Frbiz Analyzes the Causes of China's Rising Raw Milk Prices

Jun 13, 2010, 10:00 ET from Frbiz.com

BEIJING, June 13 /PRNewswire-Asia/ -- Frbiz.com, one of China's leading B2B search platforms, analyzes the rise in raw milk prices.

China's raw milk prices have risen about 2%. Fresh milk prices have gone from 2 yuan to 2.3 yuan per bag -- an increase of 15%. The price of yogurt has risen from 1.6 yuan per cup to 1.9 yuan per cup, an increase of 18%. Recent increases in fresh milk prices are mainly due to the rise in raw milk prices.

Since last October, raw milk prices rose until stabilizing in March and April of this year; however, there continues to be 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 2 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 staging a strong recovery, but companies are recovering much faster than dairy farmers, and supply and demand is imbalanced.

In the face of rising market demand, some enterprises should not push the production rate too fast, and take into account the lack of milk sources. If things continue in this way, the Chinese dairy industry will face an even greater crisis.

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