Countermeasures to Achieve High-quality Development of Dairy Industry in Xinjiang: A Case Study of Tianrun Dairy Industry

Chunming LIANG, Jinding LIU, Xiaobo XUE, FARRUH ANWAR, Lijun CAO

1. Xinjiang Dairy Quality Monitoring Center, Urumqi 830000, China; 2. Institute of Animal Husbandry Economy and Information, Xinjiang Academy of Animal Sciences, Urumqi 830011, China; 3. Institute of Animal Husbandry Quality Standards, Xinjiang Academy of Animal Husbandry Sciences (Xinjiang Breeding Sheep and Wool Cashmere Quality Safety Supervision and Inspection Center), Urumqi 830000, China

Abstract As a high-quality milk source base in China, Xinjiang has an innate foundation for the development of modern high-quality milk industry. In this paper, it was pointed out that the uneven distribution of interests between the upstream and downstream of the industry was the influencing factor restricting the development of modern dairy industry in Xinjiang. At the same time, the related information of Tianrun Group, which was the leading enterprise in Xinjiang, was analyzed. According to analysis, it was found that through the construction and development of large-scale, standardized and modern milk source base, balance of the upstream and downstream interests, improvement of the combination system of planting and breeding, the added value of products was enhanced and the anti risk ability of enterprises was increased. In addition, it was also pointed out that under the leadership of leading enterprises, Xinjiang would embark on the development road of modern high-quality milk industry with circular economy, resource-saving, environment-friendly, quality and efficiency, operation-saving, independent innovation and industrial integration in the future.

Key words Leading enterprise, High-quality development, Dairy industry, Benefit distribution

1 Introduction

Dairy industry is a livelihood industry related to national health and strengthening national physique. It is a representative industry for the high-quality development of animal husbandry and the coordinated development of primary, secondary and tertiary industries, and is also an industry closely connected with farmers’ income. Xinjiang is located in the golden breeding belt at 40°-50° N, and it is a paradise for dairy cows to live and multiply. For a long time, people of all ethnic groups living here for generations have raised fat cattle and sheep and produced delicious milk and meat by relying on high-quality grasslands. The revitalization of Xinjiang’s dairy industry is not only related to the development of regional industrial economy, but also closely related to the successful implementation of the policy of "building and stabilizing Xinjiang, consolidating and prospering the border". The dairy industry is an industry integrating the coordinated development of primary, secondary and tertiary industries. The modern dairy industry needs to drive the breeding end from the product end, radiate the surrounding supporting system and drive the common development of the industrial chain. Large scale, intensification, standardization and industrialization are the only way for the high-quality development of modern dairy industry.

In this development process, the leading role of leading enterprises is indispensable. It is also the process of awakening, growth, take-off, precipitation and development of leading enterprises to look back on the rapid development of dairy industry in Xinjiang in recent 20 years.

2 Problems and causes of dairy development in Xinjiang

Before 2000, there were some problems in the development of dairy industry in Xinjiang, which affected the way forward for high-quality development of dairy industry. Among them, the main factors affecting the revitalization and high-quality development of dairy industry include: low individual production level of dairy cows, low breeding enthusiasm of farms, unstable dairy quality, imperfect supporting service system and low added value of products. However, the main reason is the unreasonable distribution of interests between dairy processing enterprises and farms[1]. At that time, due to the lack of overall allocation of leading enterprises and corresponding protection and pricing mechanism in Xinjiang, the interest distribution of small and medium-sized dairy processing enterprises and farms was unreasonable.

Research showed that few dairy processing enterprises invested in breeding enterprises in Xinjiang before 2000. Due to the fact that dairy enterprises do not take shares in farms, there is a lack of internal interest connection mechanism. Dairy enterprises generally control milk sources through long-term contracts (generally 3-5 years) and deferred payment of milk funds (generally the settlement period was 1-2 months). Some breeding enterprises obtain bank loans under the guarantee of dairy enterprises and take their own milk funds retained in dairy enterprises as collateral. In the season of shortage of raw milk or the peak season of dairy sales, it shows that all dairy processing enterprises launch the war of "seizing milk sources" by raising the milk collection price. When raw milk is more abundant, or the dairy market encounters setbacks, all dairy processing enterprises jointly lower the purchase price of raw milk, or directly take the means of restricting purchase and rejection to transfer the previous losses to the farms. This uneven distribution of interests has affected the development of dairy industry in Xinjiang, resulting in the following consequences.

2.1 Slow development of breeding scale, and even a shrinking trendDue to the particularity of the primary industry, the breeding end has the characteristics of long production cycle, high cost and weak anti risk ability. After many dairy storms, despite the support of the state and the government, due to the unreasonable distribution of interests, the breeding end is always the group who directly faces the cold winter and risk in both the peak and off-season of the dairy market. Many farms are unable to support it and choose to withdraw from the breeding industry, which has a certain impact on the increase of the overall breeding volume of dairy cows in Xinjiang.

2.2 Breeding end lacking the power and capital to improve the means of productionDue to the unreasonable distribution of interests between dairy processing enterprises and farms, the farms have been in a state of maintenance or low profit for a long time, resulting in the lack of power and response funds for the improvement of means of production at the breeding end. Some enterprises try to use the price lever of raw and fresh milk to guide farms (dairy farmers’ cooperatives) to increase hardware investment and technological improvement. But this kind of guidance has little effect. The specific performance of the dairy industry in Xinjiang is that the feed ration of the farm can not meet the production demand, and the mechanical facilities are aging, and the renewal and improvement of the core dairy herd is slow. In particular, as the core of dairy production, dairy cows need to be improved and optimized by continuously investing funds[2]. However, the advancement of this process was mainly supported by government funds. However, compared with the huge stock base of dairy cows in Xinjiang, the result of government support alone is that some large-scale farms have the basic conditions supported by the government and have completed the continuous renewal and improvement of dairy cows. However, due to the lack of corresponding infrastructure and technology, the improvement process of small and medium-sized farms with the largest proportion is slow, which slows down the overall process.

2.3 Gap of breeding level being gradually increasingWith the development of modern dairy industry, the continuous development of molecular nutrition technology, molecular biology technology, big data and Internet of things + system, as well as the gradual rise of labor costs, dairy farming has gradually moved towards refinement, economy and automation. The breeding cost has been continuously reduced, and the production type has changed from labor-intensive to technology-intensive[3], and the industrial development has changed from simple quantitative expansion to structural optimization and quality benefit, and the overall level has been continuously improved[4]. However, due to the uneven distribution of interests between the upstream and downstream of the industrial chain, there is a lack of motivation and funds for the technological renewal of the breeding end[5], and the introduction of technology requires a lot of funds, and has no great stimulating effect on the short-term benefits. Therefore, the technological iteration between the majority of small and medium-sized farms and large-scale farms has gradually increased, forming a situation in which a small number of large-scale farms lead and most farmers lag behind.

2.4 Low dairy production capacity and lack of market impactThe stock of dairy cows in Xinjiang has been at the second level in China for a long time, and the stock of Holstein dairy cows is also at the forefront of China. However, the milk production and dairy production have always been at the middle and lower levels, which is reflected in the serious mismatch between the stock and production capacity, output value of dairy cows. Due to the unreasonable distribution of interests between the upstream and downstream of the industry, dairy processing enterprises transfer the losses to the breeding end by virtue of industrial advantages, and the poor risk resistance and income at the breeding end will lead to the industry and dairy enterprises in the situation of "insufficient food" for a long time, resulting in overcapacity. Due to the inability of dairy enterprises to achieve the design goal of production capacity and low overall output, they can not form a large-scale market effect. They can only meet the needs of the local market and are unable to impact the markets outside Xinjiang, which affects the development speed of dairy processing enterprises[6].

3 The way to break the game——analysis on the leading role of leading enterprises in the development of dairy industry

The development process of the revitalization of dairy industry in Xinjiang is as below: first, at the breeding end, it vigorously promotes large-scale breeding and improves the internal control level of raw and fresh milk acquisition; second, at the processing end, large-scale dairy processing links are realized through enterprise merger and reorganization; third, taking dairy enterprises as the core, it promotes vertical integration to upstream. With the support and guidance of the government, relying on the policy advantages of dairy development, Tianrun has solved the contradiction of industrial benefit distribution, moved towards the road of rapid development, and led the high-quality development of dairy industry in Xinjiang.

3.1 Seizing the opportunity, integrating the market and completing the growth of the enterprise itselfXinjiang Tianrun Dairy Co., Ltd. was listed on the main board of Shanghai Stock Exchange on November 22, 2013. In 2013, Tianrun Milk Beer was introduced on the basis of Jiali Milk Beer. In 2014, the "Eighth Floor Memory" with main feelings was launched. In March of 2015, Aikelin Concentrated Yogurt (original flavor) and Aikelin Fresh Milk were launched. The popular product was born and quickly opened the market of Xinjiang. After that, Tianrun has also been carrying out product iterations. After Aikelin Concentrated Yogurt, "online red products" can not only cater to the festive atmosphere, but also bring innovation to the long-term dull Xinjiang dairy market, such as Suannai Shule, Meigui Hongle, Qiaokeli Suile, Bingjiling Huale, Shuailiumangle, Huayan Qiaoyu, Fengmang Bilu. It quickly occupies more than 60% of the market, and lays a foundation for the next development.

3.2 Establishing milk source base, solving interest conflicts and removing obstacles for industrial developmentOn the road of rapid development, Tianrun Group has keenly found that the milk source base is the foundation of the enterprise and the truth that those who get the milk source get the world. By the end of 2020, Tianrun Group had 17 self owned milk source bases and 37 000 self owned dairy cows, which basically met the needs of core business milk sources. Due to a large number of self owned milk source bases, the interests of breeding end, processing end and sales end have been unified, and its anti risk ability has been greatly strengthened. In the season of shortage of raw milk, the breeding end makes profits to the processing end, which reduces the production cost of dairy products and improves the market viability of the sales end. At the same time, self owned pasture also ensures the continuity of production, and the processing end is no longer a headache for milk shortage. In the surplus stage of raw milk, the sales end shall provide appropriate subsidies to the breeding end to ensure the continuous profitability and self-renewal of the pasture. Due to the rapid construction of self owned pastures, the number of dairy cattle breeding in Xinjiang has increased rapidly, and the proportion of large-scale dairy farms has increased significantly, making the dairy industry in Xinjiang begin to move towards the road of large-scale.

3.3 Strengthening scientific and technological guidance and improving production levelAs a leading enterprise, Tianrun takes advantage of its economic volume advantages to actively carry out technological innovation and R & D, and quickly drives the modernization and standardization of the construction of its own pasture milk source base. During the "13thFive-year Plan" period, Tianrun Group completed a number of technology research and development, such as "technical regulations for feeding cows in different physiological periods", "differentiated and accurate breeding of cows", "standardized transformation of cow pens" and so on by undertaking projects approved by the state, corps and itself. At present, the dairy houses of Tianrun Group’s own pasture have all completed the standardized transformation. Through intelligent control technology, enclosure spray cooling technology, self heat absorption and energy storage technology, and automatic identification technology, the intelligent feeding, intelligent temperature control and rapid milking of dairy cows have been completed[7]. Due to the application of these technologies, the labor efficiency has been significantly improved, from three milking per day to four milking per day, and the output of some milk has exceeded more than 10 t. At the same time, Tianrun Group cooperates with colleges and universities to continuously breed and improve high-yield core cows. The breeding direction is no longer the pursuit of high-yield performance like the previous eager for quick success and instant benefit, but breeding in the direction of disease resistance, stress resistance and longevity on the premise of ensuring high yield, so as to reduce the occurrence of diseases, reduce the use of antibiotics and produce high-quality and safe dairy products.

3.4 Enriching the supporting system and carrying out the combination of planting and breedingThe development direction of modern dairy industry must be the combination of planting and breeding. The combination of planting and breeding can not only provide high-quality and low-cost feed for the dairy industry, but also effectively absorb and utilize the fecal pollution produced. Tianrun Group carried out the construction of high-quality forage land around its own pasture, and basically completed the self-sufficiency of core forage. Through the research and development of water-saving irrigation, forage preparation, wrapped fermentation and other technologies, it provides a stable feed guarantee for its own pasture. It provides protection for the safety of pasture production during the COVID-19 epidemic period[8-9].

3.5 Strengthening product iteration and improving added valueAccording to statistics, Tianrun Group currently has 6 series of pasteurized milk, sterilized milk, prepared milk, fermented milk, cheese and milk beverage; 122 items of products. In 2021, Jiangxiaonuo Aikelin Yogurt, Tianrun Micaizhen Pure Milk (Fenmei bag, 180 g), Tianrun Fresh Milk (Gelin bag, 200 g), 245 g PET Bottle of Fresh Milk and 950 mL Aikelin Pure Milk, Tianrun Summer Pasture Pure Milk (dream cover, 250 mL), Tianrun Corps Pasture Pure Milk (dream cover, 250 mL), Tianrun Xiputaole Yogurt (Aikelin, 160 g), and Jiali AD Calcineurin (Gelin bag, 160 g) were newly listed. Currently, 7 products are reserved for listing: Tianrun hello Paper Cup Yogurt (strawberry), Tianrun hello Paper Cup Yogurt (yellow peach), Tianrun Red Orange Pomegranate Yogurt (Aikelin, 160 g), Tianrun Strawberry Normal-temperature Yogurt (Gelin bag, 160 g), Tianrun Mango and Passion Fruit Normal-temperature Yogurt (Gelin bag, 160 g), Tianrun Plain Normal-temperature Yogurt (Gelin bag, 160 g). Tianrun has kept 4-5 new products on the market every year in recent five years. The launch of these new products can attract the interest of consumers and maintain the market share on the one hand[10]. At the same time, the transfer of the product line from liquid milk to cheese and milk beverage can effectively increase the added value of products and achieve greater economic benefits[11].

3.6 Leading the way of industrial developmentDue to the expansion of Tianrun, the development of dairy industry in Xinjiang presents a benign competitive situation. All dairy processing enterprises increase support and inclination to the breeding end. Xiyuchun and Huayuan have also followed the steps of Tianrun Group to accelerate building its own milk source base, and the new milk source bases are large-scale and standardized modern pastures[12]. By the end of 2020, the proportion of pastures with a scale of more than 100 cows gradually increased. There were 823 large-scale farms, 68 farms with more than 1 000 cows, 193 pastures with 500-1 000 cows and 562 farms with more than 100-500 cows. The number of cattle farms, communities and farmers with the size of fewer than 500 cows decreased to 68.29%, and the number of pastures with more than 1 000 and 500 cows increased by 22.05% and 16.06%, respectively year-on-year. In 2020, the total amount of dairy products in the region reached 2 130 400 t, including 694 800 t of dairy products, 1 435 600 million t of milk drinks and others. The total production of dairy products increased by 5.66%, and that of solid dairy products increased by 15.64%.

On the whole, the development of dairy industry in Xinjiang shows a good trend. The dairy farming structure is continuously optimized, and the proportion of large-scale breeding enterprises is increased. Dairy cooperatives are booming[13], and the standardized breeding technology system is gradually promoted. The level of improved varieties has been continuously improved; relying on the forage resource database of the system, the forage production base is reasonably arranged. It pays attention to environmental protection and gradually establishes environment-friendly pastures.

4 Future development path of high-quality dairy industry in Xinjiang

In the future, under the leadership of Tianrun and other leading enterprises, Xinjiang dairy industry will embark on the development path of modern high-quality dairy industry with circular economy, resource-saving, environment-friendly, quality and efficiency, operation saving, independent innovation and industrial integration[14].

4.1 Developing circular economy modern dairy industry

Nowadays, sustainable development has been deeply rooted in the hearts of the people all over the world. To achieve sustainable development, it must develop circular economy, which is also the requirement of China and other countries’ economies that have developed to a certain stage. The development of circular economy should focus on the combination of agriculture and animal husbandry. The combination of agriculture and animal husbandry is a sustainable economic development model of dairy industry. Through the combination of agriculture and animal husbandry, a trinity circular economy model of "land-planting-cow breeding" is established, which changes the previous situation of large consumption, waste of resources and destruction of ecology in dairy industry[15], effectively consumes waste, reduces production costs and improves feed production, forming a virtuous circle of "increasing land fertility, increasing grain and feed production-improving the efficiency of dairy farming". The development practice of China’s dairy industry for many years points out that the optimization and reconstruction of dairy industry chain is the only way for the high-quality development of dairy industry[16].

4.2 Developing resource-saving dairy industryIt should make use of modern science and technology, promote improved varieties and methods, improve the effective utilization rate of feed, achieve the combination of planting and breeding, make full use of the residues of crops to turn waste into treasure, reduce feed costs, improve the utilization rate of feed, reduce waste and save investment in pollution control. In addition, it is also an important saving to turn waste into sustainable resources through harmless treatment.

4.3 Developing environment-friendly dairy industryAn important aspect of rural revitalization is the environment. Cow manure treatment and resource utilization in dairy farms (cooperatives) are effective measures to improve the rural residential health environment. According to the statistics of China Dairy Association, China’s dairy farming produces more than 1 billion t of excrement, bedding, feed residue and other wastes every year. These pollution sources cause serious pollution to the local water quality, air and soil, and become one of the root causes for the disease increase in rural and urban areas. A virtuous cycle model is implemented in dairy farming areas to achieve the separation of human and livestock and harmless treatment of waste, and resource recycling is the only way for environment-friendly dairy industry.

4.4 Developing quality and benefit dairy industryWhen the breeding environment of dairy cows is poor, fecal pollution will cause the total number of bacteria and harmful substances in fresh milk to exceed the standard, and it can not be processed into high-quality dairy products, which will inevitably affect the quality of domestic dairy products and enterprise reputation, and is not conducive to the revitalization of the dairy industry and the restoration of consumer confidence. To develop the quality and benefit dairy industry, the first is to improve the quality of raw milk, and the basis is nutritional safety and health safety. The content of protein and fat should be increased, and the number of somatic cells, bacteria and antibiotic residues should be reduced. The specific method is to change the growth mode of the dairy industry, rely on scientific and technological progress, change the dairy industry from speed type to benefit type, from quantity type to quality type. Taking scale as the carrier, intensification and standardization are realized, so as to increase production and efficiency, save cost, and improve quality[17].

4.5 Developing science and technology led dairy industryIt should make full use of advanced technologies such as "artificial intelligence, big data and cloud computing" to carry out the transformation and upgrading to "smart dairy industry". By increasing investment in software and hardware, applying advanced technology, taking enterprises as the main body, it increases R & D efforts, and tackles key technical problems. It should increase key technologies of independent intellectual property rights through introduction, absorption, digestion and re innovation. At present, it can strengthen the supervision of the production and acquisition of raw and fresh milk by building the Internet of things cloud platform. With the milk station as the link, it can collect, sort and analyze the information of dairy farms (households), milk stations, transport vehicles and dairy processing enterprises, so as to provide basic data for enterprise production, quality control and the formulation of relevant policies and measures[18].

4.6 Integrated development and industrial integrationDairy industry integration is the organic combination of dairy industry chain into a whole, forming a benign mechanism of risk sharing and benefit sharing. The production, processing and marketing of dairy industry forms a stable interest connection, which is related to the solution of deep-seated contradictions in dairy industry. Dairy enterprises live in the relatively "strong" side of the industrial chain. They can play a leading role, and actively connect interests with the breeding side. Through innovative systems and mechanisms, production, processing and marketing are gradually transited to dairy industry integration. It could reverse the current situation of mutual separation, continuously improve the degree of organization of the whole industry, form a community of interests, and realize industrialized management[19].

5 Conclusions

Due to its large economic volume, complete upstream and downstream industrial structure, advanced technical reserves, complete supporting facilities and strong market competitiveness, leading enterprises in the dairy industry have inherent guiding advantages, which will inevitably play a leading and exemplary role in the way of developing dairy industry combining planting and breeding with circular economy, resource-saving, environment-friendly, quality and efficiency, operation-saving, independent innovation and industrial integration.