Oct 4, 2008

Situation Grim For Chinese Dairy Farmers

And they are denying that they adulterated the milk. They say the processors or milk collection stations are at fault. Meanwhile many face ruin. This article comes from today's New York Times. This is a very interesting article.

Fonterra gets a mention too

The Sanlu Group, based in Shijiazhuang, helped set off the milk scandal by announcing last month that some of its infant milk formula was contaminated with melamine. Sanlu’s decision to lower its prices this year was the first blow to local farmers, many of whom took out huge loans to purchase cows just two or three years ago and moved here to work as dairy farmers.
Sanlu and other major dairy companies were responding to government price controls that were supposed to help fight inflation and rising food costs around the nation. But here in Hebei Province, the policy hurt farmers who were already struggling to cope with soaring animal feed costs, driven up by a global surge in grain prices.
“Before the scandal, the milk station kept lowering the price, but feed costs had gone up a lot,” said Liu Jin Feng, who with her husband raises 16 cows in nearby Xinnancheng village. “The price of soy meal went up 60 percent over the past two years.”
“There was nothing we could do about price because Sanlu has a monopoly here,” said Guo Huanchen, a 35-year-old farmer who said he was now considering selling his cows to a slaughterhouse. “I think they kept offering a low price because they had no competitor. But now we are suffering.”
Sanlu, which is 43 percent owned by the New Zealand-based Fonterra Group, one of the world’s largest dairy companies, controls the only milk station in Nantongyi village, giving it monopoly pricing power in the area. Every day farmers guide their cows to the village milking station, pump milk directly into the station tanks and then return home, waiting to hear how much they will earn, if their milk passes quality inspections.

These days, though, they milk their cows at the station and then have the milk handed back to them. Because there is simply too much milk, they dump it into drainage ditches or into a cabbage garden near the milking station.
And farmers say that the milk dealers who aggregate milk supplies and sell them to big dairy producers had much more opportunity to add melamine. “We have no way to adulterate our milk,” said Shi, a 38-year-old dairy farmer in Nantongyi, noting that village cows went directly to the milking station, where they are milked by machine. “I think it’s Sanlu and the milking station that blend.”
Sanlu officials repeatedly declined to respond to questions for this article. They have blamed farmers and milking stations for tampering with supplies.