Cooperative Extends Industry Chain at Scale to Prosper Through Sound Business

Editor's Note

In recent years, due to the sharp rise in the prices of donkey hide and donkey meat, combined with declining breeding profitability of grazing livestock such as cattle and sheep, the donkey farming industry, which had been declining for many years, has begun to recover. In some areas with advantages in donkey breeding, donkey inventories have begun to "turn from decline to increase," and new types of business entities such as specialized donkey breeding cooperatives have emerged, becoming the main force driving the warming of the donkey industry. Compared with other livestock and poultry farming, large-scale donkey farming has just started, processing leaders are few and undiversified. How can cooperatives and other new types of business entities exert their strength in this process to improve breeding profitability? Please see our reporters' investigation of donkey industry cooperatives in some places in Shandong and Inner Mongolia --

Looking at the development of the donkey industry, before the 1990s, many places across the country raised donkeys, and their main use was "draft purposes." Around 2000, with the promotion of agricultural mechanization, the donkey industry began to encounter a "crisis of abandonment," with donkey inventories falling from 11.6 million head in the 1990s to more than 5.4 million head, and overall still declining at a rate of about 300,000 head per year.

Against the backdrop of "abandonment" all along the way, farmers in some places today choosing the donkey industry again must surely see calculable profits. So, from "draft donkey raising" to "commercial donkey raising," from scattered household farming to large-scale raising led by cooperatives and family farms, how can one quickly and steadily "make money from donkeys"? With this question, reporters conducted an investigation in advantageous donkey breeding areas in Inner Mongolia, Shandong and other places.

Processing Leaders Drive Donkey Industry Cooperatives to Flourish

At the current stage, developing livestock and poultry farming cannot do without the drive of processing enterprises. There are no large donkey meat processing enterprises. Donkey industry processing enterprises are mainly in the ejiao industry, which uses donkey hide as a raw material. Because donkey inventories have declined year after year while the ejiao industry has been developing well, demand for raw materials has continued to rise, driving a sharp increase in donkey hide prices. Donkey hide that cost a few dozen yuan per piece more than ten years ago has now risen to nearly 3,000 yuan.

In Xinhui Town, Aohan Banner, Inner Mongolia, Li Junguo, chairman of the Junguo Farmers' Breeding Cooperative, said: "Starting in 2014, many members turned cattle pens into donkey pens, because raising cattle earned less money, while raising donkeys required less investment and was easier to raise. Moreover, the cooperative signed an order repurchase contract with Dong'e Ejiao Company, and the price is even a bit higher than the market price. Last year, Dong'e Ejiao also gave the cooperative two fine breeding male donkeys, worth nearly 100,000 yuan."

Aohan Banner Head Yu Baojun introduced that in March 2015, Aohan Banner signed a donkey industry development cooperation agreement with Dong'e Ejiao Co., Ltd., and the two sides began cooperation in donkey breed improvement, technical assistance, order repurchase, diversified processing and other aspects. At present, the two sides are promoting the construction of standardized donkey breeding demonstration farms, trading markets, and live-animal circular slaughter and processing plants.

Since 2002, Dong'e Ejiao, the leading enterprise in the national ejiao industry, adhering to the concept of "layout in advantageous regions, whole-industry-chain development," has laid out and built standardized donkey medicinal material breeding demonstration bases in advantageous regions across the country. At present, it has established 20 large-scale breeding demonstration bases in 10 provinces and regions including Inner Mongolia, Liaoning, Shandong and **.

Thanks to all-round cooperation with Dong'e Ejiao Company, entities such as donkey breeding cooperatives in Aohan Banner have developed rapidly, now reaching 84, driving donkey inventories to 263,000 head, an increase of 65,000 head compared with 2014. The same situation has occurred in Dong'e County, Shandong Province, where Dong'e Ejiao is located. Since advancing strategic cooperation with Dong'e Ejiao in 2014, the county's new types of donkey breeding business entities have grown from nothing, and there are now nearly 50 cooperatives, with donkey inventories exceeding 30,000 head.

All-Round Policy Support for Large-Scale Breeding Leaves No Worries

"A donkey is a treasure from head to tail, and it has few diseases, making it suitable for large-scale breeding," said Wang Chengwei, chairman of the Huatong Donkey Breeding Cooperative in Dong'e County. "But to build a donkey farm with a scale of 300 head, the first-phase investment alone is 2 million yuan. How can farmers afford that?"

What solved Wang Chengwei's problem was the "Implementation Opinions on the Development of the Donkey Raising Industry (2015-2019)" issued by Dong'e County in 2014. The opinions proposed a "government + enterprise + bank + cooperative + farmer" model: in terms of policy, there are preferential policies such as land coordination and reductions or exemptions of related fees, and building large-scale breeding farms comes with subsidies ranging from 100,000 yuan to 300,000 yuan; with joint government-enterprise-bank efforts, the government and enterprises jointly contributed 5 million yuan for "financing credit enhancement," cooperating with Qilu Bank and Weifang Bank to provide subsidized loans to farmers; Dong'e Ejiao provides donkey foals at set prices, repurchases finished donkeys at set prices, supports the establishment of breeding cooperatives, and provides management services.

Once large-scale breeding farms were built, the chairmen still wanted to accelerate the pace of development, and poverty alleviation policies gave them another push.

"In promoting poverty alleviation through the donkey industry, we have explored a 'trusteeship donkey raising' poverty alleviation model that takes donkey breeding cooperatives as the implementing entity and quantifies poverty alleviation funds into shares for dividends," said Hou Amin, director of the Dong'e County Poverty Alleviation Office.

Dong'e County provides each poor household with 2 female donkeys, with a special fiscal poverty alleviation subsidy of 4,000 yuan; poor households contribute the female donkeys and the 4,000 yuan subsidy to the donkey breeding cooperative as shares and sign a trusteeship breeding agreement; after the female donkeys give birth to foals, poor households can receive 1,200 yuan in breeding reward funds for the female donkeys, and the cooperative then pays poor households a fixed return dividend of 600 yuan per donkey. At the same time, for each poor household the cooperative drives, it can obtain a loan credit line of 50,000 yuan, up to a maximum loan of 2 million yuan.

Hou Amin interpreted the benefits of "trusteeship donkey raising" poverty alleviation this way: "The cooperative expands its breeding scale and can also enjoy a fully subsidized loan policy. Poor households avoid problems such as building donkey sheds and learning techniques, and directly enjoy breeding rewards and cooperative dividends, with low risk and stable returns. Poor households without labor capacity can earn up to 3,600 yuan per year. Poor households with labor capacity can also work at the cooperative and gain another stable income."

Reporters found during interviews that similar donkey raising support policies also exist in Aohan Banner and Bairin Left Banner in Inner Mongolia and in Yanggu and Guan County in Shandong. New types of donkey raising entities represented by cooperatives have become the biggest beneficiaries. By cleverly using policies, many cooperatives have achieved rapid development, with breeding scale and driving capacity significantly improved.

Adapting to Market Demand, Extending the Industry Chain Upstream and Downstream

Also raising donkeys, Tianlong Donkey Breeding Cooperative in Houxinglongdi Village, Lindong Town, Bairin Left Banner, Inner Mongolia, has its own tricks. "Look, now the price of adult live donkeys is just over 17 yuan per jin, while the price of donkey foals passed 20 yuan long ago. For good black-haired donkey foals, the price has risen to 23 yuan per jin. Further up, fine breeding male donkeys and breeding female donkeys are even more expensive. For a good breeding male donkey, 30,000 to 40,000 yuan per head is no problem," said Chairman Tao Zhifu. "In light of the situation, the cooperative focuses on extending upstream, guiding members to proactively keep good foals, expand the groups of fine breeding male donkeys and breeding female donkeys, and earn the big money upstream."

Liu Yuguo, chief animal husbandry engineer of the Bairin Left Banner Agriculture and Animal Husbandry Bureau, introduced that in recent years the donkey industry has warmed up and a "donkey raising fever" has risen, leading to strong demand for donkey foals and further bringing about an "inversion" between live donkey prices and donkey foal prices. In response, Bairin Left Banner has leveraged its traditional advantages and guided new types of donkey raising entities such as cooperatives to proactively extend upstream, with obvious income-increasing effects. Now, the annual return from fattening one donkey will not exceed 1,500 yuan; while raising breeding female donkeys, striving to produce and sell one donkey foal each year, brings income of more than 3,000 yuan.

In traditionally advantageous areas located in the farming-pastoral ecotone, the donkey industry extends upstream, while cooperatives located in farming areas make their efforts downstream. Members of the Jiaocheng Donkey Breeding Cooperative in Dong'e County can earn a sum from donkey milk every year. "For a pregnant female donkey, if feeding techniques are in place, the lactation period can reach five to six months, producing two jin of milk per day, priced at 30 yuan per jin, for gross income of nearly 10,000 yuan. The cooperative currently has a breeding scale of more than 400 head, has registered the 'Qushan' brand trademark, and has developed more than 50 milk subscription households," said Zhu Shiping, a relevant person in charge of the cooperative.

Jiaocheng Cooperative has also extended the chain into slaughtering and sales, running its own standardized slaughterhouse and opening direct-sale stores in Liaocheng, Dong'e and other places, with chilled fresh meat and cooked meat in short supply. According to Zhu Shiping's calculations, since the cooperative's business extended downstream, with the same breeding volume of 400 donkeys, annual returns have grown from 400,000 to 500,000 yuan when simply fattening to more than 2 million yuan now.