April 10, 2012
China needs to accelerate the transformation of the dairy industry, an industry insider said after reports of farmers killing cows to avoid losses in the wake of a new round of cost inflation and price cuts by dairy firms.
Heilongjiang Wondersun Dairy Co, which has 40 branches in China, lowered the price of fresh milk collected from farmers to CNY2.8 (US$0.4) per litre recently. The price is much lower than CNY2.94 (US0.47) per litre suggested by the local government, according to reports.
Besides lower prices, rising costs of feeds like corn and higher salaries of workers created more pressure on the farmers, who had to kill cows to prevent losses if they didn't want to sell their milk at a low price to Wondersun, which has a monopoly over local milk procurement, the report said.
The price of corn has been increasing recently. It has risen 8.25% over the past three months, according to bulk commodity data provider, 100pp1.com, the newspaper said.