Taiwan’s Dairy Market Evolves – Taiwan Business TOPICS

Got Milk? In Taiwan, the answer is complicated.

Taiwan’s appetite for dairy is growing — and so is the complexity in satiating it. As more consumers reach for milk, yogurt, and cheese, drawn by changing diets and rising health consciousness, the island’s dairy market finds itself in a surprisingly dramatic situation.

Taiwan’s small-scale dairy farmers, though backed by government support programs, face persistent challenges — from high production costs and limited land to growing climate pressures. At the same time, consumer demand for dairy products is rising, particularly for milk, yogurt, butter, and cheese. As local supply struggles to keep pace, these products are now largely met through imports.

Changing palates are redefining what dairy means to Taiwanese consumers. Historically, most Taiwanese did not grow up consuming dairy, and many developed lactose intolerance or remained wary of products like cheese, which were considered foreign and unappealing. Yet younger Taiwanese, raised with more global exposure, adopted these foods enthusiastically. Survey data show that the average dairy intake among Taiwanese remains modest — well under one serving per day. Still, a new generation is consuming more milk, yogurt, and cheese as part of a broader shift toward Western influenced diets

Amid this evolution, representatives from the U.S. Dairy Export Council (USDEC) and the California Milk Advisory Board (CMAB) visited Taiwan this spring to better grasp the market and where their products can fit in.

Their message was clear: the U.S. dairy industry is ready to be a reliable, sustainable, and collaborative partner for Taiwan — not just as a supplier, but as a stakeholder in long-term public health, food security, and agricultural innovation.

Local strengths, global pressures

Taiwan’s dairy sector, while small by international standards, is vital to the domestic economy and food system. The country is home to just over 500 dairy farms and roughly 61,000 milking cows, producing around 470,000 metric tons of raw milk annually. Nearly all of it is channeled into fresh, refrigerated milk — high-quality, short shelf-life products favored by local consumers.

The Ministry of Agriculture (MOA) has long supported these producers through a combination of price stabilization mechanisms, subsidies, and technical assistance. Over 95% of dairy farmers operate under contract with processors, supported by the MOA’s price review committee, which adjusts raw milk prices based on production costs and global trends.

In 2024, 6.4 million head of cattle were covered under livestock insurance programs, up 11 percentage points from the previous year. Farmers also receive support for barn modernization, waste management systems, and automated milking equipment.

“We are very aware of the structural disadvantages our producers face,” an MOA official told TOPICS by email. “Taiwanese dairy farms are small in scale and face higher production costs than competitors abroad. That’s why we emphasize contract stability, food safety, and continuous investment in sustainable practices.”

But as international trade continues to shift, new pressures are emerging. This year, Taiwan’s Economic Cooperation Agreement with New Zealand is eliminating all remaining tariffs on New Zealand dairy imports, including liquid milk, giving one of the world’s most export-driven dairy producers an even stronger foothold in the Taiwanese market.

For U.S. exporters, this poses both a threat and an opportunity.

New Zealand dominates Taiwan’s milk powder and butter imports and is a major player in ultra-high-temperature milk, or milk that has been sterilized through a heating and cooling process, giving it a longer shelf life than pasteurized milk.

U.S. dairy, meanwhile, maintains a solid presence in milk, cheese, whey, and value-added ingredients used in food processing. In 2024, the United States exported around US$108 million in dairy products to Taiwan, making it the island’s second-largest dairy trade partner.

From USDEC’s perspective, the central issue in Taiwan’s dairy market is ensuring fairness for imports. In practical terms, that means creating a more level playing field on tariff levels.

The U.S. industry representatives are urging the Taiwan government to lower duties on U.S. extended shelf-life milk, cheese, butter, and other dairy products, which currently face tariffs of 5% to 15%. USDEC argues that the United States should not be put at a competitive disadvantage with New Zealand, particularly in light of the close ties between Washington and Taipei.

“It makes no sense that the United States is at a disadvantage — we are your best partners and your best friends,” says Jaime Castaneda, executive vice president of Policy Development and Strategy at USDEC. “Taiwan’s economic and national security is of U.S. interest. We want to be the supplier of choice for the Taiwanese consumer in a way that supplements Taiwan’s own production.”

Interestingly, Taiwan’s first sustained exposure to milk came through the U.S. military presence in the post war era. Beginning in the 1950s, U.S. aid programs and the commissary system supplied reconstituted or powdered milk to American service members on the island. These products were later made available to the Taiwanese public — first through American supplier Foremost Dairies’ own retail outlets and then more broadly — and represented the first introduction of cow’s milk to many local consumers. U.S. aid provision of powdered milk was instrumental in seeding Taiwan’s modern dairy consumption habits and in laying the groundwork for the domestic dairy industry’s later expansion.

Beyond trade mechanics, U.S. dairy representatives emphasize the potential for deeper cooperation in nutrition, public health, and education. Tony Rice, director of Trade Policy at USDEC, points to the success of school milk programs in markets like Mexico, where U.S. dairy helped design initiatives that also benefited local farmers.

“We are here because we want to collaborate,” says Rice. “We want to share what’s worked elsewhere and see where we can support Taiwan’s goals.”

Foremost Dairies’ shop in Shilin, Taipei, in the 1980’s. (Photo: Chung Yung-Ho)

Taiwan last year introduced a nationwide free milk program for schoolchildren, intended to boost dairy consumption and support local farmers. But after just one semester, the initiative was suspended amid logistical setbacks, including inadequate cold storage in schools and a hastily executed rollout.

“We’ve spoken with government officials about how to improve initiatives like this,” Rice says. “Whether it’s expanding the product mix to include cheese or yogurt, improving delivery systems, or working on nutrition education, there’s a real opportunity here.”

MOA officials echo that sentiment, stating that the ministry is “open to international cooperation, especially when it comes to improving food literacy, school nutrition, and connecting with global best practices.”

Public health is a shared concern. Taiwan already grapples with one of the highest rates of osteoporosis in Asia, and national surveys show that over 80% of school-aged children do not meet recommended dairy intake levels, potentially exacerbating the issue as this generation ages. Rice notes that many school boards still associate milk with calcium alone, but modern nutrition science points to broader benefits, including protein, vitamins, and even cognitive development.

“There’s a reason milk is nature’s first food,” says Bob Carroll, chief executive officer at CMAB. “It’s designed to sustain life. If we can help communicate that to a new generation of Taiwanese consumers, we’re all winning.”

Craft and collaboration

While much of the U.S. engagement centers on policy and trade, Carroll also sees opportunity at the grassroots level. As a former brand executive at Kraft Foods and Blue Diamond, he has long watched the evolution of Asian dairy markets.

“Pizza changed everything,” he says. “Once consumers got used to melted cheese, it opened the door to other formats — cream cheese, yogurt, even specialty butters.”

Today, Taiwan’s cheese imports are growing steadily, led by mozzarella, cheddar, and cream cheese for foodservice use.         

On the regulatory side, both USDEC and the MOA confirm that Taiwan’s food safety and import systems are relatively streamlined, especially compared to some other Asian markets.

“Taiwan has been a good partner,” says Castaneda. “We’ve seen professionalism, good communication, and a genuine interest in consumer health. That gives us confidence in deepening our engagement here.”

Still, the U.S. side believes more can be done to build trust and visibility for American dairy. “We’re not just in-and-out exporters anymore,” says Carroll. “We’re long-term partners. We want to invest in relationships, build brands, and contribute to Taiwan’s food landscape.”

To that end, USDEC is exploring partnerships with local universities, public health groups, and trade associations. There are also plans to bring more research findings to Taiwan — particularly studies showing positive links between dairy consumption and cardiovascular health, cognitive function, and obesity prevention.

“Milk fat used to be demonized,” Carroll says. “But new science is rewriting the narrative. There’s a real opportunity to update public perception.”

To be sure, dairy policy has become a balancing act for Taiwan. The government continues to seek to protect and modernize its domestic producers through pricing support, technology subsidies, and “Taiwan Fresh Milk” labeling reforms that will take effect in 2026. Still, the policy must ensure a stable and affordable supply of dairy for consumers in a warm, import-dependent region.

The MOA’s stance is cautiously optimistic. “We remain committed to supporting small farmers and building local capacity,” the ministry told TOPICS. “But we also recognize that international cooperation in technology, trade, and nutrition is essential for long-term sustainability.”

Castaneda agrees. “The future of dairy in Taiwan is not about choosing between local and imported,” he says. “It’s about building a smart, diversified system that leverages the strengths of each. U.S. dairy can be part of that solution.”

As Taiwan advances its food security planning and consumer education efforts, U.S. dairy is poised to play an expanding role. From school nutrition and retail innovation to trade talks and joint research, both sides appear increasingly aligned in turning shared priorities into tangible outcomes.

“It’s a good time for this conversation,” says Rice. “We’re here to listen, to learn, and to be part of Taiwan’s dairy journey — not just this year, but for the long haul.”

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}