China Modern Dairy to expand milk output

China Modern Dairy mulls to increase its milk output by 12% to nine tons per cow with genetic modification techniques and effective herd management by 2015.

The firm, which is the largest raw milk supplier to China Mengniu Dairy, currently sells its own brand of milk in main cities, including Beijing and Tianjin on the mainland.

Around 70% of China Modern Dairy's unpasteurized milk will be sold to Mengniu over the next decade under a deal signed between the two companies.

China Modern Dairy deputy chairman of the board and CEO Lina Gao was quoted by chinadaily.com.cn as saying that the company will use the rest of its 30% production to expand and develop its own brand.

Gao said that their dairy products will be eventually marketed in Hong Kong. The milk producer will invest to expand its sales chain from northern cities to southern cities in China, he added.

China Modern Dairy new chairman Julian Juul Wolhardt, commenting on Mengniu's pledge to source 100% of raw milk from self-operating farms, told thestandard.com.hk, "Even if Mengniu invests 3.5 to 4 billion yuan (HK$4.2 billion to HK$4.9 billion) in setting up a farm, it can only satisfy about 5-10 percent of its yearly raw milk demand."

For the full year ended 30 June 2012, China Modern Dairy reported 77% increase in net profits to CNY398.5m ($63.07m), compared to CNY224.6m ($35.66m) a year ago.