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First organic milk producer to launch

By Chen Jialu (China Daily)
Updated: 2006-08-28 09:47

Although its primary function is to make milk, Huoshaoying village in Northwest Beijing's Yanqing County is not your average dairy farm.

Here, cows are raised in a natural setting. With music playing in the background, they munch on "hamburgers" containing healthy nutrients, graze in grass grown without chemical pesticides, and drink fresh water from ground-wells.

This dairy farm for organic milk was developed by Beijing Guiyuan Ecological Agriculture Development Co, and was labelled China's first organic milk production base after passing assessment on August 13, 2006.

According to some in the industry, it could be the start of an organic trend.

As Chinese people seek healthier food sources, the use of antibiotics, pesticides and synthetic hormones in milk production is getting a bad reputation. There are 500 different pesticides licensed for use on non-organic dairy farms; organic farms don't use any. Organic milk comes from cows that have not been treated with antibiotics, so don't have the bacterial resistance which allows cows to appear healthy while producing polluted milk.

Organic milk is also higher in certain nutrients than non-organic milk, such as Vitamin E, Vitamin A and antioxidants, which are considered essential for maintaining a healthy heart and strong bones and teeth.

A competitive market

The milk industry is the fastest growing food industry in China. Production value has grown at an average 29 per cent annually in recent years, reaching 89 billion yuan (US$11.1 billion) in 2005, with an average profit margin of about 5 per cent. This growth has been dominated by market giants Yili Group, Mengniu Group and Bright Dairy & Food Co.

"The competition in the Chinese milk market is very fierce now, but mainly focused on price cuts," says Song Kungang, the chief-in-council of the China Dairy Products Industry Association. "It's good for the milk companies to upgrade their products and transfer their target markets to create a new competitive edge."

Unlike normal milk providers, organic milk-maker Guiyuan will not compete on cost. A carton of Guiyuan contains 243 millilitres and will be sold at 5-6 yuan (63-75 US cents) in the market. The price of Bright Dairy, Yili and Mengniu with the same volume range from 1 yuan to 2 yuan (13-25 US cents), according to different ingredients and packaging.