CCM: Mengniu Partners with Lhasa to Construct High Altitude Dairy Farms and Plant 09-14-2016

On 11 June, Mengniu signed a cooperation agreement with Chengguan district government (Lhasa City, Tibet Autonomous Region) to jointly construct dairy farms and processing plant. The cooperation is part of the “Pure Land & Health Industry” programme which the Lhasa government is promoting, aiming to make full use of the local unique environment and rare resources to develop pure and healthy specialty products. According to the agreement, Mengniu will offer technical and management support in operating the farms and the plant.

Source: Baidu

The Lhasa government runs a 1,500 cow dairy farm currently and plans to construct 4 high standard dairy farms this year; a processing plant next to the farms is also being set up, and is due to be operational by the end of the year (this involves an investment of nearly RMB200 million / USD30.4 million; 1st phase: 50,000 t/a).

“Working through COFCO Corporation (COFCO)’s Tibet supporting team, we can easily co-operate with Chengguan district,” stated Sun Yiping, CEO of Mengniu: “After years of international business expansion and integration, we already have a lot of resources and experience to offer.”

Guo Guo, Party Chief of Chengguan District, also attended the signing ceremony, “Tibet is rich in resources. However, it has no largescale dairy farms. We are very glad that Mengniu is here to work with us to establish local premium dairy brands.”

Mengniu starts business activities in Tibet

Tibet is one of China's 5 pastoral areas (= Inner Mongolia, Ningxia, Xinjiang, Qinghai and Tibet), with a resulting strong focus on pastoral farming.

However, the local dairy herd is very poor - mainly yellow cows with low yields. There are many yaks, but these have a typical milking period of only 120 days, and their dispersed distribution makes collection a challenge. Tibet’s dairy industry, restricted by environment, capital and technology, has started late and developed slowly, with the only real success being the brand “Treasure of Plateau” used on a range of dairy products including infant formula.

The state of the industry locally is reflected in the deficient supply of dairy products to local residents - Tibetans are mainly living on milk dregs, shortenings and yoghurt. Early in 2012, the region's rural consumption per capita of dairy products was 38.27 kg (the local statistics yearbook does not give an equivalent urban figure).

Tibet's urban residents’ spend on dairy products reached USD60.5 (RMB398.5) per capita, ranking 3rd in national terms, reflecting the significance of dairy in the area's dietary intakes - there are few vegetables available but lots of cows/yaks and sheep and even horse, making meat and dairy products key food items locally. However, the limited milk supply forces residents to buy products from other provinces such as Sichuan and Qinghai.

In this context, it makes sense to develop the industry locally, and COFCO, an SOE supporting Tibet’s development in other ways provides an opportunity for Mengniu to participate. In 2015, Tibet had a GDP of USD15.6 billion (RMB102.6 billion), led by Lhasa at USD5.9 billion (RMB38.9 billion), making it the obvious starting point. However dairying at this altitude will provide a challenge even for Mengniu, given the prevalence of yaks locally.   


This article comes from Dairy Products China News 1606, CCM


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Tag: Mengniu  dairy


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