Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Arla lifts drive to tap booming China milk imports

Twitter Linkedin

Arla Foods unveiled a $400m investment plan, primarily to boost growth in exports to emerging markets, as hopes rose for further gains in the Chinese buying spree that is "supporting the entire dairy complex".

Arla Foods, the Danish-based co-operative, announced that it would invest DKK2.2bn in 10 of its dairy sites this year.

While the vast majority of the spending is on plants in Western countries, with more than half to be spent in Denmark itself, the focus of the investment "will be on production of profitable export products for the company's strategic growth markets outside the EU".

Spending specifically on boosting dairy products for these markets – Africa, China, the Middle East and Russia – will jump 61% to DKK750m ($136m).

'Rapidly-growing demand'

"This year we are increasing our investments to dairy sites that contribute to our export out of Europe," Povl Krogsgaard, vice-chief executive of Arla Foods, said.

"Our sales on the growth markets outside the EU are growing at a fast pace, and we must prepare ourselves to meet the rapidly-growing demand in years to come."

The comments come amid expectations that China - where Arla Foods has a tie-up with China Mengniu Dairy, the country's top dairy company – will extend at least for this year the strong dairy imports which marked 2013, driving prices of many products to record levels.

"China is buying at unprecedented levels, supporting the entire dairy complex," industry group US Dairy Export Council said.

'Staggering growth'

Indeed, China's imports soared 34% last year, including a "staggering" 74% growth to 550,404 tonnes of milk powder, whey, cheese and butterfat purchases in the last four months, the council said.

That is "more than the purchases of Russia, Mexico, Japan and Algeria put together".

In fact, China's "appetite, and willingness to pay historically high prices, has squeezed out other buyers in recent months".

Production setbacks

The strong imports reflect, besides growing domestic wealth, a poor performance by China's own milk producers, undermined by poor weather, foot-and-mouth disease and the impact of an industry restricting which is driving out smaller operations in favour of dairy giants.

While the US Department of Agriculture, whose data set world benchmarks, believes China's cow's milk production rose 5.8% to 34.5m tonnes last year, others believe output was far lower.

The council said that China's milk output was "estimated very loosely at 6% below 2012 output.

"Even if weather improves in 2014, some of the structural issues [which depressed production last year] will take longer to settle," it said.


Twitter Linkedin
Related Stories

Corn prices 'may rally' - thanks to hedge funds' record selldown

Commentators raise alarm over hedge funds record net short in corn. Will speculators keep closing short bets on wheat and sugar?

Morning markets: India move sends palm oil tumbling. Fund data weaken wheat

A week that will bring Thansgiving to the US starts on a somewhat soft note in Chicago, and a definitely negative one in Kuala Lumpur

Weekly grain, oilseeds market view from Europe

What does Vivergo ethanol plant shutdown mean for UK wheat?... Eu wheat export prospects... EU rapeseed imports...

Evening markets: export data hold sway in ag markets - helping cotton

... but not corn and soybean futures. Wheat futures fare a bit better, despite talk of Russia strengthening its grip on world trade
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069