China's raw milk prices on the rise

China's dairy market is staging a strong recovery as raw milk prices have risen about 2% recently, pushing up prices of dairy products such as fresh milk and yogurt.

 

Since last October, raw milk prices rose and started to stabilise in March and April this year.  However, there is a gradual rising trend.

 

The source of milk is the fundamental basis for milk enterprise development. Previously, companies like Mengniu did not have self-built ranches, but mainly acquired raw milk from outside sources. A cow, from birth to being able to produce milk, can take two years - a speed too slow for the rapid expansion of companies like Mengniu.

 

At present, many parts of the country are showing signs of looting milk sources. After the "melamine incident" of 2008, many dairy farmers sold or slaughtered their cattle, resulting in a decline in raw milk supply. At present, the dairy market is rebounding, but companies are recovering much faster than dairy farmers, and supply and demand are imbalanced.

 

Analysts were concerned that enterprises may have pushed the production rate too fast, without taking into account the lack of milk sources, adding that this could lead to a crisis in Chinese dairy industry.