China steps up efforts to promote troubled dairy industry

BEIJING—China’s top economic planner on Monday urged local governments to implement new measures to support dairy farmers by the end of the year.
The country’s State Council last month announced measures to promote the dairy industry, such as increased subsidies for dairy herds. The new measures were to promote the development of the dairy industry, as 30 percent of diary farmers suffered losses in 2006, said officials from the National Development and Reform Commission(NDRC).
Some farmers were reported to have slaughtered dairy cows for meat due to the narrow profit margin, according to the NDRC officials. The cost of dairy herd raising in China has increased sharply in the past year. The cost of feed has increased by 30 percent; cost of human labor has doubled; while expenses in quarantine, transport and water and power have also increased to different extents. China announced measures Sunday to support dairy industry as 30 percent milk cow raisers suffered losses in 2006.
The cost of milk cow raising has increased sharply since 2006. The cost of feed has increased by 30 percent; cost of human labor has doubled; and expenses in quarantine, transport and water and power have also increased to different extents. However, the price of milk has remained the same as in the previous years. As a result, the profit from raising a milk cow decreased by an average 1,200 yuan.
The new measures will put all raisers of progenitive cows across the country under the subsidy program that once only covered 181 counties, according to the National Development and Reform Commission. Under the new measures, the government will provide more financial support, including offering interest subsidies and extending loan payment period, to milk cow raisers.
The government will provide premium subsidies to encourage milk cow raisers to buy insurance, according to the new measures. Related departments and authorities of the State Council are studying the implementation details of the measures, which will been forced by the end of 2007.
However, the sale price of milk by dairy producers remained flat. As a result, the profit from raising a milk cow fell by an average 1,200 yuan. In the meantime, the dairy enterprises were also struggling with narrowing profit margins, as only one third of the country’s dairy producers were making profits while another third were suffering losses.
The price of domestic dairy products was almost the same as 2005, said Fan Xueshan, director of the Beijing Creamery Association, as Chinese dairy enterprises were reluctant to raise their prices for fear of losing their share of the fiercely competitive market. Analysts said the measures were aimed at avoiding a sharp decrease in milk cows against the backdrop of shrinking profits, which might lead to a shortage of dairy milk cows in the near future.—Xinhua