How can the comprehensive production capacity and international competitiveness of the dairy industry be improved? Wang Yang says so

Continuously Improve the Comprehensive Production Capacity and International Competitiveness of the Dairy Industry
——Speech by Vice Premier Wang Yang of the State Council at the China Dairy D20 Summit

August 18, 2015

At this important juncture of the transformation and upgrading of our country's dairy industry, holding this Dairy D20 Summit, with everyone gathered together to jointly discuss major issues in dairy industry development, is of great significance for building consensus, pooling strength, and promoting the sustained and healthy development of the dairy industry. Here, I would like to extend warm congratulations on the convening of the conference! And express heartfelt thanks to people from all walks of life who have long cared about, supported, and been committed to the development of the dairy industry!

Dairy products are “the closest thing to perfect food” that nature has bestowed upon humanity. A glass of milk can nourish a life and strengthen a nation. The dairy industry is an important part of agriculture and the food industry, and it plays a major role in improving dietary structure, enhancing national physique, optimizing agricultural structure, and promoting income growth for farmers and herdsmen. In recent years, our country's dairy industry has achieved tremendous accomplishments. Milk production has crossed three ten-million-ton thresholds, and we have already risen to become the world's third-largest milk-producing country. Now the daily milk sales volume on the market reaches more than 200 million jin, and there are more than 21 million servings of student drinking milk every day. In just over 30 years, we have gone through a dairy industry development process that took developed countries over a hundred years. These achievements have not come easily and deserve full recognition.

At present, our country's dairy industry development is still at an important stage with great potential. Our country's per capita dairy consumption is only 33 kg, just 1/3 of the world average and 1/2 of the average level of developing countries. With population growth, the advancement of urbanization, and the improvement of people's living standards, there is huge room for growth in dairy consumption, which will bring very broad prospects for industrial development. But it must also be seen that dairy industry development is also facing the “pains” of transformation and upgrading, prominently shown in the following: some consumers lack confidence in domestic dairy products, production costs are getting higher and higher, raw milk prices fluctuate frequently, dairy farming benefits are declining, and dairy imports are increasing. Some enterprises are experiencing declining benefits and operational difficulties, and in a few places there have even been incidents of dumping milk and slaughtering cows. Therefore, accelerating the transformation of the dairy industry development model and vigorously advancing the construction of a modern dairy industry have become realistic and urgent major tasks before us.

A mature and developed dairy industry is one of the important hallmarks of agricultural modernization. The Party Central Committee and the State Council attach great importance to dairy industry development. General Secretary Xi Jinping has made important instructions many times and placed ardent hopes on developing the national dairy industry. Premier Li Keqiang has also put forward clear requirements on ensuring the quality and safety of dairy products, especially infant formula, pointing out the direction for us to build a modern dairy industry. We must follow the decisions and arrangements of the central government, take improving dairy product quality as the core, accelerate the transformation and upgrading of the traditional dairy industry with modern material equipment, modern science and technology, modern industrial systems, and modern development concepts, and continuously improve the comprehensive production capacity and international competitiveness of the dairy industry. Special attention should be paid to the following aspects of work:

First, strengthen quality awareness and rebuild consumer confidence. Quality is the life of an enterprise. Without quality there is nothing. In this regard, the dairy industry has had profound lessons. Dairy enterprises must, as promised in this Beijing Declaration, resolutely implement the principle of quality first, put quality and safety in the first place in production and operation, and, like a bird cherishing its feathers, cultivate product brands and build corporate reputation. Governments at all levels must follow the “four strictest” requirements of the most rigorous standards, the strictest supervision, the severest punishment, and the most serious accountability, fulfill regulatory responsibilities, intensify law enforcement, and create a fair and standardized market environment. It is necessary to continuously promote social co-governance, increase publicity on dairy quality and safety, guide consumers to consume with confidence and consume healthily, build up the brand of high-quality and safe domestic dairy products, raise consumer confidence, and use quality transformation to open a new future for China's dairy industry.

Second, adhere to market orientation and drive development through innovation. With the gradual popularization of dairy consumption, the trends of market segmentation and diversification are becoming increasingly obvious. Traditional extensive expansion is already difficult to sustain. We must deeply study and actively adapt to changes in market demand, and accelerate product innovation, technological innovation, and innovation in business philosophy and business models. It is necessary to advance large-scale, standardized, facility-based, and intensive production, strengthen scientific and technological support such as variety breeding, disease prevention and control, and ecological environmental protection, adjust and optimize production layout, enrich and improve the product structure, and increase milk yield per cow and quality. It is necessary to actively adopt new circulation formats such as e-commerce, accelerate the construction of the cold chain logistics system, improve enterprise operation and management, increase circulation efficiency, and reduce circulation costs. It is necessary to fully give play to the role of market mechanisms, encourage enterprises to integrate resources through mergers, reorganizations, and other means, accelerate the elimination of outdated production capacity, and enhance the ability to withstand risks.

Third, promote the integration of agriculture and animal husbandry and extend the industrial chain. The dairy industry covers multiple industries such as forage cultivation, dairy cow farming, and dairy processing, and is suitable for whole-industrial-chain operation. From the experience of developed dairy countries, the integration of primary, secondary, and tertiary industries is an important path and inherent requirement for the healthy development of the dairy industry. “Good grass raises good cows, and good cows produce good milk.” It is necessary to do a good job in building forage and feed bases, promote the return of manure to fields to fertilize the land, explore development models that integrate agriculture and animal husbandry, open up channels for the coordinated development of crop farming and livestock farming, and promote the harmonious development of production and ecology. Milk source bases are the foundation of dairy industry development. It is necessary to innovate industrial organization models and accelerate vertical integration of breeding, farming, and processing by establishing dairy farmer cooperatives, using land and pasture as equity shares, and implementing pasture trusteeship, among other methods. Farmers and herdsmen and dairy enterprises are a community with a shared future. It is necessary to establish a reasonable interest linkage mechanism between enterprises and farmers and herdsmen, so that farmers and herdsmen can share in the fruits of dairy industry development.

Fourth, deepen external cooperation and achieve mutual benefit and win-win results. Our country's dairy industry is already highly open. Against the backdrop of global economic integration and the accelerating process of free trade area construction, it will certainly become even more open and more deeply integrated into the international market in the future. This is the general trend and is irreversible. To advance the modernization of the dairy industry, we must proactively participate in international competition in the dairy industry, learn advanced technology and management experience, improve our industrial fundamentals, and strengthen our own capabilities. In opening up the dairy industry, on the one hand, it is necessary to moderately import dairy products to meet the diverse needs of domestic consumers; on the other hand, it is necessary to actively utilize overseas resources to enhance enterprises' production capacity and international competitiveness.

Promoting the healthy development of the dairy industry requires the joint efforts of all parties. Governments at all levels must actively promote dairy industry development, strengthen support for scientific research and technology extension, strengthen infrastructure construction, do a good job in market supervision, standardize market order, and provide a good environment for dairy industry development. Enterprises are the main body of dairy industry development. To make China's dairy industry bigger and stronger fundamentally depends on a group of dairy enterprises with innovation capability and competitive strength, and on the whole industry joining hands and working together. The establishment of the China Dairy D20 Enterprise Alliance is a positive exploration. It is hoped that the alliance will take communication, service, self-discipline, and development as its purpose, serve as a link between enterprises and the government, a promoter of mutual cooperation among enterprises, a leader in standardizing industry development, and an organizer safeguarding the legitimate rights and interests of enterprises. It is hoped that the alliance will strengthen its own construction, improve service levels, and continuously enhance cohesion.

The enterprises participating in the D20 Alliance are leaders in the dairy field. Today, everyone signed the D20 Enterprise Beijing Declaration, making solemn commitments to society in four aspects: quality and safety, brand building, integrity and self-discipline, and integrated development, reflecting enterprises' awareness of social responsibility and their mission to build the national dairy industry. It is hoped that everyone will match words with deeds and make new contributions to advancing the modernization of the dairy industry. It is also hoped that through this summit platform, the tremendous progress our country's dairy industry has made in recent years will be shown to consumers, the quality and safety commitments of dairy enterprises will be told to consumers, and the confidence and determination of the whole industry to work together to build a modern dairy industry will be conveyed to consumers.