Executive Summary Chinese dairy import figures provided by GTIS were recently updated with values spanning through Jan ’16. Highlights from the updated report include: • Chinese dairy imports reached a new monthly record high during Jan ’16, increasing 56.1% YOY and finishing 18.0% above the previous record high experienced in Jan ’14. • Jan ’16 Chinese powder imports increased seasonally as importers looked to take advantage of lower tariff rates offered as part of the New Zealand – China Free Trade Agreement. • Jan ’16 Chinese dairy imports excluding whole milk powder and skim milk powder remained particularly strong, finishing up 65.0% YOY. Additional Report Details According to GTIS, Jan ’16 total Chinese dairy import volumes increased 71.4% MOM on a daily average basis and 56.1% YOY to a new monthly record high. Total Chinese dairy import volumes have increased YOY for six consecutive months through January. The December – January MOM increase in import volumes was significantly higher than historical figures, although total Chinese dairy import volumes have reached seasonal highs in the month of January over each of the past three years. Seasonal increases in dairy import volumes are experienced within the early months of the year as importers look to take advantage of the lower tariff rates that are offered as part of the New Zealand – China Free Trade Agreement. The New Zealand – China Free Trade Agreement was entered into force in Oct ’08, allowing for a limited number of exports from New Zealand to China to receive a preferential tariff rate. For 2015, the quota allows for approximately 140,000 MT of milk powder to enter China at the preferential tariff rate of 2.5%, rather than the base tariff rate of 10.0%. In 2015, the quota allowed for approximately 134,000 MT of milk powder to enter China at a tariff rate of 3.3%. According to the agreement, quota volumes of milk powder increase each year by 5.0% through 2023, while tariff rates are linearly reduced on an annual basis from the base rate of 10.0% prior to the agreement, to tariff free in 2019. Jan ’16 combined whole milk powder (WMP) and skim milk powder (SMP) import volumes of approximately 144,000 MT exceeded the total 2016 reduced-tariff milk powder volume quota. Jan ’16 Chinese WMP imports increased 607.4% MOM on a daily average basis and 51.9% YOY while Jan ’16 Chinese SMP imports increased 115.6% MOM on a daily average basis and 43.2% YOY. Jan ’16 Chinese WMP and SMP import volumes each remained slightly below record highs experienced in Jan ’14. Jan ’16 Chinese dairy imports excluding WMP and SMP declined 5.9% MOM on a daily average basis from the monthly record high experienced in Dec ’15 but increased 65.0% YOY to a new record high for the month of January. Jan ’16 Total Chinese Dairy Import Volumes Finished at a New Monthly Record High Jan ’16 Total Chinese Dairy Import Volumes Finished up 71.4% MOM and 56.1% YOY Chinese Dairy Import Volumes Were 18.0% Above the Previous Jan ’14 Record High Jan ’16 Chinese WMP Import Volumes Finished up 607.4% MOM and 51.9% YOY Jan ’16 Chinese WMP Imports Were 3.8% Lower than the Record High Experienced in 2014 Jan ’16 Chinese SMP Import Volumes Finished up 115.6% MOM and 43.2% YOY Jan ’16 Chinese SMP Imports Were 1.9% Lower than the Record High Experienced in 2014 Jan ’16 Chinese Dairy Imports Excluding WMP & SMP Down 5.9% MOM but up 65.0% YOY Jan ’16 Chinese Dairy Imports Excluding WMP & SMP Finished at a January Record High New Zealand Accounted for Nearly Two Thirds of Total Jan ’16 Chinese Dairy Import Volumes