Raw milk bases key to dairy industry

China's dairy producers should set up their own raw milk supply bases in order to regain consumers' confidence, participants at the 18th annual conference of the China Dairy Industry Association (CDIA) said Saturday.

The dairy producers still had a long way to go in addressing consumers' safety concerns as they do not control much of the supply of raw milk, said Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology at the conference, according to Southern Metropolis Daily Sunday.

"At present the dairy producers only produce 30 percent of the raw milk they use, while the target is set at more than 50 percent in the 12th Five-Year Plan (2011-15) period," said Song Kunguang, director-general of the CDIA.

The establishment of milk supply bases would continue to be the key factor in the development of the dairy industry, said Song.

Diverse and unmonitored sources of raw milk supply have caused quality problems in dairy products, which could be resolved through the establishment of self-managed raw milk bases, said Liu Chengguo, honorary chairman of the Dairy Association of China, according to ifeng.com on April 25.

If Shijiazhuang-based Sanlu Group, once a leading dairy producer in China, had not closed its own raw milk supply bases in 1987, it would not have been forced to shut down following the 2008 melamine scandal, said Liu.

Experts noted that the milk producers can also save costs by establishing raw milk bases.

"The dairy producers purchase raw milk mainly from private dairy farmers. Their production capacity is very low, resulting in high prices of the raw milk," Ma Wenfeng, an analyst with the China Agriculture Consultant, told the Global Times Sunday.

"If China's dairy producers could establish their own raw milk bases and form an integrated production chain, they could not only ensure the quality of their dairy products but also reduce production costs," Ma said.

The price of domestic raw milk is 35,000 yuan per ton while the price of imported raw milk from New Zealand is between 23,000 yuan and 24,000 yuan per ton, Southern Metropolis Daily reported Sunday, citing Guo Benheng, CEO of Bright Dairy & Food Co.

In 2010 Bright Dairy acquired Synlait Milk Limited, a raw milk base in New Zealand, with the production capacity of 100,000 tons, equal to annual demand of raw milk by the company, the newspaper said.

"I recommended other Chinese dairy producers to acquire overseas raw milk bases as the establishment of a milk supply base needs at least eight to 10 years and a lot of experience," Ma said.