Milk production in Kazakhstan
Dynamics of changes in annual milk production
Milk production has shown positive dynamics over the past few years. In 2020, due to the restrictive measures imposed by the pandemic, the growth rate decreased by 0.2% compared to the previous year, which can be considered a slight decrease.
Seasonality of milk production
Despite the general trend of production growth, seasonal fluctuations in volumes show noticeable stability. Production peaks in summer (June), and production declines in winter (January).
This circumstance should be taken into account in planning the volume of potential exports.
Regional distribution of milk production
The largest milk production is concentrated in the East Kazakhstan region, Almaty and Turkestan regions. Their relative proximity to China (proximity to the border, low logistics costs) contributes to the export of Kazakh products to China.
Structure of import, export and consumption of dairy products
Milk and cream, not condensed and without additives
The structure of production, consumption, export/import of liquid milk has not changed much despite the pandemic. At the same time, there is an increase in all positions. The excess of exports over imports is also preserved.
Milk and cream, concentrated or with additives
Condensed milk and cream remain mainly imported products. A slight increase in production and exports did not actually change the picture. Against the background of the pandemic, consumption of these products increased sharply, which compensated for a sharp increase in imports. The increase in the consumption of this product is primarily associated with quarantine measures and home stay of citizens.
Yogurt, kefir
During the first 7 months of this year, the consumption of this type of food increased significantly compared to the same period last year. This is also due to the specifics of consumption under quarantine. All the indicators showed growth, but to a greater extent production and consumption.
Butter
Like the bulk of dairy products, butter, spreads and pastes also showed a significant increase in domestic consumption. At the same time, the volume of exports and imports increased significantly. This is due to the need to cover increased domestic consumption.
Cheese and cottage cheese
In the cheese and cottage cheese group, despite the growth in production, there is also a disproportionate increase in domestic consumption. This led to a corresponding decrease in exports and an increase in imports.
Ice cream and consumer ice
The ice cream and consumer ice group saw the largest increase in production compared to the same period last year. This was an adequate response to the increased domestic demand. This growth led to a decrease in imports and an increase in exports.
Current structure of Kazakhstan’s exports and Chinese imports of dairy products
Export of Kazakhstan’s dairy products
The volume of exports is completely dependent on the size of production. The main consumers of Kazakhstan’s dairy products in 2019 are Russia – 79.4% ($ 42 502 thousand) and Kyrgyzstan – 7.6% ($ 4 090 thousand). Also among the major consumers are countries such as Mongolia – 5.5% ($ 2 951 thousand) and Uzbekistan – 4.9% ($ 2 621 thousand).
Import of dairy products to China
While maintaining the positive dynamics of milk production, the growth in import volumes is obviously greater, which is due to the stable volume of cattle in the country. The main importers of dairy products in China in 2019 are New Zealand – 57.2% ($ 3 394 733 thousand) and Australia – 9.2% ($ 543 612 thousand). Also among the major suppliers are countries such as France – 6.6% ($ 391 655 thousand), Germany – 6.5% ($ 388 297 thousand).
Reference: Codes of Commodity Classifier for Foreign Economic Activities were taken as an analysis of exports of dairy products (0401 – 0406 inclusive)
The production of dairy products in China
5th place in the world for milk production according to data for 2019
977 500 dairy farms in the country
4.4 cows average farm size
The number of cows in China in 2018 was 4.25 million, 9.6% less than in 2017 and 76% more than in 1996
Foreign trade in dairy products in China
Foreign trade in dairy products in China
According to the image of safe food produced in European countries, Chinese consumers trust imported products for the best quality, health and safety
The growing trend in cheese consumption is related to the general trend towards a European lifestyle and the popularization of European cuisine among Chinese residents
The growing trend in cheese consumption is related to the general trend towards a European lifestyle and the popularization of European cuisine among Chinese residents
In March 2020, despite the pandemic, imports of dairy products to China increased by 10% in physical terms, in January-March 2020, imports increased by 1.3% compared to the corresponding period in 2019. Imports of butter increased by 99.7%, cheese – by 25.8%, while imports of milk powder (SMP and WMP) decreased by 6.4%
The production of dairy products in China
In turn, during the first half of 2020, raw milk production in China increased by 7.9% compared to the same period in 2019. In the period January-June 2020, 14.31 million tons (average protein – 3.25%; fat – 3.85%, somatic 330 thousand).
In 2018, the volume of milk production in China was 29.37 million tons, 1% less than in 2017, more than 5 times more than in 1996.
Between 2005 and 2018, raw milk processing in China increased by 14.77 million tons, and the contribution of imports to this growth was 78%. (Beijing oriental).
The average price of raw milk in 2019 in China was 54.5-56.4 dollars per 100 kg (fat – 3.85%, protein – 3.27%), the average cost was 47.6-48.6 dollars per 100 kg.
The volume of milk processing in January and February 2020 decreased by 17% due to the pandemic.
CAAS predicts that China’s raw milk production will grow to 65 million tons by 2028. (Beijing oriental).
Share in the Chinese markets of major companies dairy products (%)
Dairy products market in China
Size of the dairy market in China
Over the past five years the market for dairy products in China has grown by 19.3 %
Share of dairy products sold in China (%)
According to the National Bureau of statistics of China, in terms of sales of dairy products, there is a growing trend in sales by means of modern grocery hypermarkets and e-Commerce, and, in turn, sales in traditional small stores are falling significantly.
Export to China
Expansion of trade in non-primary products by means of dairy products export to China
In accordance with the Protocol between the Ministry of Agriculture of the Republic of Kazakhstan and the General Administration of Customs of the People’s Republic of China on veterinary and sanitary requirements for dairy products exported from Kazakhstan to China, approved by Order No. 306 of the Ministry of Agriculture of the Republic of Kazakhstan of August 20, 2019, to dairy products permitted to be imported to the territory of the People’s Republic of China are allowed: cow, sheep and goat milk and milk products, as well as dry camel milk.
Dairy products include the following types: pasteurized, sterilized, modified milk, fermented milk products, cheese and processed cheese, cream, butter, anhydrous milk fat, condensed milk, condensed milk with or without sugar, milk powder, whey powder and whey protein powder, cow colostrum powder, casein, milk minerals, infant formula based on milk, their premixes (or base powder), as well as camel milk powder, etc.
The basic requirements in accordance with the Protocol between the Ministry of Agriculture of the Republic of Kazakhstan and the General Administration of Customs of the People’s Republic of China on veterinary and sanitary requirements for dairy products
Raw milk, dairy products exported by Kazakhstan to China, should only have origin from Kazakhstan. If the dairy ingredients of dairy products exported by Kazakhstan originate from any country (region) other than Kazakhstan, the country of origin of the dairy ingredients shall have the right to export the corresponding dairy ingredients to China.
Dairy cattle used to provide raw milk for dairy products exported to China shall meet the following conditions.
a) Come from farms that meet the following conditions:
•dairy farms are not infected or suspected of being infected with HMD at least 1 month before the time of milk collection;
-anthrax has not been clinically observed on dairy farms when collecting raw milk;
-dairy farms are free of tuberculosis;
-farms are under the control of the Ministry of Agriculture of the Republic of Kazakhstan;
-farms and adjacent territories were not placed under quarantine restrictions in accordance with the Bureau International Epizootic Code and veterinary regulations of Kazakhstan due to animal diseases.
b) The animals did not receive feed prohibited by Kazakhstan and China.
c) The national plan for monitoring residues developed by the Ministry of Agriculture of the Republic of Kazakhstan will be implemented, and producers should conduct research on raw milk.
Reference: According to the National Residue Monitoring Plan and the results of raw milk studies, the levels of residues of veterinary drugs, pesticides, and other toxic and dangerous substances in dairy products exported to China do not exceed the maximum limits set by Kazakhstan and China.
Reference: According to the National Residue Monitoring Plan and the results of raw milk studies, the levels of residues of veterinary drugs, pesticides, and other toxic and dangerous substances in dairy products exported to China do not exceed the maximum limits set by Kazakhstan and China.
Basic requirements for inspection
Official inspectors of Kazakhstan provide:
a)official veterinarians of Kazakhstan carry out official control (inspection) and quarantine on dairy farms, where raw milk for dairy products to be exported to China comes from in accordance with the legislation and regulations of Kazakhstan
(b) according to the results of studies of the National Residue Monitoring Plan and the results of studies of raw milk in Kazakhstan, the levels of residues of veterinary drugs, pesticides, as well as residues of other toxic and dangerous substances in dairy products do not exceed the maximum limits set by Kazakhstan and China
c) raw milk does not contain colostrum (with the exception of cattle colostrum powder), milk obtained during the use of antibiotics and the withdrawal period, or spoiled milk
d) the product has been subjected to one of the following processing procedures:
-subjected to a sterilization procedure (ultra-high temperature – UHT) at a minimum temperature of 132°C for at least 1 second, or
-if the pH value of the milk is below 7.0, it is subjected to a sterilization procedure (high-temperature short-term – HTST) at a minimum temperature of 72°C for at least 15 seconds, or
-if the milk pH value is 7.0 or higher, the HTST procedure will be applied twice
e) dairy products are produced by manufacturers in Kazakhstan under the supervision of the competent authorities of Kazakhstan and comply with the laws and regulations of Kazakhstan
f) the products meet China’s food safety standards, and are safe, healthy, and suitable for human consumption
g) in case of detection of any violation of the above requirements, the Ministry of Agriculture of the Republic of Kazakhstan shall promptly notify the General Administration of Customs of the People’s Republic of China and suspend the export of any products of the respective manufacturer, monitor and investigate the reasons and take appropriate corrective measures, including withdrawal of products that may be contaminated
Basic requirements for packaging and veterinary certificate
PACKING
Dairy products destined for China will be wrapped and packed with completely new materials that meet international standards. The outer packaging will contain the specification, place of origin (specified country/region/city), purpose, product name, weight, manufacturer’s name, registration number, product batch number, storage conditions, production date, expiration date in the Chinese and English languages
The inner packaging will comply with Chinese law, and the label will indicate the country of origin, product name, manufacturer’s registration number, manufacturer’s name, address and contacts, production date and expiration date, and batch number
During the entire process of packaging, storage and transportation, dairy products exported to China will meet hygienic requirements and will be protected from contamination with toxic and dangerous substances. The container shall be registered after the products are loaded into it and the seal number will be indicated in the veterinary certificate. Product packaging will not be unwrapped, opened, or replaced during transportation
VETERINARY CERTIFICATE
Each delivery of dairy products that will be exported to China will be accompanied by an original official veterinary certificate confirming that the dairy products meet all the specified requirements, as well as the rules of Kazakhstan and China for the protection of animal health and public health. The official certificate of Kazakhstan will only apply to dairy products produced and processed by producers in Kazakhstan.
The veterinary certificate shall be written in Kazakh, Russian, Chinese and English. The format and content of the certificate shall be mutually confirmed and agreed upon in advance by both parties.
The veterinary certificate will not be changed, and will contain the official seal and signature of the official inspector, and the destination will be China.
Algorithm of actions of entrepreneurs to include Kazakhstani enterprises in the register of the General Administration of Customs of the People’s Republic of China
1. The entrepreneur shall send to the Veterinary Control and Supervision Committee (VCSC) of the Ministry of Agriculture or territorial subdivision of the VCSC a request for inclusion of an enterprise in the REGISTER of the General Administration of Customs of the People’s Republic of China – List of registered foreign enterprises eligible to supply products in China
2. VCSC sends the entrepreneur a questionnaire to fill out the application, then checks and supplements the questionnaire filled in by the entrepreneur
3. The Regional Territorial Inspection of the Veterinary Control and Supervision Committee (RTI VCSC) conducts a preliminary inspection of the enterprise for compliance with the information declared by the entrepreneur
4. RTI VCSC sends a positive conclusion on the results of the preliminary inspection to the VCSC of the Ministry of Agriculture
5. VCSC of the Ministry of Agriculture sends to the General Administration of Customs of the People’s Republic of China a request of several enterprises for this type of product, a questionnaire, the positive conclusion of the preliminary inspection for inclusion in the REGISTER under the guarantee of the veterinary service of Kazakhstan or on the basis of the field inspections of the General Administration of Customs of the People’s Republic of China
6. The General Administration of Customs of the People’s Republic of China conducts documentary analysis of the submitted materials, based on the results of which a decision on inclusion in the REGISTER under the guarantee of the veterinary service of the Kazakhstan or conduct on-site inspections of the General Administration of Customs
7. The General Administration of Customs of the People’s Republic of China includes it in the REGISTER under guarantees of the veterinary service of Kazakhstan (for example, milk and dairy products) or the General Administration of Customs conducts field inspection of several enterprises, following the results of the inspection, in case of a positive conclusion of the inspection, it is included in the REGISTER
8. The General Administration of Customs of the People’s Republic of China publishes the REGISTER – the list of the enterprises entitled to supply products to China
9. An Entrepreneur whose enterprise is included in the REGISTER receives a permit to export a batch of goods, a veterinary certificate for the export of livestock products
Kazakh enterprises that have permission to export dairy products to China
As a result of active cooperation between the Ministry of Agriculture of the General Administration of Customs of the People’s Republic of China, currently 6 milk processing enterprises have been certified and are included in the register, which have the right to supply dairy products to China.
Documents required for customs clearance in China
Documents required for customs clearance for export from Kazakhstan:
-copies of constituent documents; export contract (purchase and sale contract)
-transaction certificate – receipt of the contract registration number (issued by the Bank)
-invoice
-way bill – CMR, RWB or AWB (issued by the logistics company)
-packing list (provided by the product manufacturer)
-the document confirming the code of Commodity Classifier for Foreign Economic Activities of the product (provided by the product manufacturer or expert organization)
-documents confirming the passage of export control (for example, veterinary certificate); certificate of origin
Documents required for customs clearance in China
-export contract (purchase and sale contract);
– invoice
-way bill – CMR, RWB or AWB;
-packing list
-the document confirming the Code of Commodity Classifier for Foreign Economic Activities of goods
-documents confirming the safety of food products (veterinary certificate)
-certificate of origin
-original label and its translation into Chinese
-composition, nutritional and energy value (COA) with Chinese translation test report and its translation into Chinese (Analysis report
Costs in the form of duties and taxes when importing to China
Algorithm for exporting dairy products to China
1. Getting the right to export
This clause is described in more detail and step-by-step in the “Algorithm of actions of entrepreneurs to include Kazakhstani enterprises in the register of the General Administration of Customs of the People’s Republic of China” section
2. Preparation for export
2.1. The manufacturer confirms compliance with the requirements of the state standards of the People’s Republic of China in certification bodies accredited by CNAS
2.2. A certificate of conformity is issued based on the results of the assessment
2.3. Conclusion of a contract with an importer registered in China. The importer shall obtain a quarantine permit for import
2.4. Registration of special food products in SAMR
2.5. Label registration in CIQ in accordance with the requirements of the state standards of the People’s Republic of China on labeling and packaging of food products, GB 7718-2011
3. Import of products to China
3.1. Application to the territorial administration of the VCSC at the location of production for obtaining a veterinary certificate
3.2. It is recommended to send a notification to CIQ about the import of goods to China in advance
3.3. Inspection of imported goods at entry points into China includes checking all accompanying documents, verification, inspection, label verification, quarantine and sampling if necessary
3.4. Upon successful completion of the inspection, products are allowed to enter the China
Conclusions on exports to China
Why is export to the Chinese market so important for Kazakh products?
Meat and dairy production in Kazakhstan is generally considered to be one of the best in the world. In terms of the dairy nomenclature, this is due to two main factors:
•First, up to 78% of milk goes into production at the expense of private farms. This is milk from animals that are on free grazing, which makes it possible to achieve significant indicators of the microbiological composition of the product.
•Secondly, large areas of grazing provide sufficient natural food supply, as well as high indicators of environmental friendliness of products.
The level of welfare of the people of China is constantly growing and by 2019 it has increased by 46% compared to 2014
The main driver of market growth is the trend towards healthy food
According to PWC, the average annual growth rate (AAGR) of dairy products in the Chinese market was:
•Milk – 4.70%
•Drinking products – 17.30%
•Soy milk and soy drinks – 6.70%
•Yoghurts – 7.40%
•Dairy and soy desserts – 8.50%
•Cheeses – 10.40%
•Butter and fat spreads – 8.70%
Sour cream – 7.20%
The most actively growing categories in the Chinese market are drinking yoghurts and cheeses