How to revitalize China's Dairy Industry

The dairy industry suffers from pain

The impact of imported low-priced dairy products and the slowdown in consumption growth "meet", and it is difficult to sell milk.

"Raw milk prices have been falling, the first two years per kilogram also rushed to 4 dollars, and now it is about to fall below 3 dollars." If this goes on, we'll lose money soon." Recently, Lu Xianglai, a dairy farmer in Xingtang County, Hebei Province, is worried. Qiu Shengming, a large farmer in Jinan, Shandong Province, who has 1800 cows, is ready to sell some cows at a low price. Lu Xianglai and Qiu Shengming's situation was not the worst. As milk prices continue to decline, some places began to feed pigs with fresh milk and other phenomena.

Yu Kangzhen, vice minister of agriculture, said that at present, the loss of China's dairy industry has exceeded 50%. According to the Ministry of Agriculture fixed-point monitoring, March dairy farming losses have reached 51%, an increase of 5.8% year-on-year; at the same time, dairy stocks decreased by 11.9% year-on-year. What's more, this situation continues and spreads. So much so that dairy is listed as a "high-risk industry" by some banks.

Analysis of the reasons for the loss of dairy industry, Yu Kangzhen said, In the past two years, With the impact of imported low-priced dairy products and dairy consumption growth slowed down "Two meet", Dairy industry as a whole is facing challenges, Product sales are not smooth, Loss area continues to expand.

On the one hand, international milk prices and domestic milk prices are seriously upside down. Data released by the International Dairy Economics Association show that in May this year, the global average price of raw milk was 1.44 yuan per kilogram, and the average price of raw milk in China's 10 major producing areas was 3.46 yuan per kilogram. On May 3, auction prices at the new Zealand Fonterra Global Dairy Fair showed that whole milk powder was $2176 per ton, down 58.2 per cent from its 2013 high of $5208 per ton. Recently, the CIF price of imported milk powder is 18,000 yuan per ton, while the domestic price is close to 30,000 yuan per ton.

On the other hand, dairy consumption growth slowed down. Taking liquid milk as an example, according to the data of the National Bureau of Statistics, the total sales volume of liquid milk nationwide in 2015 was 27.389 million tons, an increase of 3.6% over the previous year. However, compared with the average annual growth rate of 5.1% during the "Twelfth Five-Year Plan" period and the average annual growth rate of 11.1% during the "Eleventh Five-Year Plan" period, the growth rate is significantly lower. At the same time, domestic milk consumption confidence is still in the repair stage.

When a cow is stung by a cow fly, the cow suffers. Gao Hongbin, president of the China Dairy Association, said that at present, the pain in the dairy industry is highlighted as "triple difficulties."

The first difficulty is the low price of milk. At present, the purchase price of fresh milk in large-scale farms has dropped by 10% year-on-year, while that in small-scale breeding communities and farms has dropped by 15% year-on-year.

Another difficulty is selling milk. Under the downward pressure of consumption growth rate, dairy enterprises began to limit the collection of fresh milk, accounting for about 10% of the total fresh milk production. Some large-scale breeding enterprises also have to spray raw milk that has not been processed into fresh milk into milk powder because of sales difficulties. The amount of powder spraying accounts for about 5% of the total output of fresh milk.

There is another difficulty: big losses. At present, the loss side of dairy enterprises has not been seen for many years.

Yu Kangzhen said that at present, the difficulties faced by the dairy industry are related to the macro-economic environment and the cyclical fluctuation of international dairy products prices, but mainly our own competitiveness is not strong enough, the cost of feed and labor rises rapidly, the technology and management cost saving and efficiency enhancement ability is slow, the integration degree of dairy farming and dairy products processing is still not high, the interest linkage mechanism is not close, and consumers 'consumption confidence in domestic dairy products is still not strong.

Deep development potential

Milk consumption is expected to maintain a steady growth trend in a longer period of time

The difficulties facing the dairy industry are also a kind of "growing pains". Gu Chengji, secretary general of the China Dairy Association, said that after years of efforts, China's dairy industry has made great progress.

Production methods improved. In 2015, the proportion of large-scale dairy farming nationwide reached 49%, an increase of 29.5 percentage points over 2008. Whole plant silage is popularized rapidly, mechanized milking and cold chain storage and transportation are fully realized. The proportion of self-built and equity milk sources of dairy enterprises exceeds 20%.

The yield of dairy cows increased significantly. At present, Holstein cows have an average yield of 6 tons, 1.2 tons higher than that in 2008, among which 1.5 million high-yield cows with a yield of more than 9 tons have been produced. A production system dominated by large-scale dairy farms and medium-and high-yield dairy cows has initially taken shape.

The quality and safety level has been greatly improved. The qualified rate of sampling inspection of prohibited additives in fresh milk has remained 100% for 7 consecutive years, and the main quality and hygiene indicators of raw milk produced in large-scale pastures have reached the level of developed countries. In 2015, the qualified rate of dairy products nationwide reached 99.67%.

Under the joint action of these factors, the output of dairy products in China has been greatly increased. In 2015, there were more than 10 million dairy cows in China, and the output of fresh milk and dairy products reached 38.7 million tons and 27.82 million tons respectively, ranking third in the world. At the current level of demand, supply is basically saturated.

Gao Hongbin said imported dairy products exacerbated the contradiction between supply and demand. In the first half of this year, the cumulative import of dairy products was 1.226 million tons, an increase of 30.49% year-on-year; imported liquid milk increased by 77.31% year-on-year; imported infant milk powder increased by 25.42% year-on-year.

"Destocking" is an urgent task for the dairy industry. "It is necessary to guide consumption and better meet the needs of the masses by expanding the structural supply of pasteurized milk and cheese products." said Wang Junxun, deputy director of the Animal Husbandry Department of the Ministry of Agriculture.

Although the contradiction between supply and demand is prominent, the development of dairy industry in China still has deep potential in the long run. The saturation of dairy products at present is temporary saturation at best. Yu Kangzhen said that in 2015, China's per capita milk consumption reached 36 kg, an increase of 28.4 kg over 2000 and an increase of about 6 kg over 2008, but only 1/3 of the world average consumption. He said: "Last year, the national liquid milk sales growth in all types of bulk food is still faster. With the population growth and the improvement of people's living standards, milk consumption is expected to maintain a stable growth trend in a relatively long period of time, and China's dairy industry is still in an important stage of great potential."

The way out is at your feet.

Reform and innovation, structural adjustment, transformation and upgrading are the "best policies" for dairy industry development.

How to deal with the difficulties encountered by the dairy industry at present?

Some people say that since imported dairy products make China's dairy industry feel pressure, then less imports will not become it? Peng Wensheng, chief economist of CICC, admitted that in fact, international milk prices have been falling by the dairy industry development cycle. Revenue from dairy farms across the United States has fallen 35% over the past two years, according to the U.S. Department of Agriculture, and U.S. cheese producers 'cheese stocks reached 759 million pounds in June, up 104 million pounds from a year earlier. Moreover, in today's increasingly globalized trade, the closed-door approach will definitely not work.

"The way out for the dairy industry is at our feet." Minister of Agriculture Han Changfu said that reform and innovation, structural adjustment, transformation and upgrading are the "best policies" for the development of China's dairy industry. In view of the current dairy industry problems, to use a combination of boxing. Continue to strengthen the construction of milk source base, continue to strengthen the construction of forage feed production system, continue to strengthen the supervision of fresh milk quality and safety, continue to strengthen consumption guidance, reform traditional industries with science and technology, material equipment, development concept, operation mode and industrial organization, reduce costs, improve efficiency and enhance competitiveness.

Junlebao President Wei Lihua said: "The cow flies sting the cow, the cow will force to run wildly." At present, the supply-side structural reform of dairy industry is advancing, and the vitality of dairy innovation is bursting out.

The way to improve quality and efficiency is getting wider and wider. Just like a coin has two sides, the other side of the dairy industry-wide loss of more than 50% is the performance of some dairy enterprises above designated size. According to data from the China Dairy Industry Association, sales revenue of dairy enterprises above designated size increased by 5.4% year-on-year in the first half of the year; total profits increased by 15.8% year-on-year; inventory products decreased by 14.28% year-on-year. This brings some warmth to the grim dairy industry.

One of the important reasons is that many enterprises, especially listed enterprises, have explored a "zero-one mode" to open the door of high quality from the operation of "Wantou Ranch". Deng Jiuqiang, chairman of Hebei Flag Dairy, introduced that the "zero one mode" is the "zero distance integration" mode, and the earliest modern animal husbandry in China to implement the "zero one mode" has won the gold medal of the World Food Quality Appraisal Conference for three times. Gao Lina, chairman of Modern Animal Husbandry, said that the secret of the company's production of high-quality milk lies in the production mode of "planting and breeding integration" and "from milking to processing in 2 hours." By the end of last year, modern animal husbandry had built 27 "ten thousand pastures" nationwide, contracted more than 800,000 mu of pasture, 230,000 high-quality dairy cows and more than 9 tons of lactating cattle.

The exploration of benefit linkage mechanism for win-win cooperation between dairy farmers and dairy enterprises is also steadily advancing. At present, 15,000 dairy farmers 'professional cooperatives have sprung up and are growing tenaciously. Zhongding Animal Husbandry has explored another way, entrusted the whole process of dairy cows in small and medium-sized pastures, supplied high-quality raw milk to large-scale dairy enterprises, and became a dairy "waiter". This enterprise, which was founded in May 2013, has integrated 140 pastures nationwide through entrustment, equity, self-construction and technical trusteeship, with 100,000 contracted cows and 1100 tons of fresh milk per day, ranking among the top 5 animal husbandry enterprises in China and forming the largest innovative dairy farmer consortium in China.

All kinds of exploration are bringing vitality. Although the situation is grim, we are convinced that it will not be long before China's dairy industry comes out of the doldrums.