Chinese dairy farmers in the home province of the bankrupted Sanlu Group, which was at the center of a tainted milk scandal, have just got over the incident and are bracing themselves for a market boom, said an industry chairman in northern Hebei Province on Monday.

"We have visited all major dairy farms in the province this month, and noticed that most farmers are keen to expand their business scale, which was in sharp contrast to the post-scandal phenomenon of dumping milk," said Wang Yinsheng, chairman of the Hebei Food Industry Association.

"The market has recovered to 70 percent of the pre-scandal consumption level, and we expect it recover to 90 percent by the end of this year," said Song Kungang, director-general of the China Dairy Industry Association.

Xiao Luozhen, a 60-year-old dairy farmer in Hebei, said "the worst time has passed" since the melamine contamination scandal soured China's dairy business last year, although dairy farmers are still "running businesses at losses".

"The raw milk was collected at 1.6 yuan (US$0.23) per kg in December last year, which is much cheaper than a bottle of 500 ml mineral water. The price has bounced back to 2.6 yuan per kg now," said Xiao, who has a cow-breeding farm in Xingtang County, the largest cow-breeding base in north China.

The farmer has been expanding the number of cows in stock from 300 to 600 this year, as he foresaw a "hope" of a new round industry boom, after the melamine scandal of the Hebei-based SanluGroup shattered the market.

"I am applying for a bank loan in hope to add another 200 cows.I should get prepared as the market is getting hot sooner or later," said the veteran dairy farmer.

He nicknamed his grandson born in June this year "Xi Wang", which means hope in Chinese.

He named his twin grandsons, born in October last year during the scandal, "Nan Jiao" and "Dao Guan", meaning "hard to sell milk" and "dumping milk," as the grandfather wanted the kids to remember the difficult period when he found no buyers for his raw milk.

The county government has provided dairy farmers with 40 million yuan in subsidies and low-interest loans worth 60 million yuan to help them withstanding the difficult time, after the melamine scandal broke out in September last year.

Sanlu Group, the dairy company headquartered in Shijiazhuang, the provincial capital of Hebei, was found to have adulterated its infant formula milk powder with melamine, an industrial chemical substance, leaving at least six infants dead and over 300,000 others suffering kidney problems and other symptoms.

The tainted milk scandal has taken its toll on the dairy industry, resulting in a sluggish market, excess raw milk in stock and low purchasing prices.

"Farmers began to dump raw milk and abandon cows after the incident. The county government acted swiftly to help build 109 cow-breeding bases to raise the cows and collect milk from the farmers," said Lu Shuping, deputy head of the county animal husbandry department.

He said the county now has about 75,000 cows in stock, accounting for one third of the total in Shijiazhuang.

"Daily fresh milk output from Xingtang County now reached 490 tonnes, which supplied China's dairy bellwethers of Yili, Mengniu and Sanyuan," he said.

However, a latest investigation by the county government showed that one third of the cow-breeding bases in Xingtang still could not make their ends meet.

"The milk price is still low, and the forage costs are getting higher," said the farmer Xiao, whose farm business lost 10,000 yuan a month.

Nationwide, in response to the melamine crisis, the Ministry of Agriculture found 3,908 of the country's total 20,393 milk collection stations defective, and shut them down.

(Xinhua News Agency July 13, 2009)