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Ralph Jennings

He Huifeng

Seven government departments issued a joint notice on Thursday with a list of steps to stabilise China’s 500 billion yuan (US$71 billion) dairy industry, which has been so addled by supply-and-demand imbalances that some farmers have been forced to cull their herds.
The Notice on Promoting the Stable Development of Beef and Dairy Cattle Production outlined measures to revive the industry on the same day of an unexpected Politburo meeting and two days after a raft of interest rate cuts and monetary policy easing were announced as part of stimulus efforts to stabilise the world’s second-largest economy.
“Since 2023, nationwide prices of milk and beef have kept falling and dairy farmers overall have suffered losses and operational difficulties,” the Ministry of Agriculture and Rural Affairs said in a statement.
“Beef and milk production is facing a severe situation not faced in many years.”
The notice aimed to “help farmers tide over difficulties and stabilise beef and dairy cattle production”.
The notice asked localities to “cultivate new business entities”, such as family dairy farms, and advocated that enough grain be allocated to control feed costs.


On Friday, the stock price of Mengniu Dairy – China’s second-largest dairy producer – rose over 14 per cent by midafternoon.
Falling prices and flagging demand had already prompted some farmers to dump milk and slaughter their cows since January last year, the state-backed Global Times newspaper reported.
Beef prices having fallen by 14.5 per cent over the first half of 2024 have added to their woes.
After costs, a cow sells for about 14,000 yuan, according to Wang Zhangai, who runs a cattle farm in China’s central Henan province, but farmers are still losing money.
Demand for milk has fallen in China because of a slowing birth rate and a broader pullback in consumer spending, which is a hallmark of China’s struggle to recover its economy.
Other measures outlined in the government notice called for stabilising purchases and sales orders of raw milk, offering subsidies to impoverished cow-breeding households and supporting farmers who face “temporary difficulties” via loan renewals and extensions.
But it also warned against any “blind withdrawals” of loans.
I don’t think local governments would have the funds to implement or promote this policy
Sofia Zhou, nursery school owner
“Efficient and practical technologies” should also be used to save costs, raise quality and improve efficiency on farms, the notice added.
Another measure called for supplying students with more milk and issuing consumption vouchers.
But it is unclear where the funding would come from, said Sofia Zhou, who runs a nursery school in China’s eastern Jiangxi province.
“I don’t think local governments would have the funds to implement or promote this policy,” Zhou said.
Dairy retail sales are expected to see a compound annual growth rate of about 4.8 per cent from 2022 to 2026, ending at 596.65 billion yuan, the Huajing Industrial Research Institute estimated in 2022.
The dairy industry support measures dovetail with wider economic stimulus ambitions announced this year by the central government, said Victor Gao, vice-president of the Beijing-based Centre for China and Globalisation think tank.
On Thursday, President Xi Jinping called for help for the private sector and for officials around China to be mobilised to prioritise reviving the economy.
We are now in a situation where, on one hand, domestic demand is very weak and, on the other hand, the governments keep importing large quantities of beef and milk
Wang Zhangai, cattle farm owner
“Dairy farmers would be part of this stimulus,” Gao said, adding that their woes extend to a “value chain” that delivers milk from farms to consumers.
“The dairy industry is very fragile,” he added.
But some farmers have wondered if the moves to help the dairy industry have arrived too late.
“Such new policies seem not to help the domestic farming industry substantially,” added Wang.
“We are now in a situation where, on one hand, domestic demand is very weak and, on the other hand, the governments keep importing large quantities of beef and milk.”
In the first half of 2024, China’s beef imports rose by 17 per cent year on year, representing a record high in terms of volume for the six-month period.
The average wholesale price of beef stood at 61.51 yuan (US$8.77) per kilogram as of Thursday, down by 13.7 per cent from the same period last year, according to the Ministry of Agriculture and Rural Affairs.


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Beef and milk production in China is ‘facing a severe situation not faced in many years’, according to a joint notice from seven government departments


Beef and milk production in China is ‘facing a severe situation not faced in many years’, according to a joint notice from seven government departments.


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