Huaxia Farm rents 4,000 mu of land. A mu is a Chinese surface unit and equals 666 square meters. 4,000 mu corresponds to 270 hectares, on which mainly corn and grass is grown. Calling 270 hectares ‘limited’ for a farm with 14,000 cows is an understatement. Yet, ‘arranging’ sufficient feed is not a problem. The region is known as China’s granary. Sufficient amounts of corn can be purchased from local farmers. Lucerne is imported from the US, rye hay from Australia. Feed represents 60% of the cost price.
Around Beijing there is nothing but small parcels of land. Huaxia Farm rents its parcels from a village representing 3,500 to 4,500 small land owners. The company pays rent to the village representative, who in turn pays the small farmers. All the little parcels are combined into a number of larger plots of land. It is regrettable that not all farmers have signed. There exist large parcels of 10 hectares or more, where a handful of farmers work a piece of land of 18 meters wide, right in the middle of the parcel. Due to the small scale small farmers harvest around 45 tonnes of corn per hectare. Huaxia Farm-plots can be worked and fertilised more efficiently, resulting in an average yield of 50 to 60 tonnes of corn per hectare.
In order to guarantee food security Settle would want to purchase more land, but it is difficult to rent more land in the region. There is an enormous hunger for land, especially due to building activity. “Ten years ago the main location was located in a rural area, now it is surrounded by buildings.”
Lower milk price due to imports
Huaxia Farm supplies several buyers, including Danone, Mengniu Dairy Company Limited, Yili and Shanghai Bright. Five percent of Huaxia Farm’s milk is processed into pasteurised and sterilised milk and yogurt. This is sold in well-known supermarkets, under Huaxia Farm’s own brands Wondermilk and Wonderyogurt. Positioned as Chinese A-brands, the company creates added value.
The considerable export to China from abroad had an adverse impact on the milk price. This decreased from 6 RMB (€0.51) per kilo last year to 4.8 RMB (€0.41) per kilo milk now. At this farm the cost price is €0.27 per kilo, so despite the lower milk price, the farm is still making a profit.
Berwick Settle (47) is the manager on Huaxia Farm in the Chinese town of Sanhe. The farm has 14,000 cows on three locations. Production per cow: 9,000 litres per year. Fat: 3.8 %, protein: 3.3 %. Cell count: 180,000 to 240,000. Daily production: 200 tonnes of milk. 400 employees, of whom 250 for cattle. Other staff: cooks, guards, administrators, cleaners etc. Strategy: To benefit from the increasing Chinese demand for high-quality dairy products with its own dairy brand Wondermilk.