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Chinese dairy companies raise prices amid escalating costs

  • Staff Reporter
  • 2012-12-23
  • 13:59 (GMT+8)
A milk farm belonging to Bright Dairy. (Photo/Xinhua)

A milk farm belonging to Bright Dairy. (Photo/Xinhua)

The Shanghai-based Bright Dairy & Food Co has announced that it will raise prices for some of its fresh milk and yogurt products by an average of 5% from Dec. 18 due to escalating labor costs and the continuing surge in raw material prices, reports the Guangzhou-based Southern Metropolis Daily.

The company's move is expected to trigger price hikes in dairy products across the country.

Bright Dairy had already increased prices for its fresh milk and yogurt products in some regions, including Wuhan, the capital of central Hubei province, earlier this month.

However, the dairy company did not offer details about the latest price hikes, including affected products and implementation timetables in different regions.

The Southern Metropolis Daily said that continuing growth in raw milk prices, which began soaring at the beginning of the year, as well as other production costs, was responsible for the recent price adjustments.

An industry expert in Guangdong told the newspaper that the purchase price of raw milk in Guangdong in 2012 has risen to 5,200 yuan (US$835) per ton, up 5% from 2011.

Guangzhou Fengxing Milk said the continuing surge in feed costs had driven up cow breeding costs, which coupled with steeper labor costs and other material costs had exerted additional operational pressure on the dairy industry.

Many dairy farmers have reportedly suffered losses because their price hikes have not been sufficient to offset the rise in raw milk prices.

Soaring labor costs and an increasing number of farmers shifting to other vocations has also led to a large number of dairy farmers withdrawing from the sector.

International raw milk prices are also expected to continue rising next year due to the appreciation in corn prices and other feed costs.

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