Lao Zhang Cai Yifei, a dairy farmer in Shuozhou, Shanxi Province, pulled two cows for the cattle dealer this afternoon, and they are both thin cows-7 years old, the best age for milk production. How could such a cow be sold to1.6,000 ~1.7,000 in the year when cows were favored? Now only two cows have sold a fraction. Nowadays, cows are not sold at their real prices, because no one wants them. As a result, they can only refer to the price of beef cattle. Lao Zhang said that raising at home does not make money. One more day to feed it, one more day to lose. Otherwise it won't sell. Lao Zhang clearly remembers that such a cow was still a treasure two years ago, earning at least five or six thousand yuan a year; Thank god you're not losing money now. You have to pray that cows don't get sick, and you can't hire a milkman. Unilateral increase in feed prices and no increase in milk purchase prices are the chief culprits of dairy farmers' crisis. The latest data show that the price of soybean meal in the essential concentrate for raising cattle has risen from 2000 yuan per ton to about 3400 yuan now; The price of corn rose from 1000 yuan per ton to 1400~ 1500 yuan. However, the price of milk purchased by dairy enterprises from Lao Zhang has not changed, and the government-guided price is still per kilogram 1.7 yuan. Hit hard by rising feed, Lao Zhang is not the only one who can only sell cattle at a loss, nor is it just a place in Shuozhou, Shanxi. According to the data quoted by China Dairy Association, the continuous increase in food prices has brought huge cost pressure to dairy farmers this year-at present, about 40% of dairy farmers in the country are in a state of loss, and "selling cattle to kill cattle" is everywhere. Some insiders have publicly stated that the number of dairy cows in a southern province has dropped by 50%. Jinyuan Securities quoted the data from the Agriculture and Animal Husbandry Department of Inner Mongolia Autonomous Region as saying that even in Hohhot and Baotou, where the milk purchase price was the highest, the purchase price per kilogram of milk only rose from 1.73 yuan to 1.84 yuan in six years, with an increase of only 6.4%; Correspondingly, under the same feeding conditions, the annual feed fee for a cow with an annual milk output of 5 tons is about 2000 yuan more than that in 2004. "Feed prices rose too fast in the first half of this year, which seriously affected the development of dairy industry in this region." This is obviously not normal logic. The increase of feed cost brings about the increase of breeding cost, which inevitably requires the increase of milk purchase price; The increase in the purchase price of milk inevitably requires the increase in the market price of dairy products. The industrial chain of dairy products market is short and uncomplicated, and the price increase of raw materials should be transmitted to the sales terminal in time and accurately. This is not a fantasy, and the global price increase of dairy products is the best example. Since the beginning of this year, major dairy companies in Europe and the United States have begun to announce an increase in the terminal sales price of milk. There are two reasons, one is that the drought in Australia and New Zealand has caused insufficient market supply, and the other is that the feed cost has risen since last year. According to the data, as of May 2007, the price of skim milk powder, the global trading indicator of Chicago Mercantile Exchange, rose by 60% in six months. China is an exception. So far, not only the purchase price of milk at the raw material end has not risen sharply, but also the milk price at the sales terminal has not changed. The relationship between supply and demand is not unheard of. In June 2007, China Dairy Association signed the Nanjing Declaration on Self-discipline of Dairy Enterprises with Mengniu, Yili, Guangming and other three dairy enterprises, explicitly requiring enterprises to carry out contract milk collection and raise the purchase price of milk. Obviously, China Dairy Association also knows that raising the purchase price of milk is a temporary solution. So, 20 days after signing the declaration, it called the contracted enterprises to hold a meeting in Beijing to implement the declaration, and formulated the implementation plan of the declaration-taking Beijing and Harbin as pilots, canceling all bundling and giving away sales; Prohibit all dumping activities below the cost price, and cancel special prices and sales at reduced prices; In the future, the scope of implementation will be gradually expanded in big cities such as Shanghai, Chengdu and Guangzhou. At the end of this implementation, it was signed by the top management of 13 dairy enterprises including Mengniu, Yili, Sanyuan and Guangming. Some consumers questioned that this was a disguised price increase, and even more questioned that China Dairy Association manipulated market prices, so the National Development and Reform Commission intervened in the investigation. However, in the view of China Dairy Association, the milk market in China has reached a very critical moment, which urgently needs government regulation. According to a data quoted by the Association, in 2006, the sales income of dairy enterprises in China decreased by bundling, discount and other promotional activities reached 5 billion yuan, equivalent to 9 1% of the total profit of the whole industry. More detailed calculation shows that if the promotion of 1 obtained by buying 5 is basically close to the cost area of the enterprise, then the result of 1 obtained by buying 4 will lead to some enterprises' losses. Accordingly, the loss of corporate profits can only depress the purchase price of milk, leading to the selling of dairy farmers and the death of a large number of cows. According to the association, the supply of milk will be reduced, and it may eventually repeat the mistakes of pork. The concern of China Dairy Association is bull's-eye, but this non-binding statement can't fundamentally solve the problem. In fact, since the implementation of the declaration, from local milk associations to dairy enterprises, most of them are disobedient, and some enterprises continue to bundle sales on the grounds of "signing contracts with supermarkets long ago". It has been more than three months since the implementation of the declaration. Not only major cities still have "bundling discounts", but even pilot cities such as Beijing and Harbin can be seen everywhere. "The competition in the industry is very fierce. People bundle discounts, and you will lose market share if you don't fight. " A salesperson of a dairy company said. According to public information, China's current annual milk production is about 32 million tons, while China's actual annual milk consumption capacity is only 20 million tons, and milk production is seriously surplus. In such a fierce competitive environment, China dairy enterprises can only get used to the pressure of increasing their own costs, and as a result, the profit rate of dairy industry has decreased year after year. At present, the profitability of the industry is "three-thirds"-1/3 can be profitable, 1/3 is flat, and the remaining1/3 is at a loss. According to the research report of CICC, the rapid growth trend of dairy consumption in China started from 1998, and actually began to show signs of slowing down in 2004, and the sales growth of dairy industry also began to decline in 2006, which means that the cycle of rapid growth of dairy consumption is coming to an end. The report also pointed out that the average net profit of enterprises mainly producing and selling liquid milk in the international market is 4%~5%, but this situation will not change in China market, because they attach too much importance to the market share target, so they will not easily raise the product price, so as not to leave opportunities for competitors. On the other hand, liquid milk is the most obvious category in the dairy industry. Apart from the different brands, there is not much difference, which is why consumers will choose the cheapest milk near the supermarket freezer. Therefore, even if dairy companies have money, they should invest more in marketing instead of paying cattle farmers, so that the more consumers they buy, the better. Some comments hit the nail on the head, the competition is fierce, the raw materials are rising, but the terminal does not dare to rise, which can only reduce the profits of dairy farmers, because they are the best "exploitation" targets. First of all, like dairy producers, dairy farmers are overcrowded. According to the data of CICC, since 2000, the average annual growth rate of dairy cattle stock and raw milk production in China has exceeded the growth rate of downstream dairy consumption. In fact, in the past few years, not only the number of dairy cows in various places increased geometrically, but also most of them failed to form large-scale farming, which not only consumed manpower, but also directly increased the cost of farming. Correspondingly, in the past few years, the field of dairy production has gradually concentrated on large enterprises, which has made the bargaining power of dairy farmers to dairy processing enterprises decline continuously, and the actual rate of return has decreased year by year. However, dairy farmers may not have bargaining power, but they have the right to sell cows. They can even feed cows less, or add two spoonfuls of water to the milk. As a result, the quality of milk has declined. Statistics show that the content of fat and protein in recently purchased milk has a downward trend. Fundamentally speaking, this "company+farmer" model is mostly a loose industrial chain relationship, which can neither guarantee the interests of dairy farmers nor dairy enterprises, but will increase the risk of operation. Large dairy processing enterprises have begun to realize the seriousness of the problem. Mengniu Group stated in its 2006 annual report that it will actively promote raw milk suppliers to improve the scale and efficiency of milk source bases to ensure the supply of high-quality raw milk. Mengniu began to provide technical assistance to its raw milk suppliers, and was able to choose better breeding cattle and improve their quantity and quality. At the same time, optimizing existing products and developing high-end new products with high added value are new attempts made by Mengniu to improve the profit rate of enterprises. However, as far as the current situation is concerned, the contradiction between supply and demand in the market cannot be reconciled in a short time. A netizen said worriedly that it takes a long time to raise cattle in aquaculture. It takes at least 15 months from calf reproduction to maturity, plus more than 9 months of pregnancy, and it takes 25 months to start milk production. If this fragile chain breaks one day, it will take at least two years to recover. Who can afford it? Since everyone from dairy farmers to dairy enterprises is losing money, the question now is, when will the milk price in China start to increase for the healthy development of the industrial chain?