Executive Summary Chinese dairy import figures provided by GTIS were recently updated with values spanning through Jan ’17. Highlights from the updated report include:

• Jan ’17 total Chinese dairy import volumes declined on a YOY basis for the second consecutive month, finishing 14.1% below the monthly record high experienced during the previous year. The YOY decline in total Chinese dairy imports was the largest experienced throughout the past 19 months on a percentage basis.
• Jan ’17 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. Chinese whole milk powder and skim milk powder imports increased 220.5% and 188.5% MOM on a daily average basis, respectively, but remained 10.0% and 2.0% lower on a YOY basis.
• Jan ’17 Chinese dairy imports excluding whole milk powder and skim milk powder declined a YOY basis for second consecutive month, finishing down 21.5%, but remained at the second highest January figure on record.

Additional Report Details According to GTIS, Jan ’17 total Chinese dairy import volumes increased 51.1% MOM on a daily average basis to a 12 month seasonal high but remained lower on a YOY basis for the second consecutive month, finishing 14.1% below the monthly record high experienced during the previous year. The YOY decline in total Chinese dairy import volumes was only the third experienced throughout the past 18 months but was the largest experienced throughout the past 19 months on a percentage basis. The seasonal increase in total Chinese dairy import volumes of 51.1% was consistent with the three year average December – January increase in volumes of 51.0%. Seasonal increases in total Chinese 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 2017, the quota allows for approximately 150,000 MT of milk powder to enter China at the preferential tariff rate of 1.7%, rather than the base tariff rate of 10.0%. In 2016, the quota allowed for approximately 142,000 MT of milk powder to enter China at a tariff rate of 2.5%. 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 ’17 combined whole milk powder (WMP) and skim milk powder (SMP) import volumes of approximately 129,000 MT, accounting for 86% of the total 2017 reduced-tariff milk powder volume quota. Total Chinese dairy imports destined from New Zealand accounted for over two thirds of the total import volumes throughout the month. Jan ’17 Chinese WMP and SMP import volumes declined 10.0% and 2.0% YOY, respectively, throughout the month, although both remained at the third highest January figures on record. Jan ’17 Chinese dairy imports excluding WMP and SMP declined on a YOY basis for the second consecutive month, finishing down 21.5%, but remained at the second highest January figure on record. Jan ’17 Total Chinese Dairy Import Volumes Reached a 12 Month Seasonal High Jan ’17 Total Chinese Dairy Import Volumes Increased 51.1% MOM but Declined 14.1% YOY Total Chinese Dairy Import Volumes Remained at the Second Highest January Figure Jan ’17 Chinese WMP Import Volumes Increased 220.5% MOM but Declined 10.0% YOY Chinese WMP Imports Remained at the Third Highest January Figure Jan ’17 Chinese SMP Import Volumes Increased 188.5% MOM but Declined 2.0% YOY Chinese SMP Imports Remained at the Third Highest January Figure Jan ’17 Chinese Dairy Imports Excluding WMP & SMP Declined 15.1% MOM and 21.5% YOY Chinese Dairy Imports Excluding WMP & SMP Remained at the Second Highest Jan Figure New Zealand Accounted for Over Two Thirds of the Jan ’17 Chinese Dairy Import Volumes