Accelerating Dairy Industry Transformation and Upgrading

Source: Qilu Securities at 10:24 August 20th, 2015


Event: China Dairy Industry D20 Summit sponsored by the Ministry of Agriculture and Dairy Association of China was held on August 18th, 2015 in Beijing with a theme of Allow Prosperity for the China Dairy Industry Stemming from High-Quality and Safe Development. Twenty dairy enterprises including Yili, Mengniu and Firmus attended the summit. The opening of the summit symbolized the founding of the highest-level alliance of domestic dairy enterprises– the China Dairy 20 Alliance. The Beijing Declaration of the China Dairy D20 was signed during the summit to adhere to promises in four respects: quality safety, brand building, honesty & self-discipline and integrative development to demonstrate the determination China dairy companies to prosper.
Comments: the savage development era has come and gone, and China's dairy product industry has undoubtedly come upon a major transformation and upgrade juncture, China's dairy product industry has made some achievements in production capacity, production modes, quality safety and development of laws and regulations in recent years. At the end of the 20th century, the promotion of UHT milk products has solved the problem of uneven distribution of China's milk resources and customer groups to some extent. Domestic customers' demand over dairy products has been driven rapidly by improvements on the supplier side. China's dairy product industry ushers in a golden decade of development. However, with limitations of the production cycle, the supply of raw milk consistently fails to meet increasing demand. What is worse is that the outbreak of melamine scandals has certainly exposed the serious imbalances in the upstream and downstream of production chain in China's dairy product industry. Customers seem to have become wary, and their confidence towards domestic dairy products has yet to fully recover after the melamine scandals. This has caused China's dairy product industry to face a series of problems such as increasing production costs, frequent fluctuations in prices of raw milk, low benefits of dairy cow breeding and growing dairy imports. Therefore, China's dairy product industry has come upon a major transformation and upgrade juncture.
China's dairy product industry has made some achievements: in production capacity, dairy cows on hand have reached the 14 million mark, and milk output is over 38 million tons, ranking third in the world. In the production mode, small-scale, free-range and low-return breeding has been improved, and the ratio of mass breeding of over one hundred dairy cows has reached 45%; in quality safety. The Ministry of Agriculture has carried out quality inspection plans for raw and fresh milk for 7 consecutive years, which makes the quality of raw and fresh milk produced from large pastures considerably higher than national standards. The development of laws and regulations that have been released from leading departments at all levels have had more than 20 rules and regulations implemented.


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