Song Kungang: China Dairy After Cleanup and Rectification

The 17th annual meeting of China Dairy Products Industry Association was held in Chengdu. Mr. Song Kungang, Chairman of China Dairy Products Industry Association, made an important industry report. The title of the report is "Cleaning China's Dairy Industry after Reorganization".

The following is the full report:

Song Kungang: At the annual meeting, colleagues from the national dairy industry and experts from home and abroad gathered in this beautiful city to discuss the development of China's dairy industry. I hereby extend my welcome to all colleagues and old and new friends. The annual meeting was held after the dairy industry was cleaned up and reorganized. 2010 was a year of tremendous changes in the development of China's dairy industry. Under the strong support of relevant leaders of the State Council and the efforts of the entire industry, dairy products are safe, The industry development environment and other aspects have made tremendous achievements. Market and consumer confidence have been further restored, and product sales have improved further. Although various companies are generally facing the pressure of rising production costs, due to the rapid development of new products and high value-added products, the economic benefit level of the industry has generally improved compared to the previous year. However, we must see that the dairy market and consumer confidence have not yet fully recovered. Domestic consumers still have doubts about product quality and safety, and the economic growth of enterprises is not synchronized with the development of production. The dairy industry still faces some outstanding contradictions. We must use the scientific development concept to lead the development of the industry, change the development model, enhance the concept of development, ensure product quality and safety, expand dairy product consumption, and guide the industry to a sustainable and stable development.

first part. Achievements in 2010 industry development.

First, the industry consolidation reform was successfully completed with remarkable results. In the fourth quarter of 2010 and the first half of this year, according to the requirements of the General Office of the State Council on further strengthening the quality and safety of dairy products, the Development and Reform Commission of the Ministry of Industry and Information Technology carried out audits and clean-ups of the dairy products industry in accordance with the relevant access requirements of the dairy industry industrial policy. The construction project will be re-audited and the construction-intended construction project will be audited. The General Administration of Quality Supervision, Inspection and Quarantine issued rules for the review of the new version of the company's production of infant formula certification and the rules for the review of licensing conditions for dairy products produced by the company, and issued a new verification certificate for infant formula manufacturing enterprises in the country based on the new production license. Production licenses, 688 companies have obtained production licenses at the end of July. The clean-up and rectification work is a transformation of the dairy industry in China. It can also be said to be a major change in history. The dairy industry began its new historical period. Since 2008, the number of companies that have closed the melamine cyanide accident and voluntarily waived their applications has registered 330, accounting for 21.9% of the total number of enterprises in the industry in 2008. If 56 enterprises still in the process of rectification obtained production licenses after rectification, the total number of production licenses obtained was 744, which was 49.4% of the total number of enterprises in 2008, which means that nearly half of the enterprises were closed down. Clean-up and rectification has eliminated companies that are lagging behind in infrastructure and small in scale. The backward technology, backward equipment, poor product quality, and low management level of China's dairy industry have become history. Shown in front of us is a modern dairy product company with advanced technology and high management level. Significant changes such as the complete packaging of milk powder to automatic mechanical packaging, and the ability to test all the indicators of the product and equipment. The raw materials entered the factory and the products were tested in batches, the cleanliness reached the level of the pharmaceutical factory, and the enterprise management achieved an advanced quality management system. The quality and safety of the products can be traced back. This is the improvement of our technical equipment level and management level after our industry has been rectified. Specific performance. The liquidation and reorganization resulted in the market share of large-scale backbone enterprises and well-known brands, and the degree of industry concentration was further improved. Compared with 2008, the total number of factories was reduced by nearly half, resource allocation was optimized, and raw materials and markets were concentrated on large-scale backbone enterprises and famous brands. Reduced idle rate. The market share that shuts down the company's exit accounts for about 15%, and the enterprises that have exited are all small and medium enterprises. The market is basically a three or four-tier market. The market share that is withdrawn will be quickly supplemented by large-scale backbone enterprises. It will not cause a gap in market supply. Products on the market will be mainly played by large-scale backbone enterprises and famous brands, and the quality and safety of dairy products will be Huge improvements. The rectification of the industry has changed the competitive landscape of the industry, and the competitive landscape has eased. The industry's development environment will be further improved. This includes the establishment of a milk source base, the order of raw milk purchases, raw milk purchase prices, and market competition. The phenomenon of contending for milk sources will be reduced, the quality of milk sources will be significantly improved, and the phenomenon of internal consumption and vicious competition in the market, such as price wars and advertising wars, will be greatly reduced. Repeated construction, blindly developed industry environment will be effectively contained, will create a relatively good environment for the development of the industry, business development, China's dairy industry will begin a new chapter in history.

Second, the production and consumption of dairy products enterprises have basically been restored. Compared with the previous year, the overall economic benefits are better. Fundamentally, the National Bureau of Statistics released the business operations of enterprises above designated size from January to June. Dairy production and sales still achieved good results. At the end of June, there were 638 large-scale enterprises in the country. This scale has now been increased. It is an enterprise with a sales income of more than 20 million. The accumulated industrial output value was 108.51 billion yuan, a year-on-year increase of 62.63%, and the total output value of dairy products accounted for 17.1 of the total output value of the food manufacturing industry, which was 10 percentage points lower than the average growth rate of the food manufacturing industry. The output of liquid milk was 9.271 million tons, a year-on-year increase of 12.97%. There are 187 milk powder production enterprises with output of 665,000 tons, a year-on-year growth of 19.67%. From these data, we can see that the output value growth is higher by nearly 10 percentage points than the output growth, due to the price factor, mainly the new high attachment. Value products bring. With the increase in production costs facing the industry, economic benefits have generally declined compared to the same period of last year. According to the statistics of the National Bureau of Statistics, the total profits and taxes of enterprises above designated size increased by 28.06% year-on-year. The average profit margin of sales revenue was 5.67%, which was a percentage increase from 4.62% in the same period of last year. However, it is still at 6.83% of the average sales margin of the food industry, which is one percentage point lower. The average sales margin of the food manufacturing industry is one percentage point lower. There were 141 loss-making enterprises, accounting for 22.03% of the number of statistical enterprises, which was basically the same as the same period.

Third, the company has made great achievements in building its own milk source base and has played an important role in safeguarding product quality and safety. In the past two years, the main content of the company's upgrading has been the construction of its own milk source base. Many large-scale backbone enterprises have invested heavily in the development of their own dairy bases, and their own milk sources have rapidly expanded from scratch. According to the association’s understanding, large-scale backbones The proportion of enterprises’ own milk sources, including cooperatives, joint-stock companies, and custody dairy farms, generally exceeds 15%, and some enterprises reach 40%. This is the most distinctive highlight of China's dairy industry's upgrading and transformation and has played an important role in safeguarding product quality and safety. Some enterprises have implemented the whole industrial chain management model for the production of infant milk powder. This whole industry chain management model has a good demonstration role for other companies. At present, the construction of the company's own milk source base is being carried out in an orderly manner throughout the country.

Fourth, the quality of dairy products has improved significantly. After nearly two years of rectification in the dairy industry, the quality and safety of the products have been fundamentally changed, especially for infant formula milk powder. It should be said that the quality of dairy products on the market today is the best period. Consumer confidence has gradually been restored. From February this year, the quality of baby milk powder sampling testifies to this judgment. In February and March 2011, the Institute commissioned a third-party inspection agency and the National Food Quality and Safety Inspection Center conducted quality surveys on infant formula milk powder in markets such as Beijing, Hebei and Tianjin. Including domestic production and foreign imports, there are domestic brands and foreign brands. Twenty-five random inspections of 25 brands, 43 samples, 26 inspection indicators, the test results are very good, and the product quality is very reliable. In order to strengthen consumer confidence in infant formulas, starting from May of this year, the association implemented a month-month sampling plan, companies voluntarily enrolled, and the association commissioned a third-party inspection agency to take samples for testing on the market. As of July, a total of The 17 mainstream brands of infant formula products were sampled three times. This time, the sample construction surveyed 17 indicators, all of which were safety indicators. The inspection results were very good. On August 12th, CCTV News Channel had an interview with the Association at 12.30pm. We reported to the society about the quality of sampling, and we are very pleased with the quality of the products.

Fifth, the rapid development of new products and high-end products. Last year, the development of high-end products for new products has made remarkable achievements. Many companies have launched their own new products, such as high-end pure milk, high-quality coagulation yoghurt, and other products that are welcomed by the market, and have high added value. Therefore, better production efficiency is obtained. Under the prevailing pressure of cost of production and sales, enterprises can still maintain better economic benefits. Among the enterprises that have obtained production licenses, we have 40 cheese production enterprises. China's dairy product restructuring has made gratifying achievements.

6. The entrepreneurial mentality and business philosophy are changing, and the industry development environment has begun to improve and improve. After the lessons and reflections of melamine, the dairy industry has gradually adjusted its own development philosophy. Entrepreneurs are gradually adjusting their development mentality, changing the emphasis on speed, quality, market, light technology, and publicity. Light practical impetuous mentality. Began to change to pay attention to the foundation, attach importance to the construction of enterprise software, attach importance to the construction of corporate culture, and strive to adapt the pace of development and market cultivation, market development and economic efficiency. Since the beginning of this year, the price war and advertising campaign in the market have been reduced. There have been many subsidies for charitable causes and public welfare undertakings. The consumption income has been used more often to transform channel construction and sales patterns, using sales services, and through product differentiation. Expanding the market and increasing sales through upgrading services and expanding sales channels, the development environment of the industry has been improved.

the second part. The current form of development of the industry, despite last year's industry development and market recovery, has made great achievements. However, in the new year, the industry still faces great challenges and difficulties, mainly due to the rising production costs brought about by the rise in prices of various raw materials and the difficulties caused by the lack of consumer confidence in the market.

First, since the second half of last year, the price of raw milk has increased and the production cost of enterprises has increased substantially. According to the fixed-point monitoring results of the Ministry of Agriculture, the price of raw milk in the ten milk-producing provinces increased 11.89% year-on-year in June this year. In order to prevent market volatility, enterprises generally adopt lowering of sales expenses, lower advertising investment, and minimize the increase in product prices. The price of special milk powder for infants and young children was affected by the price increase. Most of the ingredients were imported from abroad. From January to June of this year, compared with the same period of last year, the price of main ingredients and import prices of infant formula was similarly high. Whey concentrate Protein rose by 41.37% and milk powder rose by 13.1%, which is calculated based on average import prices. The increase in the prices of certain corporate products has also aroused the attention of relevant social departments and the media. We hope that production companies will be able to use their own cost-rising factors as far as possible, not to easily raise prices, and increase the burden on consumers. But at the same time, we also hope that society will maintain a normal attitude towards the fluctuation of dairy products prices, because the prices of international markets sometimes fluctuate greatly.

Second, consumer confidence has not yet fully recovered. From January to June, the inventory of finished products of enterprises above designated size increased by 17.64% compared with the same period of last year, and the product sales rate was 96.67%, which was one point less than the equivalent of 97.16% in the same period of last year. It was basically the same, but compared with normal years. Compared with a percentage point lower, the sales rate of our normal year products should be above 98%. In particular, the withdrawal of loans was not satisfactory. The account receivables of enterprises above designated size increased by 31.96% in the same amount, and they owed more money. From the analysis of consumer groups, consumers' consumption of liquid milk and fermented milk has basically returned to the normal state. This is the result of the efforts of the government and the company's silicone. However, due to the special nature of infant milk powder, consumer confidence has not yet been fully established. Some consumers still have doubts about domestic products. During the Spring Festival this year, some consumers bought milk powder in the markets of Hong Kong, Macao, and neighboring countries, causing tight supply in the local market and becoming the focus of media coverage for a time. In the first half of this year, the import volume of retail packaged infant formula milk powder remained high. From January to June of this year, we imported a total of 34,200 tons of infant milk powder, an increase of 2.91% year-on-year, and the volume of imports did not decline last year. This is a great shock and spur to every dairy worker. It has a lot to do with the problem of milk powder last year. In particular, it is not a report about dairy product safety issues, and there is a great debate about raw milk standards. Relationship reports. We must take measures to build up consumer confidence as soon as possible.

Third, the import of dairy products still grows significantly, and exports are still blocked. From January to May, liquid milk imports reached 16,000 tons, an increase of 1.12 billion. Whey powder imported 138,000 tons, an increase of 14.23%, whey powder imports and infant milk powder sales are related. The import of lactose was 28,200 tons, an increase of 24.33% over the same period of last year, and the import of infant formula milk powder for retail packaging was 34,200 tons, an increase of 23.91% over the same period of last year. The value of imports accounted for 4.25 of the total output value of domestic dairy products, which was less than 3% in the past. In the first half of the year, exports of dairy products have begun to recover again. The export of dairy products was 22,900 tons, with a total value of 49.92 million US dollars, an increase of 22.92% and 64.71% year-on-year, and milk powder import 4167 tons, an increase of 99.41% year-on-year.

the third part. The focus of the industry work in 2011. The focus of the dairy industry in 2011 is still on the protection of product quality and safety, improve the industry's operation and management level, optimize the industry environment, and build confidence in the market.

First, continue to implement the industry upgrade plan. In 2010, the upgrading of various enterprises in equipment, processes, inspection capabilities, and industrial enterprise management has been completed. The main content of this year's industrial upgrading plan is still the construction of a milk source base, vigorously develop its own milk source, and strive to obtain 30% or more of the proportion of self-owned milk used in production for three years.

Second, the raw milk used by infant formula production enterprises all realize the whole industry chain model, all from the company's free milk source, use the best raw milk, and guarantee the absolute safety of product quality. For the construction of its own milk source base, the construction of butter farms must be scientific and reasonable, in line with national conditions, and the appropriate scale, supply of grass and fodder should be taken into account, and unnecessary losses caused by blindness should be reduced. When developing their own milk source base, various companies must pay attention to science and seek more opinions from animal husbandry experts. The second aspect is the persistence of unremitting efforts to ensure product quality and safety. The dispute over the quality of raw materials and the safety standards for raw materials once again caused the dairy industry to suffer a reputational injury. Consumers have become suspicious of the quality and safety of dairy products. Raw milk safety standards are only one must be achieved. The minimum standard is a minimum standard. There is no restriction on raw milk above this target. High-quality raw materials can produce high-quality products. This is a simple truth. No company is willing to purchase poor-quality raw materials. Therefore, the low standard does not mean that raw milk purchased by enterprises is of a low standard, nor does it mean that all products are produced with low standards, because there are still many companies that have their own high-quality own milk sources. A considerable proportion has been reached. In addition to the acquisition of cooperative milk sources, each company has its own internal standards. The price of milk of different quality levels is not the same, and the price of milk is good. Therefore, some people think that the national standard is low, and the standard of production is waste products. Such reasoning It is not true. Under the current circumstances, the establishment of various companies to develop their own raw milk acquisition grading standards, in order to analyze the price, good milk prices to ensure the safety of raw milk. Second, in accordance with the list published by the National Food Safety Office for Renovation, the inspection of raw milk will be strengthened to combat adulteration. Third, carefully observe and implement the newly promulgated standards for the use of food additives, use standards for nutrient-enhancing ingredients, and resolutely eliminate the abuse of food additives. I know that all companies are very strict in this regard. However, we are reminding you again here that we must strictly adhere to national standards and add by volume in accordance with the variety. Fourth, earnestly implement the system of raw materials entering the factory and products leaving the factory for inspection and approval to ensure that products appear in line with national standards. This is our requirement for ourselves. The AQSIQ is formulating management rules for the product traceability system, and the company must establish an electronic file. This file must be established at key points of each process. This document is the traceability of the AQSIQ on products. This product regulation is in progress.

three. In 2011, all companies must complete the construction of a sincere system, and all companies should earnestly study the implementation guidelines for the food industry enterprises' sincere management system construction and implementation requirements, food industry enterprises, and standards.

Fourth, continue to implement various measures and systems to ensure product quality and safety. First, establish a product quality and safety traceability system. Second, establish a product quality and safety risk pre-quadrant system. Third, establish and implement good production practices for dairy products.

5. All enterprises should conscientiously implement the dairy industry policy, consolidate and develop the success of the industry's liquidation and rectification, strictly follow the conditions of industry access, build and renovate dairy product projects, and stop the blind investment and redundant construction. Continue to optimize Industry development environment.

Sixth, to strengthen corporate culture construction, training to enhance the quality of the team. First, carry out training and education for employees of enterprises, including corporate culture education, professional ethics education in the industry, food law and regulations policy study and education. Second, professional technician training and skills appraisal are performed for technicians, and personnel in important positions must hold certificates.

Comrades, China's dairy industry after clean-up and reorganization has laid a foundation for healthy development and entered a good environment for healthy development. It is hoped that all enterprises will conscientiously implement the various guidelines and policies, and do a good job of the upgrading of enterprises that focus on the construction of a milk source base. Work to ensure product quality and safety, expand the consumer market, and write a new chapter in the development of China's dairy industry. thank you all!