Markets for dairy genetics in Japan and China offer opportunities from two diverse sets of customers.
Paul Meyer of Alta Genetics’ marketing division recently returned from Japan, where North American dairy genetics are highly desirable and farmers are willing to pay top dollar to acquire the best producers.
Meanwhile, Gary Smith of Alta Exports has been marketing dairy semen in China, where customers are price sensitive.
Japan imported large numbers of cattle from Canada until the early 1990s and then began to import more embryos and semen.
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“Most of the bulls that they sampled domestically in Japan for the dairy industry are sourced from North America,” Meyer said. “They are very high on North American genetics, both the U.S. and Canada.”
Farmers want high milk volume, high protein and a similar butterfat content to North American standards.
The Japanese must import a large share of their cattle and feedstuffs, making it costly to raise the animals. For example, it costs $4,000 or more to raise a dairy heifer.
“It costs twice as much to raise an animal in Japan as it does in North America,” Meyer said.
Alta Genetics offers its genetic products through a wholesaler for distribution throughout the country.
While China imported more than 130,000 dairy animals from Australia and New Zealand in 2004, Japan takes almost nothing from those countries.
“Japan wants the very top end and in Japan they believe North America has the best type and conformation bloodlines so the primary focus is North American sires with European sires entering in a smaller extent,” Meyer said. “China is looking for inexpensive products.”
While Japan is a well-developed dairy market, China is still in the development stage, although analysts predict the dairy industry could double in size to nearly $20 billion by the end of this decade based on purchasing power in the typical Chinese family.
“China is a key market for the future but they are nowhere near the development and the infrastructure or proving system, so they need a lot of help yet,” he said.
Smith has been dealing with the Chinese for a number of years, specializing in dairy semen. He sees long-term opportunities for the semen business, but also sees opportunities on the beef side.
“China does more insemination of beef cattle than all the world combined,” he said.
“It is possible to sell embryos there but the Chinese are producing their own and sales are limited because of price. They are not willing to spend much on imported embryos. Canada is proud of its quality and rightly so, but China is looking for price.”
Dairy production has increased throughout the country, but processing is lagging.
“There were lots of cattle and they had more milk than they could process so prices fell,” he said.
Milk consumption, especially among children, is increasing and the government has a campaign to ensure each child receives a pound of milk per day, according to the Dairy Association of China.
“The key thing will be to increase management and technology in milk production,” Smith said.
Major dairies could have as many as 10,000 cows, but the level of management and nutrition is not the same as in Canada. Ownership arrangements vary and include collective farms, as well as private ownership, where individuals own the cows but share milking parlours.
