Dairy demand continues to decline in China, how does it affect Uruguay?

Dairy demand continues to decline in China, how does it affect Uruguay?

The demand for dairy products by China continues to decline over time and is a problem that affects the commercial relationship with Uruguay; However, the president’s trip Luis Lacalle Pou It could favor the trade balance with the Asian giant that had been losing in the dairy sector.

According to data published by the Advisory in Dairy and Food Product (CLAL), dairy imports by China They decreased in volume by 5.5% in the month of October compared to the same period last year. On the other hand, regarding value, a decrease of 18.5% year-on-year was noted.

According to the report, the highest volume products – such as milk powder, fluid and whey – showed a drop, while those with lower volume – such as cheese, yogurts, casein and ice cream – saw growth, although they are of relative importance. What refers to milk powder is specific – the largest input consumed by China to the Uruguay – Purchase volumes and purchase value in October fell by 33%.

On the other hand, regarding the accumulated so far this year regarding purchases by the globally attractive giant, a drop of 9.4% was perceived around tons, while a 10.5% of fall could be seen in dollars.

A difference in the trade balance

Prior to the trip of President Luis Lacalle Pou, it could be seen in the annual report of Uruguay XXI that China played a fundamental role as the main trading partner and represented the 28% of exports of goods, with 3,675 million dollars exported out of the total of 13,356 million dollars. This meant a 12% annual increase in placements in the Asian country during 2022.

The beef It was the main product placed by the country in the international market—20% of those exported, for values ​​of 2,557 million dollars. Within this global figure, China returned to occupy the first place with a participation of 58% —1,475 million dollars. Of the total placements in the Chinese market, meat placements represented, in turn, 40%.

However, the placements of dairy products did not have the same luck since they have been adding deterioration since 2022.

The problem of the dairy sector with China

Exports are falling at a general levelparticularly with China, whose prices do not rise even after a certain economic reactivation following the impact suffered by health policies around Covid-19.

This is also observed in terms of milk exports from Uruguay towards the Asian country, which were 246,922 tons in August compared to 276,912 tons in the same month in 2022. This represents a drop of 11% in terms of the volume placed. Considering the value of the products, the drop was 20%.

In the case of purchases of whole milk powder by China —the main product of the sector exported by Uruguay- fell: they went from 30,063 tons in August of last year to 28,872 in August of this year, marking a 4% decline. Imports of skimmed milk powder, in particular, fell 36%. Cheeses registered increases, as well as butter.

Are advances promised for the sector?

During his trip to the Asian country, Luis Lacalle Pou managed to sign 24 treaties and memoranda with his Chinese counterpart, Xi Jinping, despite not having obtained concrete progress regarding the Free Trade Agreement (FTA) bilateral.

Among the multiplicity of agreements—although with no concrete progress regarding the FTA in sight—what stands out for the national agro-export sector is Five-Year Strategic Plan for Agricultural Cooperation between Uruguay and China. This details cooperation initiatives between the Ministry of Livestock, Agriculture and Fisheries (MGAP) and the China Ministry of Agriculture and Rural Affairs (MARA)within the framework of the 2012 memorandum of understanding.

Likewise, it is the second five-year plan of this type between both countries, and it focuses on strengthening the collaboration in agriculture, agroindustry and fishing. Among its objectives, the exchange on agricultural policies; efficient use of water; animal husbandry; plant health; capacity development; agricultural trade; the scientific and technological research; the dairy, the fishing and aquaculture They are the main ones.

On the other hand, the long list of agreements also included the updating of certain protocols and establishment of others to expand and improve the entry of Uruguayan products into Chinese territory, with better conditions for local exporters and fewer bureaucratic obstacles.

Conaprole’s agreement with Yili

Conaprole reached a productive agreement with the Chinese dairy giant Yilithe world’s most valuable brand in the sector, based in the city-prefecture Hohhot, capital of the autonomous region of Inner Mongolia.

The Uruguayan company managed to sign an agreement of intention to increase production on a sustainable basis with the Asian company, which was already a client of Conaprole in China.

It was within the framework of the state visit led by Lacalle Pou to China, Gabriel FernandezPresident of Conaprole and part of the dozens of businessmen who accompanied the delegation of the Executive Branch, communicated the agreement.

Fernandez He assured radio Carve that the businessmen were “very satisfied with the tour”, which “was very fruitful”, even for the dairy. “There was a treatment Uruguay as a state visit; This is very significant,” remarked the businessman.

Source: Ambito

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