Farmer Liu Bingyong used to run a thriving dairy business, earning about 5,000 yuan ($700) daily from his milk sales. These days, he’s barely scraping by, unable to stem the losses from his farm. Liu, like many dairy farmers across China, now faces significant economic pressures within the dairy sector—a crisis reflecting the larger struggles of the nation’s economy.
While dairy is not traditionally common in Chinese diets, the government has long advocated for its consumption, promoting its numerous health benefits. This push for increased milk consumption paralleled efforts to achieve food self-sufficiency, which included the expansion of dairy production capabilities and the import of large numbers of cattle. These initiatives seemed promising at first; extensive investments were made to increase output and shift public dietary habits.
Yet, the current reality is starkly different. An unfortunate combination of factors has converged to push dairy farmers to the brink. Liu, sharing his experience, articulated the dire circumstances many face by stating, "There's no way out of it. It's become normal for farmers to slaughter their cows." He's certainly not alone. Farmers throughout China’s northern dairy belt have reported similar fates—faced with plummeting prices, many are struggling to keep their heads above water, with some resorting to throwing away milk or culling their livestock.
Experts like Yifan Li, the head of Asia dairy at StoneX, have traced the roots of this crisis back to practices initiated several years ago. The influx of calves imported since 2019 has exacerbated the situation. By the time these animals reached maturity, the devastating impacts of mass Covid-19 lockdowns closed off their usual avenues for sales, leaving producers with both increased supply and drastically reduced demand.
Though restrictions were lifted by the end of 2022, the expected resurgence in consumption simply never materialized. With demand for milk still tepid, the market is currently flooded, leading to lower purchase prices and financial strains across the sector. Farmers reporting losses of up to 10,000 yuan daily speak of their despair, and many are reconsidering their livelihoods altogether.
The enforced cattle-sourcing strategy, initially seen as innovative, has since become another layer of the industry’s troubles. "There are just too many cows," lamented farmer Wu from the northeastern province of Liaoning, highlighting the oversupply issue plaguing dairy production.
This situation reflects broader demographic shifts within China, particularly concerning the fertility rates. The country is experiencing what some have termed a "baby bust"—a dramatic decline in birth rates—which will likely continue to impact future demand for dairy products. With fewer children naturally meaning fewer consumers of milk, the groundwork for future growth seems increasingly shaky.
Combined with rising input costs, many farmers are caught leading their businesses toward inevitable declines, with some seeing their families’ generations of farm work teetering on collapse. For Liu, the future looks grim. He sums up the current despair by stating: “We always knew things were going to get worse if the industry didn’t adjust.” Indeed, these sentiments echo throughout the community, with many wondering if this crisis is merely the beginning of more significant challenges to come.