However, recent shifts in trade dynamics have presented challenges for Australian dairy exporters.
In 2014-15, China imported more than 110,000 tonnes of Australian dairy, accounting for 14.6 per cent of Australia’s total dairy exports by volume.
By 2020-21, this figure had surged to nearly 290,000 tonnes, representing more than 35 per cent of total dairy exports.
This growth was largely driven by a decline in domestic dairy production in China and government-led initiatives promoting dairy consumption for its health benefits.
Additionally, in 2020, stockpiling and panic buying —particularly of UHT milk and milk powders —further contributed to the record-high import volumes seen in the 2020-21 season.
However, as Chinese milk production recovered and previously stockpiled inventories remained sufficient, demand for Australian dairy fell.
This led to Australia exporting 17.9 per cent less dairy to China from 2022-23 to 2023-24.
Since then, there has been some recovery in dairy imported by Chinese buyers as domestic stockpiles are worked through and local milk production weakens, but whether this momentum continues is uncertain.
During the early 2010s, Australian dairy exports peaked at more than 110,000 tonnes in 2012-13.
At that time, Australia was Japan’s largest dairy supplier by volume, with cheese consistently accounting for at least 80 per cent of exports.
However, in 2015, trade sanctions between the European Union and Russia led to European exporters seeking new markets.
With cheese making up a significant portion of EU dairy exports, their increasing presence in Japan contributed to a decline in Australian dairy exports to the region over the following decade.
This season, however, Australian dairy exports to Japan have increased off the back of Australia’s improved export price competitiveness, reaffirming the country’s position as an important market for Australian cheese.
South-east Asia remains a consistently important market for Australian dairy exports despite recent fluctuations.
After growing through 2021-22, Australian exports to the region fell in both 2022-23 and 2023-24 as inflation hit consumers and importers.
Nonetheless, there has been strong demand from importers in countries such as the Philippines, Vietnam and Thailand, with dairy imported into these markets rising 14 per cent, 35 per cent and 44 per cent, respectively, over the past five years.
Despite the broader market downturn, these three countries achieved the highest import volumes seen in more than a decade in 2023-2024, indicating continued demand for Australian dairy products such as liquid milk, condensed milk and milk powders.
The global dairy market will continue to evolve, bringing both challenges and opportunities for Australian dairy.
Looking to today, Asia remains an important export region for Australian dairy, and improved demand from buyers in these key markets have supported Australia’s exports this season.
While some uncertainty remains, both in terms of future demand from Chinese buyers and potential changes to trade flow (resulting from US tariff measures), the Australian dairy industry is well-positioned to navigate future changes and capture any new opportunities that may arise.
Madelyn Irvine is a Dairy Australia industry analyst.
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