China’s dairy producers are struggling to make ends meet as the price of animal fodder continues to rise, yet they are unable to raise their prices due to stiff competition from imported milks, Yicai Global has learned.
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China’s Dairy Farmers Feel the Pinch From Soaring Feed Prices, Cheap Imports

The price of soybean pulp surged 17 percent over the week-long Lunar New Year holiday that ended Feb. 6 to CNY4,100 (USD644) per ton, Xu Xinqiang, founder of dairy farming giant Xinqiang Animal Husbandry, told Yicai Global. The price of all protein feeds has increased by between CNY200 (USD31) and CNY600 a ton, he added.

Yet the price of unpasteurized milk is falling. It was CNY4.26 (USD0.67) per kilogram on average in the country’s 10 biggest milk producing areas in the first week of this month, down 0.2 percent from the previous week and a drop of 0.5 percent from a year earlier, according to the Ministry of Agriculture and Rural Affairs.

Local products are also being supplanted by imported ones which can cost up to 20 percent less, Song Liang, an independent dairy industry analyst, said to Yicai Global. Last year dairy imports jumped 18.5 percent from the year before to 3.9 million tons, a much faster clip than the 7.1 percent growth rate for domestic milk output, according to the National Bureau of Statistics.

Prices of unpasteurized milk must stay above CNY4.30 (USD0.68) per kilogram to guarantee an 8 percent basic profit margin, Li Shengli, chief scientist with the National Dairy Industry and Technology System, said earlier.

There are no simple solutions to the problem of high feed prices, said Gao Lina, deputy secretary-general of the Strategic Committee of the Dairy Association of China. Dairy farms can only hike output to cut costs or charge more for their products.

Australians are being warned of another price hike, with the cost of milk set to go up.

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