In 2013 the number of dairy cattle in China dropped 2 million below 2012 levels resulting in a constriction in the supply of raw milk by 15% – 20%. Insufficient supply is driving up dairy prices in the country. Within one month the price of raw milk increased from US$690 per ton to US$855 per ton. Several dairy companies including Yili, Mengniu, and Bright Dairy will be increasing the price of their dairy products again this year in December. Shengyuan raised its prices by 5% in February and Yili, Bright and Mengniu saw price increases in October. Current supply of raw milk in the country is estimated to be 35 million tons and demand is placed at 40 million tons. The short supply is being attributed to three causes: high summer temperatures this past season, small producers exiting the industry over the past two years, and the Chinese government reducing imports from New Zealand after a contamination scare involving milk powder from that country.
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