Dairy Products China News

This week saw the New Zealand Herald run an article acknowledging that China’s government hadn’t been too happy with the official New Zealand response to the DCD crisis, and suggesting that the New Zealand government had been slow to respond to such concerns by putting standards in place establishing the country’s strong dairy food safety credentials. Whether or not such criticism is justified – and the proliferation of formula brands suggests that it has been a gravy train which needs bringing under some control – it is clear that responding to food safety concerns is inevitably a slow process due to the complexities involved, a point I’ll be touching on at a talk in China this month. This is exemplified when one considers a few of the key staging points in the development of food safety regulations in the US – with examples such as the 1906 Pure Food & Drug Act, the 1938 Food, Drug and Cosmetic Act (FD&CA) and the 2011 Food Safety Modernization Act (FSMA). All these came to pass after periods of crisis and concern in terms of food safety. As China will testify given the ongoing overhaul of its enforcement structures, the key requirement is that any New Zealand response should be substantive rather than PR-driven.
 

This month we review financial trends at a number of China’s leading dairy processors. Yili and Bright Dairy have done well in revenue terms but Mengniu has had a rather more difficult time(food safety concerns again!) Interesting to note that from a wider perspective, all fall short of the expansion of Amul in India, which reported an 18% rise in sales in 2012-13, to about USD2.4 billion – a little larger than Bright Dairy by this measure. Amul also grew average daily milk
procurement by 19% in the year. By contrast, this month we note how hard it is proving to achieve milk growth in Inner Mongolia – and the rise of Shandong as a dairy province.