China's milk industry should invest in the future, even though the
near-term outlook is quite bleak, according to the China Academy of
Agriculture.
Following China's entry into the World Trade Organization (WTO) in
December, the output of China's milk industry is expected to
drop.
However, a study by the academy says it is essential now to upgrade
enterprises' producing capacity.
Cheng Guoqiang, leader of the study and the adviser of the Ministry
of Agriculture, noted that, after WTO entry, the prices of milk
products will lower, which will benefit consumers but cut the
income of milk producers and cow breeders.
Milk consumption and import will definitely rise, according to
Cheng.
According to China's WTO promise, the tariff on milk products will
be cut to 10 percent from the current 30 percent.
Generally, Cheng said, domestic milk enterprises cannot compete
with their foreign counterparts because of their backward
technologies and small-scale production.
"Chinese milk enterprises will face a hard time in the short run,"
Cheng said.
However, Cheng pointed out that when WTO's Treaty on Agriculture
comes into effect in 2005, and the developed countries cancel their
subsidy on milk production and exports, the operational cost of
milk firms in developed countries will rise.
"It will help the Chinese milk enterprises to attract foreign
investment and upgrade their technologies, equipment and product
quality," Cheng said.
Cheng added that it will also speed up the restructuring of the
milk industry, and foster home conglomerates and brands in the
sector.
To
make it through the hard times and seize the opportunity, the
Chinese milk industry should focus on three points, said Du Ying,
director of the Industrial Policy and Regulation Department under
the Ministry of Agriculture.
First, the milk enterprises should enlarge their size through a
combination of production, procession and sales, which makes it
possible to enrich the product mix and utilize the capital more
effectively.
Then, China should establish a comprehensive quarantine system on
milk products.
Finally, the government and milk enterprises should make a joint
effort to cultivate milk consumption and expand demand.
Du
cited the Milk for Student project as an example to cultivate a
generation of Chinese accustomed to drinking milk.
Statistics from the China Association of Dairy Industry show the
average Chinese drinks 6.4 kilograms of milk per year, or 6.4
percent of the world's average. The per capita milk consumption
stands at 300 kilograms in developed countries.
Zheng Xinming, president of the Wandashan Milk Product Group, said
it is important to foster brand names and improve the base for cow
husbandry.
"I
think the key battle for the market lies in milk resources, namely
good bases for cow husbandry," he said.
According to statistics provided by the China Association of the
Diary Industry, the country has more than 1,500 milk product
enterprises, with an annual output of 8 million tons.
However, 90 percent are small, with a daily output lower than 100
tons.
(China
Daily March 14, 2002)