Farmers' hard work going down the drain

With nowhere to sell their product, some Chinese dairy farmers have resorted to throwing out milk and killing their cows.

"A ton of milk has to be discarded each day," said dairy farmer Pei Shuke in Shandong province. "We have rarely been this desperate."

Slumping global milk prices since the second half of 2014 have pushed many dairy farmers to desperation, and many say a long-term price mechanism is urgently needed to rescue farmers from their plight.

Pei said throwing out milk is just one of their disposal methods. Some farmers have had to sell milk at the low price of about 1.6 yuan (26 US cents) a kilogram, and others have started to kill their cows.

The Ministry of Agriculture has warned that such drastic measures are increasingly frequent as dairy processing companies cut or suspend the purchase of fresh milk.

On Sunday, the ministry announced that it would help dairy farmers in northern China.

The dairy sector downturn has come as a surprise to many.

In late 2013, China's dairy products saw a price hike following a production decrease caused by disease and farmers leaving the industry. Milk prices jumped to more than 5 yuan per kilogram in December 2013 from 3.4 yuan per kg a year earlier.

The dairy boom sent ripples of excitement through the sector, with farmers purchasing large numbers of dairy cows at high prices to boost production.

But the boom proved to be a flash in the pan. In March, foreign milk prices began to fall drastically due to overproduction. Many dairy companies resorted to cheap overseas sources and limited purchases from domestic suppliers, causing dairy prices to dip to new lows.

The Ministry of Agriculture is encouraging dairy firms to increase purchases, starting weekly production monitoring and is strengthening support for the industry, the ministry said in a statement.

The ministry said it had talked to major dairy firms including Inner Mongolia Yili Industrial Group and Mengniu Dairy Group, and urged them to purchase more milk, stabilize prices and safeguard the interest of dairy farmers.

The ministry will work with central government departments including the Ministry of Finance to map out more supportive policies to help dairy farmers to overcome their plight, it said.

So far, the desperation among farmers has spread to many major milk-producing areas in China, including Hebei, Inner Mongolia, Heilongjiang and Guangdong.

Wang Dingmian, former managing director of China's Dairy Association, said discarding milk and killing cows started in 2009, and over 100,000 farmers have quit the industry each year.