The New York Times

By DAVID BARBOZA 

April 8, 2003, Tuesday,
HOHHOT, China

 
In a dusty little village that sits along the windswept plains of Inner Mongolia, a 43-year-old farmer named Wang Ergo has built a small dairy farm in the courtyard that leads into his modest home.

He has a set of tattered, makeshift barns on his muddied 20-by-20-foot property, four Holstein cows (including one he chains to a green jeep) and a metal bin stocked with aging corn.

And with milk demand in China soaring this year, he is thinking expansion.

"My income is very good," Mr. Wang says, standing in the mud, stroking the back of one of his cows. "I can afford a television and a sound education for my son. And it's not very hard work."

Like thousands of other dairy farmers in this north border region, Mr. Wang is benefiting from China's growing appetite for milk and other dairy products.

Though dairy consumption in China still ranks far below that of Western nations and even below that of other developing countries like India and Thailand, the sale of dairy products has been soaring since 1998, when the national government began encouraging schoolchildren to drink a glass of milk a day.

Now, with China's growing middle class in places like Shanghai having milk delivered right to the doorstep, expectations of an even bigger national boom are growing. And China has already declared the dairy industry one of its top agriculture priorities over the next decade.

As a result, the government and corporations are now pushing to develop this region -- a vast grasslands that stretches from Xinjiang Province in the northwest across Inner Mongolia and east to Heilongjiang Province -- into China's new Milk Belt, this country's answer to Wisconsin, America's dairy state.

"The north is already China's Dairy Belt," says Marshall Sun, a dairy expert working at the Shanghai office of Rabobank. "And there's a lot of room to grow."

Hohhot, which is about 415 miles northwest of Beijing, close to the border of Mongolia, is the epicenter of the new milk boom. This is where China gets much of its raw milk.

Two of the country's biggest dairies, the Yili Corporation and Mengnui Dairy, are based here. And new dairy plants and ice cream factories are sprouting throughout the region.

Indeed, Hohhot (pronounced who-ha-HOT-ta) has already been dubbed Milk City by people here, largely because its outlying villages are dotted with thousands of small dairy farms.

Of course, these are hardly modern dairy farms by Western standards. In a village called Gertu, about 20 miles southeast of Hohhot, families typically have just four or five cows, which they keep much like a pig housed in a courtyard, chained to a post or latched to a truck. Any visitor to the village's narrow, manure-piled streets can see cows lined up against walls or peeking out from small courtyards.

The Holstein cows that now dominate the region are still kept in rather primitive conditions. They are often fed food scraps or grain harvested from local fields. Much of the feed is unsuitable for higher milk production standards.

There are a host of other problems that could complicate China's diary strategy. Officials at China's Ministry of Agriculture, for instance, admit that the dairy industry here has poor-quality cows. And the United States Department of Agriculture, in its own recent study of China's dairy industry, has said that "China seriously lacks good breeding stock."

Western agriculture has bolstered production in every arena from hogs to chickens to dairy cows by breeding animals for higher production and differing qualities. China, experts say, is far behind.

But there has also been some progress in villages that are just emerging from the nation's old-style agriculture systems.

Twice a day, morning and late afternoon, farmers in Gertu, a village of 4,000 people, march their cows through the unpaved streets to the nearby Babai Village Station No. 2, a new automated milking post that one of the big dairy companies installed here last June.

"We get three tons of milk a day," says Li Rongsheng, who works at the new milking post. "Before, we had to do all this by hand."

Because farmers here have been purchasing and even importing cows from places like Australia and New Zealand, production has more than doubled in the last few years. But demographics and projections of a continued milk boom suggest the need to increase production at an even faster pace.

Even if only 10 percent of Chinese consumed what the average American now takes in from dairy products, over the next decade this country would need more than three million additional cows to meet the demand.

"They'll either have to add millions of cows or import a lot of cows, not even to match the U.S., just to get up to where Mexico is in milk consumption," says Arthur Coffin, an expert at the Department of Agriculture.

To keep pace with the milk boom, which has been fueled by new attitudes about health and nutrition in this country, the government is also initiating efforts to improve the genetics of dairy cows nationwide.

And farmers here in the north are moving to increase the size of their farms and adopt new techniques. Academics and other experts are being flown in from around the world to train farmers.

The Yili Corporation and other dairy companies are installing milking stations in small villages that still burn small pots of coal to cook and heat their houses. The companies are also offering loans to small farmers eager to bolster production.

But agriculture experts in China know that one of the major obstacles to higher production is inefficiency in the production system. While the average cow in the United States yields over 17,600 pounds of milk each year, the average cow in China yields less than 8,800 pounds, according to the Department of Agriculture.

Industry experts call some of the conditions woeful.

"Some of these conditions are really primitive," said Barry Murphy, a sales manager who traveled to Hohhot in March for DSM Food Specialties, a dairy company based in the Netherlands. "Some of these farmers think their cows are pigs, so they'll feed them anything."

But the environment in the north seems mostly suitable for the establishment of a Dairy Belt. The region is cool, flat and relatively unpopulated.

One worry, however, is that environmental issues could slow the push for dairy developments here. For years, there have been concerns that cows, sheep and goats in the region have been overgrazing. The government has begun placing restrictions on grazing and even begun fencing in some properties in an attempt to halt the overgrazing.

Some in the government believe the depleted grasslands may be contributing to the dust storms that periodically sweep across the northern steppes and then flow down toward big cities like Beijing.

Farmers, however, are looking forward to expanding their operations. They are confident because of the progress they have made in recent years. Most no longer milk by hand. And though many farmers admit to knowing little about where their milk ends up, farm incomes have jumped from about $300 a year a decade ago to close to $2,000 a year now.

"I'm much better off now," says Gong Yougui, 55, who has six cows and three-fifths of an acre in this area. "You can feel the changes. People around here have furniture, televisions and tractors."

So after decades of tilling the soil to produce food for their families and local communities, farmers throughout this region are starting to abandon traditional crops like corn and wheat in favor of dairy cows.

Indeed, many people here like to point out how well nearby villages are doing.

"There's a village about 2 kilometers from here called Yunheshe, where people with 10 cows have cellphones and motorcycles," says Niu Hongwei, a 33-year-old dairy farmer here.

In Yunheshe, a former construction worker named Li Tengwei, 37, says the village of Shebiye does even better because it has a larger dairy operation. The village is divided: people live on one side of the main road and large, gated dairy farms holding about 10 cows each exist on the other side.

"We don't live in mud houses anymore," Mr. Li says.

And there are bigger dairy farms on the way. From Shebiye, visitors can see the new developments coming in the rows and rows of bricks piled six and eight feet high for the dozens of dairy farms under construction.

Dairy farmers here like to show visitors the old part of Shebiye, a dilapidated village of old mud houses, many of them abandoned or occupied by squatters.

In the place of these older houses are newer but still modest brick homes, with a television set the prized piece of furniture.

Farmers here say the growing demand for milk made much of this possible. This came about because of striking changes in the agriculture system.

The new dairy farms have evolved out of a system that has dominated China for decades, a system of small plots of land, about one acre, where each farmer grew for the family and sold the excess to the local community.

Now, farmers are getting used to a market system. And for the last decade, despite some big price drops, the market has been good to them. Farmers who used to earn $200 a year selling excess corn and vegetables are now making $700 for each cow they own.

No one in this part of the world knows how sustainable the milk boom is going to be in China. But everyone's counting on higher dairy consumption in the coming years.

And so while dairy farms here may never rival the 10,000-head operations in the Western United States, farmers like Mr. Wang think the boom will carry through to his son's generation.

"I think he'll be doing the same thing," Mr. Wang says, running his hand through his hair. "And this will still be good work."