2015 was the first time a 42-year-old dairy farmer from Shandong was forced to throw out his milk. “I dumped more than 200 kilograms of milk. It left tears in my eyes,” the farmer said, asking not to be named.
Dumping milk and slaughtering milk cows have become common practices in China since 2004. Driven by low demand and tumbling prices, the actions have become commonplace, Economic Information Daily reported.
Farmers in Zhenjiang, Jiangsu province were found to be secretly dumping more than 1,300 kilograms of raw milk every day.
“There is a milk surplus, and dairy companies have informed us they won’t buy anymore milk from us once our current contract ends,” said Yan Xili, a farmer. To get by, most farmers began slaughtering their cows and selling off their raw milk stock to middleman traders for 1.6 yuan per kilogram.
But on April 1, the price of raw milk tumbled below 1 yuan per kilogram, cheaper than even common mineral water.
Records from the Animal Husbandry and Veterinary Information Center of Shandong Province show that farmers dumped 975 tons of raw milk and slaughtered 6,270 cows in the first week of January while scrambling to minimize their losses.
By April, the total number of dairy farmers fell to 9,100 and the number of cows to 675,000, a 7.5 percent contraction from 2014.
“Dumping milk and killing cows shows just what kind of storage problems the domestic dairy companies are facing,” said Cao Mingshi, deputy secretary general of the Shanghai Dairy Association, “Much of the gloom is related to a growing preference for imported milk.”
Most Chinese milk drinkers say they prefer the quality of imported milk. Sanlu Group’s 2008 melamine scandal that sickened or killed thousands of children permanently damaged consumers’ trust in domestic dairy companies. Mothers are especially keen to rely on imported milk and baby formula for their children.
A 2012 market survey found that three quarters of the dairy market in first-tier cities belongs to overseas dairy corporations. In some cities, domestic production accounts for less than 5 percent of all baby formula sales.
Milk imports soared from 350,000 to 1.6 million tons from 2008 to 2012.
“Consumers’ decision to buy so much milk from abroad is a shame for our own dairy industry,” said Han Changbin, minister of agriculture.
The low price of imported milk is also attractive for Chinese buyers.
According to a 2014 report by Economic Information Daily, the price of imported baby formula is dramatically cheaper than the few trusted domestic brands. Some dairy processors have taken to buying powered milk from abroad to replace their domestic suppliers.
By last November, the total amount of imported milk soared to 8.84 million tons. With domestic production also up 5.2 percent, it’s not hard to imagine why dairy makers are having storage troubles.
Known for Poor Quality
“In spite of flowery packaging, there is no indication or guarantee of milk quality printed on domestic packages,” said Wang Jiaqi, a researcher at the Beijing Animal Husbandry and Veterinary Research Institute.
Frequent reports on safety scandals in the dairy industry have made most locals terrified to buy domestic milk products.
“There is excellent milk produced in China, but the lack of standards and labeling makes it impossible to spot,” Wang said. With no standards to display on their packaging, most dairy corporations invest in advertising rather than cow breeding or milk processing techniques, he said.
“Without indicators of quality, consumers can’t tell whether the milk is good or bad,” Wang said.
In the US, the grading of milk is an essential step in dairy production. The US Public Health Service issued a grading ordinance to slash the prevalence of milk-borne illness in 1924. Three years later, it began grading milk according to its Grade A Pasteurized Ordinance.
Based on China’s current milk standards, any milk with a bacterial colony below 2,000,000 per milliliter and protein above 2.8 grams for every 100 grams is considered perfectly safe.
In Taiwan, even milk with less than a fourth of that bacteria count would be deemed unfit for sale.
A 2014 inspection by the China Food and Drug Administration found aflatoxin in three samples of baby formula. “It almost certainly is connected to the plummeting prices of raw milk. The first place farmers will try to cut costs is in their cow feed,” said Song Liang, a dairy industry researcher.
Finding a Way Out
To fight the excess, some smaller dairy farms are establishing “milk bars” to sell fresh dairy products directly to consumers. There are more than 2,000 milk bars in some 17 cities in Shandong province.
“Group-buying makes it easier to create customer demand. Our dairy products are often in short supply, so we decided to start a membership so the farmers can produce to meet the demand,” said Yang Xiaoxia, owner of the Wangjiao Milk Bar in Jinan.
But experts warn that the dairy products at milk bars are not safe at all.
“The staff usually know nothing about basic food safety or milk processing regulations. They rely on previously processed raw milk, so there’s no way to know how safe their products are or aren’t,” said an expert who refused to be named.
More than a dozen Chinese dairy companies, including New Hope Diary, Modern Farming and Changfu Dairy, are instead advocating for new multi-tier dairy regulations that would provide standardized milk grading and supervision of cow breeding and milk processing.
“A third party should be involved in the dairy quality test. Currently, the dairy company determines milk quality. Farmers have no right to be part of the pricing,” said Zhao Kun, a manager in Jiabao Diary in Jinan.