China’s raw milk producers are struggling with oversupply as a result of a surplus of dairy cows and a lack of demand. Milk prices are falling to unprofitable levels, while feed costs continue to rise.
According to the Ministry of Agriculture and Rural Affairs, the price of raw milk in ten major milk-producing regions, including the Inner Mongolia Autonomous Region, fell 4.2 per cent year-on-year to CNY 4.12 (USD 0.59) per kilogram in the last week of December.
In the middle of last year, the price was between CNY4.20 and CNY4.30 per kilogram in large-scale farms, but by the end of the year it had dropped to CNY3.90 to CNY4 per kilogram. In the northwestern Ningxia Hui Autonomous Region, prices have even fallen to CNY3.80 per kg.
Milk prices should average at least CNY4.30 per kg to ensure an 8 percent profit margin for producers, according to Li Shengli, senior researcher at the National Dairy Industry and Technology System. But this is not in sight, milk producers have already started selling cows, some are getting out of production completely.
