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Chinese dairy producers cancel customer discounts as costs rise (2) |
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08:42, July 26, 2007 |
"The dairy enterprises used to find other ways to cut costs or directly pay for the higher costs when the production costs increased," said Wang Huaibao, deputy director of the Diary Association of China.
Wang said only one third of the country''s dairy enterprises were making profits and another third were suffering losses, although the whole sector recorded a 23-percent annual growth rate in the past six years.
Continued sales promotions have caused dairy producers to lose about five billion yuan (667 million U.S. dollars) in sales income, 91 percent of the total for the whole sector in 2006, according to the Diary Association of China.
With the dairy enterprises struggling with narrowing profit margins, dairy farmers have also suffered due to the low price of crude milk. Statistics showed dairy farmers could only make less than 10 percent of the total profits for the sector.
Dairy farmers in Shanxi province were reported to have sold their homebred cows, worth 20,000 yuan each before, at several thousand yuan for the meat in May.
That would greatly harm the enthusiasm of dairy farmers and further undermine the development of domestic dairy industry, Fan said.
China''s annual milk consumption per person is 6.6 kg, compared with the world average of 102 kg.
The interests of dairy farmers and producers should be prioritized to ensure the long-term development of domestic dairy industry, Wang said.
Source: Xinhua
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