Domestic dairy producers despair amid surge in imports
Group Co Ltd at the start of 2013, the domestic dairy giant still stopped collecting milk from her farm at the end of last year, and she is now considering a lawsuit against Yili for breach of contract.
A major part of that investment was 500,000 yuan spent on a set of imported feed processing equipment, as required by Yili under the contract.
The business used to have 800 cows but most of that herd has now been sold, leaving her just 170 animals. Chen Jiayun, one of the 13 farmers involved in the collective, has sold 38 of her cows, from the original 73.
“Raising cows is as hard as raising a baby,” said Chen. “You have to be really careful about hygiene and feed.”
Her story is being mirrored by thousands of milk producers across China, as sales prices fall well below breakeven point, she said.
Before the 50-year-old was forced to start selling her cows, the cost of feed each day was around 3,330 yuan. The 1 metric ton of milk she took from the animals daily brought her around 3,000 yuan.
The milk industry crisis is particularly serious in provinces like Shandong, Hebei and Qinghai, said industry sources.
As an increasing number of dairy companies start to reduce or halt their collection of fresh milk, many farmers there are being forced to pour their milk down the drain or even have their dairy herds slaughtered.
And while domestic farmers find it increasingly hard to sell their fresh milk, the import of dairy products has continued to grow
According to the General Administration of Customs, the country imported 320,000 tons of liquid milk in 2014, up 70 percent from the previous year. Import of milk powder excluding infant formula rose 9 percent year-on-year to 930,000 tons, and that of infant formula increased to 121,000 tons in 2014, roughly the same level as a year earlier.
About 27.7 percent of the imports were from theNetherlands, followed by 14.1 percent from Ireland, 13.5 percent from France, 10.3 percent from Denmark and 8.6 percent from New Zealand. The five countries accounted for 74.2 percent of total formula milk powder imported last year.
Li Liuhang, director of the Shandong provincial dairy management office, said the prices of fresh domestic milk have been dropping monthly since February last year and now sit at around 4.5 yuan per kg on average. The province, with 1.25 million cows and total output of 2.71 million tons, is the country’s fifth-largest milk producer.
Official figures show raw milk prices remain stable at larger farms but small-scale operations have suffered, with prices falling as low as 1 yuan per kg in some regions.
Chen Rongwei, deputy director at the China Dairy Industry Association, said it