China's Dairy Industry Is Facing Transition

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The Chairman of Modern Animal Husbandry, Deng Jiujiang said dairy farming model is facing a transformation.

The Chairman of Mengniu Dairy, Niu Gensheng, has announced the resignation. The chairman Ning Gaoning of COFCO took the place. The former vice chairman of Mengniu, the current chairman of modern animal husbandry, Deng Jiujiang yesterday responded: "Mengniu and Yili Dairy have made significant contribution to the development of China's dairy industry. No one should deny the fact. Now they have entered a new stage of development. Milk comes after cow. Mengniu and Yili were busy in the rapid expansion of production capacity of dairy products in the past, but investment in the cattle industry is much fewer. This model is time to change."

On June 11, the NDRC also doubted Mengniu and Yili's business model of re-processing and light farming. These people said: "The state should increase its efforts to support the local dairy industry, develop breeding base. We do not encourage these enterprises such as Yili, Mengniu and other large enterprises to go outside of the corporate headquarters to Sichuan, Hebei, and Ningxia to compete for other people's milk. These enterprises should first develop the regional farming industry around the headquarters. The state support for all businesses needs to be fair and just, not in favor of a single large enterprise. If there is a dominant monopoly, it is not conducive to competition."

In 2007, among the national top ten dairy companies, only one was complained for the competition for milk. However, now there are several companies are complained for the competition for milk. Some local brands, local dairy companies are crushed out of business. In addition to snatch milk, Mengniu, Yili and other large enterprises take the modal of purchasing raw milk rather than producing milk by themselves, which brought greater uncertainty for farmers.

In 2008, after the outbreak of the melamine incident, many large enterprises stop the acquisition of milk, leading to local dairy farmers suffered heavy losses. In 2008 and 2009, due to the stop of purchasing, Ningxia was forced to slaughter tens of thousands of cows, which are high-yielding dairy cows. The foundation of local dairy industry development has been shaken.
Deng Jiujiang said the investment of Mengniu, Yili and other large enterprises in the self pasture are limited. One reason is that the investment in building a modern ranch is huge. In addition to the huge investment, the return cycle is much longer than the construction of dairy processing plants.

Analysts of the industry also said the development of China's dairy industry have entered a new stage of development.


About the Author:
I am Amanda Xia from foodchinanet.com, and my work is to promote a free online trade platform. http://www.foodchinanet.com/ contain a great deal of information about sheeps yoghurt,sheeps milk cheese, muscle milk cytosport ,and more.



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