Boycott storm escalates: Wei Chuan Lin Feng Ying fresh milk unsold while other brands face a fresh milk shortage

Text by NewsMarket reporters Wang Wen-hao and special correspondent Huang Pei-yun

The consumer boycott of Ting Hsin and Wei Chuan foods, triggered by Ting Hsin Group's mixing of lard with feed oil, is widening. The fresh milk brand with the highest market share in the country, Wei Chuan Lin Feng Ying Fresh Milk, is the first to take the hit. Under pressure from local governments and consumers refusing to buy, its sales have plunged and stock is piling up unsold, while other brands of fresh milk face booming demand but insufficient supply of raw milk.

This afternoon the Council of Agriculture invited domestic fresh milk industry groups to a meeting to coordinate with Wei Chuan so that, without altering its contracts with contract dairy farmers, part of the dairy farmers' raw milk would be transferred to other brand dairy processors, protecting dairy farmers' rights on the one hand and meeting consumers' dairy demand as much as possible on the other.

Chu Ching-cheng, deputy director of the Council of Agriculture's Department of Animal Industry, said domestic fresh milk supply is based on long-term contracts between dairy processors and dairy farmers. According to statistics, there are about 120,000 dairy cows and 544 dairy farming households in the country, with annual raw milk supply of about 350,000 metric tons. Of these, 168 dairy farming households have long-term contractual relationships with Wei Chuan, and Wei Chuan's milk supply accounts for about 34.9%, ranking first, followed by Uni-President at 30.3%, Kuang Chuan at 19.1%, Standard Foods at 4.9% and other brands at 10.8%.

The Council of Agriculture estimates that Wei Chuan Lin Feng Ying Fresh Milk collects more than 330 metric tons of milk a day. Affected by the consumer boycott, and calculating unsold stock at a rough two tenths, 66 metric tons of raw milk would be forced to sit in the dairy plant. Given the current atmosphere of boycotting Wei Chuan products, if Wei Chuan does not release part of its contract dairy farmers' milk supply to other manufacturers, letting other peers increase output to ease the market's milk shortage, it may not be able to hold out for long itself.

However, for Wei Chuan, once it transfers its contract dairy farmers to other brand dairy plants, it worries that once transferred they will not come back, and it showed a resistant attitude toward the Council of Agriculture's request. Still, at this afternoon's discussion meeting convened by the Council of Agriculture with fresh milk industry personnel, Wei Chuan softened its stance and agreed to transfer part of its contract dairy farmers to other manufacturers.

Fresh milk industry groups attending today's meeting included technical-level personnel from the Central Livestock Association, the Dairy Association, the Dairy Industry Association, the Dairy Farmers Association, Wei Chuan, Uni-President, Kuang Chuan, Standard Foods, Yakult and Kai Yuan.

Hung Chang-chin, chairman of the Dairy Farmers Association, said that as of now Wei Chuan is still collecting raw milk normally. If the consumer boycott of Wei Chuan fresh milk affects dairy farmers' rights, the Dairy Farmers Association will certainly step forward and ask the Council of Agriculture to coordinate, so that dairy farmers' rights are not harmed.

After this afternoon's discussion, the Council of Agriculture said Wei Chuan's production and marketing contracts with dairy farmers will not change, but Wei Chuan will release one third of its daily purchased raw milk volume (about 104 metric tons) to five companies, Uni-President, Kuang Chuan, Standard Foods, Kai Yuan and Yakult, to ensure dairy farmers' rights are not affected, with the dispatch price negotiated privately according to industry custom. The dispatch period will last one month, from 10/16 to 11/15, and the Council of Agriculture will, on a project basis, issue fresh milk labels to the commissioned processing plants to be affixed to their products. (The one third figure is Wei Chuan's initial estimate.)