China's dairy farmers face the problem of low milk purchase prices and rising costs

With the global outbreak of the new coronary pneumonia epidemic, reports such as "American milk farmers dumping milk" are frequently reported. Under the background that the domestic epidemic situation is basically controlled, the reporter learned that in most regions, dairy farmers are still burdened with raw material price increases and downstream milk collection prices are "two big mountains", and they hold a wait-and-see attitude toward future development.
Dairy farmers survive the "dark moment"
At the beginning of the outbreak, due to many factors such as insufficient consumption in the downstream of the dairy industry and poor for the test transportation, a large area of ​​milk was unsalable in China. According to data released by the China Dairy Industry Association, as of February 7, more than half of the dairy farms in China experienced a feed shortage, large dairy processing plants began to spray powder, and corporate sales fell year-on-year.
At present, with the outbreak of foreign epidemics, the news of "American dairy farmers dumping milk" is frequently reported. In contrast, dairy farmers in China have survived the "dark moment." At the end of February this year, Li Shengli, chief scientist of China's dairy industry technology system, once said that with the gradual improvement of domestic traffic, the transportation of dairy companies has been basically smooth. Dairy expert Song Liang told reporters from China Business Daily that in the past month or two, the state and local governments have given a lot of policy support to agriculture and animal husbandry, and the production of agriculture and animal husbandry is gradually recovering.
The relevant person in charge of China Shengmu Organic Dairy Co., Ltd. (hereinafter referred to as Shengmu) told a reporter from China Business Daily that as a large animal husbandry company, Shengmu has stable contract protection and is relatively less affected by the epidemic. In fact, Shengmu ’s pastures have been resumed after the Spring Festival, and transportation has been affected when the epidemic is serious. However, the transportation has returned to normal, and the amount of fresh milk powder sprayed by the company ’s pastures is very small and can be ignored.
Low milk price
But many small pastures in China are not as "lucky" as Shengmu. "Currently, the price of milk received by downstream dairy companies for us is 3.2 yuan / kg, which is 0.7 yuan / kg lower than before the epidemic," Wang Ming (pseudonym), a rancher in Qingdao, Shandong, told a reporter from China Business Daily. Wang Ming independently manages a small pasture of more than 160 cows. Although the amount of milk received is basically guaranteed, the price of milk is significantly lower than before the epidemic.
There are not many ranchers similar to Wang Ming. Li Li (a pseudonym), a rancher in Ningxia, also told a reporter from China Business Daily that at the end of last year, the price of milk received by downstream dairy companies was around 3.9 yuan / kg, and the price of milk received in January this year fell slightly to 3.77 yuan / kg. However, in February after the outbreak, the price of milk received fell steeply, reaching 3.1 yuan / kg. The milk payment in March has not yet arrived. It is estimated that the price of milk received in March will be around 3.3 yuan / kg. But it is only just covering the cost.
In fact, Song Liang admitted that due to the current poor sales of downstream dairy companies, the willingness of dairy companies to collect milk is not high, and the price of milk collection for upstream is generally low, and many small and medium-sized farmers have suffered serious losses.
Li Chuanshui, the legal person of Shandong Zibo Rongying Animal Husbandry Co., Ltd. (hereinafter referred to as Rongying Animal Husbandry), told China Business Daily that at the end of last year, the price of milk received by downstream dairy companies was 4.3 yuan / kg, but now it has dropped to 3.5 yuan / kg. The determination of the price of 3.5 yuan / kg milk collection is also based on the scale of Rongying's 1000 cows and the quality of the company's products. According to him, the company's raw milk is supplied to downstream manufacturers for the production of high-end milk. The indicators such as the number of somatic cells and the total number of colonies are high. The company has received many rewards, and the milk price is considered high locally. In fact, dairy companies currently receive milk prices of only 2.9-3.2 yuan / kg for many small local farms.
High cost and low profit Dairy farmers hold a wait-and-see attitude towards future development-China Business Network | China Business Daily 0

The highest increase in raw materials reached 15%.
In addition to lower milk prices, another “big mountain” that weighs on small and medium pastures is the rise in raw material prices. Li Li told a reporter from China Business Daily that after the Spring Festival, prices of raw materials including cottonseed, sugar beet pellets, and imported alfalfa have risen, especially imported alfalfa, which has risen from the previous 3,000 yuan / ton to the most recent 3,250 yuan / ton.
Li Chuanshui also admitted that after the Spring Festival, raw materials began to rise in price, mainly including soybean meal, imported alfalfa, corn, etc., among which the price increase of corn started after the occurrence of foreign locust disasters. He revealed that small and medium ranchers have a relatively low demand for raw materials and will not negotiate prices directly with raw material suppliers, but will go through distributors. The reason for the large increase in raw material prices this time is the malicious hype of distributors during the epidemic.
Specifically, Li Chuanshui revealed that soybean meal has risen from the ex-factory price of 2820 yuan / ton to the highest point of 3400 yuan / ton, and slightly decreased in April. The current price is about 3240 yuan / ton. Corn rose from 1,900 yuan / ton to 2,100 yuan / ton, corn flakes rose from 2,060 yuan / ton to 2,200 yuan / ton, and imported alfalfa increased by about 100 yuan per ton. For the test, a China Business Daily reporter calculated that the current price of soybean meal, which has the highest price increase, is now 15% higher than before the outbreak.
At present, dairy farmers who bear the "two mountains" hold a wait-and-see attitude towards future development. As Li Li said, dairy farmers do not know the future development trend of the industry and dare not blindly expand production.