Since 2009, China has been the world’s largest importer of dairy cattle. Currently Uruguay, along with Australia, and New Zealand, is one of the top three exporters of dairy cattle to China. In 2011, Uruguay sent over 23,000 dairy calves between 8 and 16 months old to China: 14% of all Chinese dairy cattle imports.

Li Shengli, the chief scientist  at China’s National Milk Industry Technology System and a professor at China Agricultural University expects that number to continue to increase in the short-term but drop off within 5 years.

The surge in dairy cattle exports to China is because companies like Modern Farming Group Co Ltd, Liaoning Huishan Holdings Group and other top Chinese milk producers are setting up dozens of large farms to ensure a consistent supply of milk to the People’s Republic. China Mengniu Dairy Co Ltd plans on constructing between eight and twelve large-scale dairy farms by 2015 at a cost of $549.15 million.

The increased Chinese investment in milk production can be traced to several tainted milk scandals in 2008. These scandals scared consumers away from Chinese milk and led to a dramatic increase in the amount of milk China imported. The Chinese government responded by establishing production goals for domestic producers, cutting taxes on production and introducing other financial incentives for China’s big milk producers. The government also encouraged foreign investors to bring in capital and technology.

The current revolution in the Chinese milk industry has produced a surge in demand for Uruguay’s dairy cattle. Although China already has a substantial herd of dairy cattle, milk companies have been importing higher yielding breeds from Uruguay and other countries in order to increase production.

However, that surge in demand may end before the decade. Li predicts that within 5 years Chinese dairy companies will have enough livestock  to breed high yielding dairy cattle on a large-scale. They currently have the technology to ensure first-born calves are female which greatly increases the speed the cattle population increases at.

Uruguay Business Reports original reporting by Donovan Carberry. Sources include: Uruguay’s National Milk Institute and China Daily.