Demand growth and rising costs have driven raw milk prices to rise continuously
Our reporter Qiao Jinliang
The price of raw milk has gone up!
According to the price data of the livestock product market of the Ministry of Agriculture and Rural Affairs, from May to December 2020, the national raw milk price increased for 7 consecutive months. The monthly average price increased from 3.57 yuan/kg in May to 4.15 yuan/kg in December. A cumulative increase of 16.25%.
Liu Changquan, director of the Industrial Economics Office of the Rural Institute of the Chinese Academy of Social Sciences and director of the Industrial Economics Office of the National Dairy Industry Technology System, believes that this round of price increases is mainly affected by two factors, demand growth and rising costs, especially the sharp increase in feed prices.
Since May 2020, the supply and demand of dairy products have increased simultaneously, and the relationship between supply and demand has been stable. Domestic raw milk production and total dairy product imports have both increased significantly.
According to data from the National Bureau of Statistics, the national milk production in the third quarter of 2020 was 8.98 million tons, an increase of 15.6% month-on-month and an increase of 8.6% year-on-year.
According to data from the Ministry of Agriculture and Rural Affairs, each month's raw milk production since May 2020 has increased by more than 8% year-on-year, and even more than 12% in individual months.
According to customs data, the total import volume of dairy products from May to November 2020 increased by 14.43% year-on-year, and the total import volume after conversion of raw milk increased by 12.61%.
According to data from the Ministry of Commerce, the sales price of dairy products in the retail market was generally stable from May to December 2020, and the monthly average milk price increased year-on-year or even decreased slightly.
Liu Changquan said that the balance of supply and demand means the simultaneous growth of supply and demand and the pull of demand on supply.
However, the growth rate of domestic raw milk production is lower than the growth rate of dairy imports, indicating that domestic raw milk production cannot fully meet the growth of dairy product demand, and the domestic raw milk supply-demand relationship is tight, which drives up prices.
"Since May 2020, the main driving factor for the price increase of raw milk is the increase in feed prices." Liu Changquan said that domestic corn prices have risen rapidly for 9 consecutive months. The cumulative increase in corn prices from May to December exceeds the increase in raw milk prices over the same period. Amplitude.
In addition, soybean meal prices continued to rise by 7.43% from June to November.
Liquid milk is the main part of domestic dairy product production. From January to November 2020, the total output of dairy products nationwide is 25,226,400 tons, of which liquid milk accounts for 93.39%; based on the amount of raw milk, liquid milk processing accounts for more than 60% of dairy product processing.
In the production of liquid milk, the cost of raw milk accounts for 80% to 90% of the total cost. Since the price change of raw milk does not affect the processing cost, it can be considered that the total cost of liquid milk from May to December increased by 0.58 yuan/ kg.
The average retail price of milk in December was 12.38 yuan/kg, and the increased cost of raw milk accounted for an average of 4.68% of the retail price of milk.
For other high value-added dry dairy products, the increased cost of raw milk will account for a lower proportion of retail prices.
"The increase in the price of raw milk has a certain impact on the income of dairy processing enterprises, but the main contradiction facing China's dairy industry is still the low profit distribution of the breeding link in the industrial chain. The ratio of retail milk prices to raw milk prices in China has long been Above 3, in Europe and the United States and other countries, it has been between 2 and 2.3 for a long time. This means that Chinese dairy processing companies have a higher level of return." Liu Changquan said that the domestic dairy farming industry has continued to linger in the past few years, but dairy products The revenue and profits of processing companies have repeatedly hit record highs, which collectively reflect the uneven distribution of benefits in the industry chain.
In 2020, even after the continuous increase in the price of raw milk, the ratio of the retail price of milk to the price of raw milk in December is still as high as 2.98, which shows that the income of dairy products processing enterprises is still well guaranteed.
Due to the basic balance of supply and demand in the terminal market, there is little room for retail price growth.
In the face of rising raw milk prices, the key for processing companies to improve their revenue should be to increase production efficiency and reduce costs in circulation and other links.
From the perspective of breeding, the profitability of the dairy industry has improved to a certain extent after the continuous rise in the price of raw milk.
According to the national dairy industry technology system monitoring pasture data, from May to November 2020, the gross profit of raw milk production will increase from 0.35 yuan/kg to 0.69 yuan/kg.
However, the increase in the price of raw milk and the increase in income from dairy farming in this round has not been supported by the reform and construction of the benefit linkage mechanism of the dairy industry chain.
Liu Changquan believes that once the supply and demand relationship of raw milk is eased, coupled with the adjustment of feed prices and the squeeze of international low-priced imported products, the price of raw milk will face greater downward pressure in 2021.
In the near and mid-term, how to improve the distribution status of the dairy industry in the dairy industry chain and how to consolidate the foundation of dairy farming are still issues that need attention in the development of China's dairy industry.