September 25, 2012
Local dairy herders are losing their livelihoods as industrial farming booms in Inner Mongolia. Good news for big companies; bad news for local economies and the environment. Shu Ni reports.
Herder Gereltuya’s home in Inner Mongolia’s East Ujimqin banner is about a kilometre from the main road. It’s another 200 kilometres to the milk-processing plant in the city of Xilinhot. Her two nearest neighbours are at least a kilometre away. Lantu, a dairy herder in Xulun Hoh, also known as Plain Blue banner, is eight to 10 kilometres from the main road, and then another 10 kilometres from the town. Alateng Sukhbataar, in Hexigten banner, grazes his cattle eight kilometres from the road. From there it is 150 kilometres to the government seat.
Given these typically long distances, the herders would need to take their cows on a journey of over 100 kilometres, twice a day, to reach an automated dairy. This means that their cows’ milk will never make it into the factories that produce and package cartons of milk.
China’s dairy giants only purchase milk that has come from a sterile environment. Hand-milking is not permitted: the cows must be taken to a robotic milking machine twice a day.
What does that mean for the farmers? In the city of Baotou, I met a man surnamed Zhang, the owner of an automatic milking system. Zhang made 2 million yuan in the trucking business, which he invested in dairy farming during a so-called “milk boom” in the region. Nearby farmers come to his plant to have their cows milked. As the plant is near the milk packaging factory in the city, the transportation costs are lower and the profits are higher. The dairy farmers who use his plant come from small towns, far from the grasslands, so they use straw and cornmeal as fodder, rather than grass.
Zhang’s records show that milk prices have only risen slowly, squeezing farmers’ profit margins. Since only two large companies, Mengniu and Yili, dominate milk purchasing, farmers have little choice about who they sell to. Milk doesn’t keep long; it must reach a factory the day it is produced, so there’s little scope for bargaining. The companies can delay payment, but the farmers have to keep delivering the milk or they will have to dump it. Zhang has lost much of his initial 2 million yuan investment and many farmers nearby have switched away from dairy. There are only two dairy farmers left in the town.
In Dalad banner, in Ordos, I visited a dairy farmer surnamed Chen. He raises cows in a small village, with dozens of others doing the same nearby. He had been dairy farming for five years. He only started to make a profit in his third year. Then disaster struck in the form of an udder infection spreading through his herd, forcing him to shift to beef production. An automatic milking system worth 400,000 yuan stood idle. Only one of the dairy farmers in the village is said to be turning a profit.
But Inner Mongolia used to have lots of small milk processing plants, manufacturing milk powder and other high-quality goods. In the early 1990s, my family asked a friend to send Inner Mongolian milk powder to us in Beijing. I used to make fun of my classmates at school, who only had milk powder manufactured by Nestlé.
Those small companies only supplied local markets. They couldn’t build up brand recognition elsewhere. But they had close links with the local herders, and those nearer to the main roads could deliver their milk twice a day. The companies’ standards were appropriate for the area. The milk produced locally was thick and creamy; it was milked by hand, and the local firms permitted this. In all of the counties I visited for this report, and most of the cities, there had once been a local dairy processing firm. But these have now either closed down or been bought up by big Chinese or international companies.
So, where have all the cows that used to graze naturally gone? Gereltuya’s family own 20 cows – all crossbreeds of Simmental and local breeds. The milk is fermented and made into butter or a traditional food known as “milk tofu”, mostly to be eaten at home or given to friends. Only a small amount is sold.
Lantu’s family in Pure Blue banner also make traditional dairy products. They bought three Friesian cows, which produce a lot of relatively watery milk. Lantu says that they can’t take these cows to the automatic milking plant. It’s too far, and they the plant won’t buy it. So they just make milk tofu, too. Zhang, from the robotic milking facility in Baotou, said he needs to add water to his milk to meet the companies’ standards.
Alateng Sukhbataar’s family, on the traditional pastures, has 80 dairy cows, which are milked twice daily from April until the autumn. His family is busy making foods from the milk all day: once it has fermented for three days, the cream that floats to the top can be eaten, or made into butter and buttermilk to keep longer. The sour milk can be made into milk tofu and the fermented by-product is distilled into an alcoholic drink. There is work to be done every day, and there’s no room for slacking. There is a limited market for traditional dairy foods, and prices aren’t great, but the market has grown steadily over the last decade. The local shops and restaurants all sell local products, and for herders like him this is a major source of income.
Dairy production is split: on one side, the milk of pasture-grazed cattle does not reach industrialised supply chains, but is processed into traditional foods by herders. On the other side, large-scale dairy farms on the edges of cities and on main roads, their cattle fed on fodder and milked robotically, sell milk to big companies.
The ascent of the dairy giants has had a huge impact on traditional herding. Wuyunhua used to herd cattle on the Xilin Gol grasslands. Just as the dairy companies expanded, the government encouraged herders to move off the grasslands for ecological restoration. He and his family moved – and they sold off their local breed cattle. They moved to the edge of the city, bought Friesian cows and sold the milk to the milking plant. Many cattle were sold in similar fashion, sometimes for as little as 500 yuan a head. Buying new cattle often cost over 10,000 yuan per head.
Wuyunhua used all his savings to build a house, buy new cows and fodder. After two difficult years with no income, the cows started to produce milk, but not as much as he had been promised. He also found that he had paid too much: the Friesians got sick easily and needed to be looked after very carefully. Following the melamine scandal, the dairy market suffered even more. Eventually his family were the last dairy farmers in their village, and after years of losses they sold their livestock and moved into the city. A mining project bought their old pastures. The ecology was not restored, but destroyed.
Despite years of visits to Inner Mongolia, I have never heard of dairy giants purchasing milk from naturally grazed cattle. Some milk does originate in Inner Mongolia, but it comes from cows in dairy farms around the cities, raised on fodder, not grass. Milk from grazing cattle does not reach the industrialised supply chain. The herders continue to go bust and the number of farmers and cows is dwindling. But for the dairy companies, sales are increasing. There is more to this than meets the eye.
Shu Ni is a volunteer at the Beijing Brooks Education Centre’s Man and the Grasslands project and a freelance writer on grasslands issues.
This article is published as part of the project EU-China Civil Society Dialogue, and is a collaboration between chinadialogue and the Institute for Civil Society at Sun Yat-sen University.
Homepage image by Cory M. Grenier