China’s recent birth subsidy policy marks a new horizon for the global dairy market. With incentives of up to US$ 13,800 per child in some provinces, the government aims to curb population aging and stimulate consumption.
These measures have already triggered reactions in the stock market: shares of infant formula companies like Feihe and Beingmate rose by up to 10% in the days following the announcement, according to Bloomberg.
Global experience shows that the growth of the child population is a key driver of dairy demand, from infant formulas to fresh products. However, studies warn that factors such as the cost of living and social barriers limit the real impact of these subsidies.
In Japan, despite offering financial incentives since the 1990s, the birth rate continues to decline, standing at 1.26 children per woman in 2022, according to the Japanese Ministry of Health.
Historically, the dairy sector has relied on population growth patterns. Major exporting economies have adjusted their production based on demand for infant formulas and fresh dairy products.
According to World Bank data, birth rates in many key economies have shown sustained declines over the past two decades.
In Europe, for example, countries like Italy and Spain have recorded drops of up to 30% in birth rates over the last 20 years. Meanwhile, in Asia, Japan and South Korea have implemented economic incentives similar to those in China, without successfully halting population aging.
The application of subsidies in China could partially reverse this trend, although experts agree that the impact will be long-term and depend on other structural factors, such as housing costs, job stability, and access to childcare services.
Additionally, consumption habits have changed drastically in recent years, with a 10% annual growth in China’s plant-based beverage industry, according to Euromonitor, which also affects the dairy sector’s growth prospects.
Major dairy companies are closely monitoring how the situation evolves. Demand for powdered milk, cheese, and infant formulas could benefit from a potential birth rate rebound, but changing consumption habits also play a crucial role.
In many markets, concerns about child nutrition have led to stricter regulations on dairy formulas, such as the ban on direct advertising in the European Union and China, which could affect the sector’s growth opportunities.
On a commercial level, major dairy-exporting economies have been diversifying their markets to counteract declining birth rates and stagnant domestic consumption.
Countries with strong dairy industries have intensified their presence in emerging markets, betting on value-added products and quality certifications to ensure competitiveness.
Moreover, in an increasingly competitive global dairy trade, exporting countries are analyzing how to position themselves in a potentially higher-demand scenario.
Strategies include product diversification, investments in innovation, and trade agreements to secure access to key markets. In this regard, free trade agreements play a crucial role in facilitating the placement of dairy products in high-potential consumption markets.
China is not an isolated case. Other countries have implemented similar policies with mixed results. In some nations, financial incentives have temporarily increased birth rates but have not ensured a structural change in demographic trends.
In France, for example, birth subsidies have been part of social policy for decades, with financial incentives, extended parental leave, and subsidized childcare.
While France’s birth rate is one of the highest in Europe (1.83 children per woman in 2022, according to INSEE), experts warn that this is not solely due to economic incentives but also to a set of policies that facilitate work-life balance.
With 23 Chinese provinces implementing financial incentives, the global dairy industry is closely watching birth rate figures and their relationship with future consumption.
Although demand recovery will not be immediate, the sector is already strategizing to position itself for a possible rebound. Leading dairy exporters are evaluating expanding their production capacities and adjusting their business models to meet future demand for infant products.
In conclusion, birth subsidies represent an opportunity for the dairy industry, but their real impact will depend on multiple factors.
The combination of economic policies, cultural changes, and market strategies will determine whether increased birth rates in certain regions translate into sustained dairy consumption growth. Meanwhile, the sector remains on alert, analyzing every market movement to anticipate trends and maximize business opportunities.
EDAIRYNEWS
