Dairy farmers in Inner Mongolia are currently receiving a base price equivalent of 51c/Laccording to Meng Niu Dairy Group Production Manager Mr Jiannjun Han.
“Our pricing structure is focussed on a protein content of 3.1%. This is slightly higher than the average milk protein level in China, which currently stands at 2.9%,” he said.
“We only collect milk from large, modern farms, many of which we have a shareholding in. It has been our policy not to collect milk from family owned businesses since 2008. This is because these smaller farms do not have a good reputation in relation to the quality of the milk they produce.
“Family farms have a very poor image in China. Consumers in this county are more reassured when they know that the dairy products they are eating have been manufactured from milk produced on large scale, modern farms where the highest management standards are implemented. The farms we own have an average herd size of 10,000 cows.”
Mr Han made these comments while hosting a visit from an Irish agri food trade delegation to the Meng Nui processing facility on the outskirts of Hohhot. The group processes 6m tonnes of milk annually with a product mix comprising pasteurised milk, UHT, yoghurt, cheese and ice cream. It generated a turnover in 2013 of €5.3 billion. The business is currently valued on the Hong Kong Stock Exchange at €7 billion. The Chinese retail consortium Cofco is the main shareholder in Meng Niu with both Arla and Danone both represented on the board.
“It is currently costing our farmers the equivalent of 41 cent to produce a litre of milk,” Han said.
“So dairy farming is relatively profitable in China at the present time. And while milk production is increasing, it will never catch up with the growth in demand for high quality dairy products here in China.
“Last year, dairy imports into China increased by 30% to total some €375 million. The Irish dairy industry has a lot to offer the Chinese market. And we would welcome the opportunity of doing business with dairy manufacturers in Ireland.”