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|An American look at the Chinese dairy industry|
|News - Progressive Events|
|Written by Kevin Herrick, South Dakota State University|
|Friday, 06 April 2012 08:40|
This article was #6 of the Top 25 most well-read articles on www.progressivedairy.com in 2012. Click here to jump to the article. It was published in the April 10, 2012 Extra. Click here for the full list of the Top 25.
Since the article was published, I completed my degree and accepted a position that has given me the opportunity to visit and learn more about dairying in several countries.
Most notably, I traveled to India and observed dairy and buffalo farms throughout the country. The biggest difference that I observed between Chinese and Indian dairy farms was the size of the farms.
While China had several large commercial dairies, the vast majority of the farms in India were very small. Additionally, the emphasis on buffalo farming was also a major difference. This clearly demonstrated the flexibility of the dairy industry in India.
Buffalo were much more tolerant to the heat as well as producing milk with a much greater fat content. Buffalo milk contained up to 7 to 8 percent fat, and many consumers purchased milk directly from the buffalo farms.
In my current position, I have grown to appreciate the global scale of the dairy industry. Although there are differences between the U.S. and international dairy industries, there are things that producers could learn from each other.
For example, learning how other regions deal with expensive or alternative feed ingredients may provide options for producers during periods of financial challenges.
I was just finishing my Ph.D. degree in dairy science, and I had 10 years of experience in the industry as a consultant and herdsman. Many of my expectations were based on this experience as well as my research and preparation before the trip.
I knew that the Chinese dairy industry was of minor importance compared to the swine and poultry industry. I also knew that the demand for dairy products was still recovering from a melamine outbreak that occurred in 2008. What I didn’t understand until I spent two weeks visiting several agriculture enterprises were the opportunities that the Chinese dairy industry offers.
According to a 2011 report, Fonterra Cooperative Group Ltd. reported that Chinese demand for New Zealand milk products in 2010 surged more than fivefold from 2008 to about 353 million kilograms.
The dairy company forecasted that exports to China will more than double to 950 million dollars by 2020, from 400 million dollars in 2010. Rising incomes and expanding populations fueling demand for protein-rich diets were given as the main forces driving this projected increased demand.
One of my first observations upon arriving in China was the dichotomy of new and old that was present in almost every aspect of Chinese culture to which we were exposed.
There were houses and apartments with no running water that were being preserved in parts of Old Beijing. Meanwhile, other parts of the Beijing landscape were speckled with cranes constructing high-rise apartments and office buildings.
The average corn production throughout China is 90 bushels per acre or 60 percent of a U.S. average. This equates to a total annual production of 15 bushels of corn for some farmers. Furthermore, most of the labor was done by hand or with the aid of water buffalo and there was very little mechanical automation. All of these details made myself and the rest of our large group question how such an inefficient system could be viable for feeding China’s population of 1.3 billion.
Additionally, the corn silage was harvested with three American self-propelled choppers that the dairy owned. However, many of the challenges limiting production on this dairy (approximately 62 pounds per cow per day), demonstrate the problems that the entire Chinese dairy industry experiences.
However, the smaller farms that are typical in China would not be able to afford this luxury. These individuals are forced to feed low-quality grass or residues left from grain production.
It was discussed not only by this manager but by other individuals how the Chinese government encourages business opportunities that can demonstrate a greater employment rate. Often this goal of creating more jobs comes at the expense of poorer labor efficiencies. It was noted that during our entire visit which lasted most of one afternoon, we did not see or hear any type of skid-steer or other machine that are so common on most dairies.
This was readily apparent to our group as during our entire visit we were continually warned to not drink the water because of high bacteria counts. In fact, our tour guides informed us that even native Chinese residents are forced to boil all of their drinking water because the quality is that poor.
The consensus of opinion was that these issues as well as the government’s policy regarding importation of genetically modified products need to be addressed if continued growth is going to occur.
Additionally, it became clear during our visits with some agribusinesses as well as our visits to local markets that there is a very large problem with imitation products. This ranges from pirated CDs and DVDs to growing grains on their farm and subsequently bagging and selling the grain as seed under a corporate brand.
However, bacteria counts increased and it was discovered that because of a lack of hot water, sanitation of the milking equipment was not occurring. This clearly outlined that there is essentially a domino effect that occurs when new technology is implemented. There has to be an anticipation of potential problems and an understanding of how changing one practice or how improving one area of production may have an impact on other non-related issues.
The latest five-year plan has identified agriculture as one of these areas and as a result there has been increased investment into improving the agriculture system as well as the nutrition for Chinese residents. However, besides an increased monetary investment, specific methods to achieve the goals in the latest five year plan were unknown to most of the individuals involved in our discussions.
These companies attributed much of their success to investing time as well as emphasizing working as a partner with departments and Chinese businesses to achieve the goals set out by the government. The final overall impression that I got from most of the individuals that our group met with was a desire to continue to develop the Chinese agriculture industry.
The limitations and weaknesses of the current system were acknowledged by most. However, it was also apparent that these same individuals were willing to work with outside companies and investments to ultimately reach their final goal. PD