Friday, March 29, 2024

NZ dairy tech helps China grow

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The Chinese government’s intention to feed its people better-quality food means the nation’s industrial might has turned to its agricultural production and a New Zealand company is firmly embedded in that goal.
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Waikato Milking Systems China country manager David Morris has spent the past seven years working with Chinese milk companies at the sharp end of a dairy sector undergoing a revolution, moving from small peasant operations to big, controlled, indoor dairy systems.

Today Waikato has about 30% of the Chinese dairy platform market and a close alignment to the state-owned industrial farm component and turnkey operator Beijing Kingpeng Global.

It has become instrumental in building rotary milking platforms so familiar to NZ farmers, with 60 to 80 cows capacity the standard scale. 

However, the scale of the operations will be less familiar. The big platforms are usually built in pairs for indoor farms milking 4000-6000 cows three times a day all year round. Estimates are more than 100 such operations are now spread across China.

“Today it would be very hard for a small-scale dairy farmer to remain in business. They are very dependent upon someone buying their milk every day and they face the likelihood they will get paid the least amount. 

“Any surplus of their milk gets turned into low-value powder and they will be paid a very low price as consumers prefer overseas-sourced milk powder,” Morris said.

The money in China’s dairy industry today lies in fresh milk sales and increasingly it is the big three milk processors, Yili, Mengniu and Bright, that also own supply system from the farms to the supermarket shelf space.

Morris said there are good margins for processors with that level of control and it also reflects government steps to increase traceability and single-sourced milk supplies to improve consumer confidence in the homegrown product.

Waikato is supplying rotary platforms to most of the big processors, largely through its alliance with Kingpeng, which buys components and technology for its agricultural production systems globally.

Kingpeng chairman and general manager Jiwei Gao said the company buys from whatever part of the world does them best.

The company’s food production focus is on poultry, pork, dairy and greenhouse operations, drawing on component supplies from Europe and United States. 

“And in the case of rotary platforms they see us as a leader and as a company we are the second largest for rotary platforms in the world,” Morris said.

Gao described China as passing through a transferring time as both government policy and consumer expectations drive higher food standards.

The focus on scale has huge impetus behind it with the release of the Chinese government budget only this week revealing aims to turn 5.33 million hectares of land into high-standard crop land.

“Before, you may have been your own farmer on a small piece of land. Now you are likely to be the worker on a farm operated by corporates,” Gao said.

For Waikato the expansion has involved recruiting and training Chinese staff on dairy shed installations that are distributed from the far north regions of Inner Mongolia, across central China to the Tibetan mountains in the southwest where the world’s highest large-scale dairy farm operates at 5000m milking 3000 cows.

Kingpeng’s strong focus on protein production is following the curve of growing middle class consumer demand for meat, milk and dairy products. 

While milk powder remains a valuable market with the infant formula sector estimated to grow to US$32 billion in the next two years, fresh milk and yoghurt products are gaining in popularity. 

Average annual urban consumption of milk products has grown to 17kg a head. 

While relatively flat in urban areas for the past two years, continuing strong population urbanisation will continue to see increases for years ahead. 

The budget also announced intentions to move another 10 million rural people out of poverty and into new urban jobs.

“When we once would have seen problems for consumers to get such fresh products delivered due to distribution delays, today that has all changed with networked courier systems that are often aiming to deliver to apartments within an hour,” Morris said.

With about 40% of all purchasing including food done online, China’s food system is now strongly app driven. With an announcement to invest NZ$220 billion over five years in a 5G network that will only increase.

Gao said the alliance with Waikato was built on a high level of mutual trust and an appreciation the company’s components are well up to the task.

Morris said platform design has been beefed up to deal with the larger herds, bigger cows and more frequent milking cycles and supported by a strong service team.

Listen to Farmers Weekly editor Bryan Gibson speak to Richard Rennie in China below

 

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