 are used to examine the trends and patterns of China's dairy product imports. Findings – China's dairy market has expanded rapidly in the past two decades but there are significant disparities across regions and income groups. The estimated income elasticities suggest that, as per capita income continues to increase, the demand for dairy products, especially yogurt and fluid milk, is expected to grow at a significant rate. The import trend and pattern analysis indicates that China's dairy imports will likely continue to grow and provide opportunities for major dairy product exporters like the USA, New Zealand, and Australia. Originality/value – The paper contributes to the literature by examining the trends and disparities of China's dairy market using the most recently available data, presenting an estimation of demand elasticities for fluid milk, yogurt, and milk powder in urban China, and discussing the future prospects of China's dairy imports and implications for trade.