When the cost is high and the price of milk is low, why do small dairy farmers "lose" to restored milk?

Chinanews.com, Beijing, Sept. 18 (Qiu Yu) some dairy farmers in China are losing money because the sales price is not enough to cover production costs. In addition to the pressure of some companies refusing to accept milk and the influx of imported milk powder, dairy farmers have to face a bigger headache-some companies use cheap recovered milk to pass off as normal temperature milk or pasteurized milk.

The milk price is low and the dairy farmer: I can't get along anymore.

After raising a cow for 18 years, Dong Changlin said, "I can't live with it this year."

A cooperative in Hengjie Town, Ningbo City, Zhejiang Province, where Dong Changlin is located, used to have four dairy farmers and 1250 head of cattle, but now only Dong Changlin is left to raise the last 200 cows.

He supplies raw milk to local dairy companies. The purchase price is 4.3 yuan per kilogram, but the cost per kilogram is 5 yuan, that is to say, there will be a loss of 70 cents per kilogram of raw milk. All in all, the annual loss is as high as 1 million.

Many dairy farmers have no choice but to quit. "the other three sold all their cows last year," he said. when they were introduced, each cow cost 30,000 yuan, and when it was sold at the slaughtering price, it was less than 10,000 yuan each, and the cooperative lost more than 20 million yuan.

In fact, compared with the northern producing areas, the price of raw milk in Dong Changlin's town is still relatively high. According to a report released by Societe Generale Securities, milk prices in the main northern producing provinces have fluctuated between 3.39 yuan / kg and 3.40 yuan / kg for several weeks since July this year.

In addition to low milk prices, dairy farmers have also been hit by the refusal of some dairy enterprises. A number of dairy farmers in major dairy provinces such as Inner Mongolia and Heilongjiang complain that dairy companies buy a limited amount of raw milk every day, "not a drop more".

Societe Generale Securities pointed out in the report that in the first half of 2016, the amount of milk rejected and restricted in major provinces reached 10% of the total milk volume, and the production capacity of small dairy farmers and dairy stations continued to be eliminated.

Overcapacity of raw milk

One of the reasons why dairy farmers are in trouble is raw milk overcapacity.

Liu Jiangcheng, a former dairy farm director in Shuangcheng District, Harbin, a major dairy county, recalled that a few years ago, consumer confidence in domestic dairy products was restored, and many people began to import cows and invest in factories.

According to the data released by the China Dairy Industry Association in the Analysis of the Dairy Industry situation in 2016 and the work ideas for the next year, China imported a total of 694600 dairy cows in the five years from 2011 to 2015, which is 1.67 times that of the 10-year period from 2001 to 2010.

Super large-scale dairy farms have been built one after another. Data show that according to the media reports collected in the first half of this year alone, a total of 16 projects were signed, started and put into production, of which 11 were over 10,000 pastures, with a total feeding scale of 268000, with a total investment of nearly 12 billion yuan.

"many people borrow money to raise cattle." Liu Jiangcheng said that according to local policy, if the number of cows exceeds 300 and other conditions are met, they can get a subsidy of 3 million yuan, but only half of the subsidies can be received by farms.

"now that milk prices have fallen, most local dairy farmers want to sell their factories." He said.

In this regard, the China Dairy Industry Association pointed out that due to the blind development of the dairy industry, resulting in overcapacity of raw milk, it is difficult to sell milk in some places, and dairy enterprises and dairy industry are under great pressure.