China's organic milk market is small, but potential is great
High costs and shoddy products are holding back development.
Currently, the production of all sorts of milk is close to 40 million tons in China, but the percentage of quality raw milk is less than 30%. There is very limited amount of high-quality organic milk due to slow construction of organic farms.
In a new analysis shared with Dairy Foods, the research firm Beijing Shenong says organic milk accounts for less than 1% of the total. It cites four reasons:
1. The cost of an organic farm is high. The transitional period for an organic farm is three to five years, and the production cost is three times or even more than that for plain milk.
2. There is weak supervision over organic food markets; it is common to see shoddy products disguised as quality products. High price does not mean high quality and there is lacking of consumers’ trust, according to Beijing Shenong.
3. The price difference between organic and plain products is two to three times (or even more). Hence, there is poor demand for organic products.
4. The Government has no policy on encouraging organic milk production, and companies are not spurred to build up organic farms.
Eventually, top-end customers will become more aware of organic milk and will begin to demand it. China’s organic milk market has a huge development potential.