China, 2014–2015: Economic Problems Affect Demand
China is one of the world’s largest—sometimes top—dairy importer. In 2014, the bulk of China’s imported dairy products came from New Zealand. After New Zealand experienced a prolonged drought, China started buying more milk from France.
But in 2015, two things happened to change this trend: The Chinese realized they had overstocked on milk and demand plummeted. Simultaneously, China endured an economic downturn. As a result, French dairy exports to China fell by over 13 percent.
Europe, 2015: Increasing Milk Production in Europe Means Increasing Competition
In addition to the markets in Russia and China contracting, French dairy farmers found they could not even sell their excess supply domestically, as rates of milk consumption had dropped in France.
Exacerbating the problem, the European Union had decided to lift long-standing quotas, or limits, on dairy production, a move that added to the growing supply and further drove down milk prices all over the European Union.
By the beginning of 2016, milk prices in France had plummeted nearly 20 percent, meaning French farmers were taking home significantly less income from the milk their cows produced.
The EU eventually stepped in with aid packages, offering 500 million euros, or about $585 million, in aid to its dairy farmers. But no quota on milk production was reintroduced, which meant that European producers could continue to produce as much milk as they wanted. They just needed to find a place that would buy their milk—and, with the European market saturated, they turned their attention to Africa.