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Breakthrough @ CRISIS for DAIRY

2020-3-11 11:12:34 Comments:0 Views:533 category:SDDDC News

“Misfortune and fortune cross their paths. Disasters and opportunities come at the same time. When standing at the intersection, the grumblers and escapists turn left in panic, while those who face the challenges turn right in the course of solving problems. If disasters can’t be avoided, we have to learn to live with them, and try to tear apart the misfortune, letting in sunshine and hope that wither darkness and fear.”

Sino-Dutch Dairy Development Center (hereafter, SDDDC) hosted a live stream on February 28th to discuss the dairy industry’s opportunities facing the current crisis. James Su, the Secretary-General of SDDDC and the host of the live stream, pointed out that milk, as a popular gift for families and friends during the Spring Festival season, reached the lowest sales of recent years after the outbreak of novel Coronavirus. Yet he quoted the words above to encourage the dairy industry to face and embrace the multiple challenges it brought, including inventory pressure, the dilemma of spray drying, the heavy loss of dairy farming, and so forth.

In face of those challenges, how to build consensus and contribute wisdom, in all links of the dairy industry chain, such as farming, processing, and consumption, to deal with the uncertainties, has become a shared concern of the whole industry. On the live stream, experts, scholars, and enterprises executives from different branches of the dairy industry explored the opportunities under the current crisis and shared their in-depth understandings.

The highlight of this event is the discussion on current situations and recommended solutions from perspectives of all links of the whole dairy industry chain. The expert team invited to the event consists of Li Shengli, Director of SDDDC and Chief Scientist of the National Dairy Industry and Technology System; Grace Chen, CEO of Royal FrieslandCampina China; Yang Yong, Vice President of Henan Hua Hua Niu Dairy Group Co., Ltd.; Guan Ming, President and General Manager of Beijing Eastern Bell Technology Group, senior engineer, think-tank member of Beijing Municipal Science & Technology Commission; Jiang Linzheng, Vice President of Nanjing Weigang Dairy Co., Ltd.; Long Jiang, President of Yunnan Niuniu Animal Husbandry Co., Ltd., President of Yunnan Zhadian Dairy Co., Ltd.; Sun Zhihai, General Manager of Yunnan Niuniu Animal Husbandry Co., Ltd.; Feng Li’ke, CEO of Guangdong Yantang Dairy Co., Ltd.; and Dr. Jiang Weiming, CEO of DSM China, Senior Global Executive Vice President of DSM. James Su, the Secretary-General of SDDDC, hosted the event.

Face the temporary impact of the epidemic on dairy industry

 Find opportunities in the crisis

Li Shengli, Director of SDDDC and Chief Scientist of the National Dairy Industry and Technology System, delivered a keynote report titled “The Epidemic and China - Animal Farming - Dairy Industry”.

 The epidemic has been under relatively good control in China, but worldwide the situation is not as optimistic, with signs of turning even worse. Due to the influence of the epidemic, the global stock markets have witnessed constant drops recently. Uncertainties cloud the global economy, the outlook being unclear. In China, the outbreak of coronavirus has the most significant impact on the tertiary sector. The secondary industry sector suffers more than the primary industry from the outbreak of the epidemic, as many manufacturers have experienced lack of orders, shortage of labors, restriction on operation hours, disruption of supplies, and tight cash flow. Therefore, we should pay attention to the spread of the epidemic in Japan, South Korea, Europe, North America and other countries and regions, and follow closely the influence of the global economic situation on our domestic market. If the international supply chain is cut off, China will undergo a shortage of supply.

The domestic animal farming industry also endured manifold impacts of the epidemic on feeds production, raw-material supply, animal raising, products processing, and consumption market. The existing order of the industry has been disrupted as traffic and logistics have been blocked, prices of production material have risen, stock has accumulated, and the consumption has been sluggish. If we narrow down to the dairy sector, the main problems are as follows: 1) the shortage of labor and the increase of labor costs. Statistics show that about 60% to 70% of dairy businesses are in shortage of labor, because farm workers have to be quarantined before they could return to work, and technicians from dairy companies are not allowed to enter the dairy farms to help with the operation. 2) The significant rise in price of feed by 5% - 10%. 3) The surplus of raw milk. In Hubei Province some of the surplus raw milk has to been dumped because the logistics has been disrupted. In other regions, most dairy companies have opted to spray drying of the raw milk. 4) The purchase price of raw fresh milk has dropped in most provinces since January 2020. The reason behind it is mostly the decrease in sales and consumption. The pressure from the downstream end of the industrial chain has been transferred to the upstream end.

The central government is taking effective measures to combat the epidemic and ensure the social and economic development over this crisis. We are confident that the crisis is temporary and there are opportunities coming with the challenges. With various favorable and supportive policies being introduced, the economy will welcome an explosive growth in the second and third quarters which will offset the losses in the first quarter. The dairy industry should stay calm and work to restore the market by promoting dairy knowledge and nurturing consumers’ habit of drinking milk. At the animal farming end of the dairy industry, farms should take some scientific and reasonable emergency measures to stabilize the milk production and reduce losses in the short run. In the long term, it is essential to enhance the competitiveness of China’s dairy industry by increasing the per-cow yield, raising more dual-purpose cattle, combining dairy farming and crop farming, supporting the farmers to participate in processing under the direction of the government, and by taking other measures that will underpin a stable and fast growth. 

Break through the current predicament and look into the future

New ways, new ideas, new trends  

Grace Chen, CEO of Royal FrieslandCampina China

Continue with digital marketing, stay in close communication with consumers, and suggest development of the cheese industry

 Royal FrieslandCampina N.V. is a cooperative, so no matter how the market is, the company is obligated to purchase all the good-quality raw fresh milk from its member farms. Cheese products have the feature of long shelf life, and therefore, they can serve as a buffer against the market stagnation for the dairy producers. The Netherlands’ experiences in cheese production is worth reference, but if China is to promote cheese production, the whole dairy industry chain has to work together. SDDDC, with a think tank of the industry, may coordinate the development of cheese production.

 After the outbreak of coronavirus, FrieslandCampina responded to the situation quickly, doing its best to turn the challenges into chances. FrieslandCampina has managed to increase its sales even when the conventional distribution channels have been severely interrupted. This success should be attributed to the company’s genes of digital marketing, the commercial team’s quick adaptation of strategies to the new situations, and the supply chain’s rapid responses.

 The consumer education team adopted live streaming, short videos, social marketing and other ways to promote the products. Since the consumers became more aware of the importance of immunity after the outbreak of the epidemic, the team highlighted the extensive amount of lactoferrin in our Friso products. The company also increased its investment on the online promotion.

 We stayed close with our consumers and provided them with good services during the crisis. Over 3000 parenting consultants of our company delivered the products to the consumers by various means regardless of the costs, especially in Hubei Province.

 Shouldering the social responsibility is the base of a brand. After the epidemic broke out, Royal FrieslandCampina N.V. has worked closely with its business partners and the government to guarantee the supply and delivery of its products. The value of a business should not only manifest in its products, but also in its contribution to the society, and it is in moments of crisis when a brand stands out with its value.

 After the crisis, the consumption of dairy products is estimated to increase. Nutrition is essential for immunity whose importance people have generally come to be more aware of after the breakout of the coronavirus. In 2003, after the epidemic of SARS the consumption of yogurt increased by 40%, and liquid milk by 20%, and that had been before China became the second largest economy in the world. This time after the epidemic, the consumption of dairy products will probably increase, and at the same time, the consumers’ demands may become more diverse.

 The consumers’ desire for healthy and balanced diet and lifestyle will become stronger, so will their demand for dairy products’ diverse nutritional values. This may urge the dairy producers to innovate and diversify their products to meet the consumers’ needs.

 The consumption of dairy products is increasingly influenced by the social media, and the younger generation of consumers tend to choose brands that convey values that fit their own. Therefore, online marketing that allows the producers to send out messages to their target groups, and to actively communicate with the consumers, is becoming more and more important.

 Online and offline marketing channels will merge with acceleration; online platforms and o2o platforms need to be expanded; and digital marketing is becoming progressively important.