(Yicai Global) Feb. 7 -- China’s imports of packaged long-life milk slumped to the lowest level last year since 2018, ending a decade of strong growth, as depressed demand at home and soaring prices from overseas suppliers render the business unprofitable, according to the latest data.

Some 722,000 tons of UHT milk were imported into China in 2022, a dive of 27.5 percent from the year before, according to figures from the Dairy Association of China. And the value of the imports tumbled 23.1 percent to USD670 million.

More than half of China’s milk imports were from the EU, at 56.6 percent. Two of the biggest suppliers, Germany and Poland, have been hit hard by the energy crisis caused by the Russia-Ukraine conflict, resulting in much higher production and raw material costs.

The sharp slump in milk imports last year was partly due to weak consumer demand in China amid outbreaks of Covid-19, but it was mainly due to a big jump in overseas prices that made imported goods less profitable, independent dairy analyst Song Liang told Yicai Global.

“Importing milk is not profitable at the moment,” a food importer based in Ningbo, southeastern Zhejiang province said. He is no longer importing milk from Italy and Spain because the agents hiked their prices by more than 30 percent.

It marks the end of 10 years of strong growth. From 2013 to 2021, the compound annual growth rate of milk imports was about 30 percent, according to data from the dairy association. Imports reached a peak in 2021 at 996,000 tons and a value of USD870 million. However, since the fourth quarter that year, import volumes began to slide and the decline has been accelerating.

Importers of other dairy products have also been badly affected. Imports of dairy products in general slumped 17.1 percent to 3.2 million tons last year from a year earlier.

Food importer Pinwow Food, which gets nearly 80 percent of its revenue from dairy products, is bracing for net profit to plunge by up to 89.5 percent last year from the year before. This is due to the continuous rise in European energy prices, which led to higher procurement costs and compressed profit margins, it said.

Editors: Tang Shihua, Kim Taylor