degC. Still cold but the low humidity makes it more bearable. Hohhot is a typical second tier Chinese city with new roads and construction projects springing up amongst old buildings and factories, even though many of the completed buildings seem to be empty. Western chains including McDonalds, KFC and Jeans West are already established.

Running across northern China is a dairy belt of provinces that supply 75% of the country’s milk production. In this region Inner Mongolia has emerged as the biggest raw milk producer in China due to the availability of land, favourable government policies and the fact that Mengniu and Yili, the two largest dairy companies in China, are based there. Both are located within an hour of the city. Mengniu’s headquarters is located in Helingeer County, an area that, 10 years ago, was little more than farmland with a few villages.

With under 200mm of annual rainfall Helingeer County is an arid looking region but favourable government policies, including cheap land, are attracting businesses
to move there. An entire university has also been relocated to the area.
In June 2006 Mengniu opened a new state of the art UHT factory here. The new factory is used as a showcase for Mengniu. Visitors are taken on a tour either on foot or by Mengniu-branded electric carts along an elevated walkway that runs through the whole facility. The whole operation is highly automated right through to the warehouse.There are not many workers to be seen. Foreign technology has been used extensively; Tetra Pak even has its own office within the facility staffed by engineers to oversee the equipment.
On the way back into Hohhot we stop to learn more about the local dairy industry. Our driver takes us through a village of mud brick houses to a long brick building that turns out to be a milking shed. A frozen pond has formed where effluent flows out onto the ground outside. So much for environmental regulations!
Inside headbails are lined along each side of the shed. The floor has had the manure scraped of it but hasn’t been washed down. There are no milking machines to be seen.A sign on the wall tells farmers that they shouldn’t use antibiotics. At one end of the building is a small room where the three workers who operate the milking shed live. They tell us that the shed is owned by Yili and is one of four milking sheds in that village-two operated by Yiliand two by Mengniu. Some milking sheds are owned directly by the milk company, others are owned by private operators. The milk company will help these operators get a bank loan to setup a milking shed; in return they are usually contracted to supply that milk company exclusively.
The average farmer in this village has seven-eight cows and brings them to the milking station but is not necessarily contracted to either company. If Mengniu are offering more money than Yili this month then farmers will take their cows there.
Milking is done by manually taking a milking machine from cow to cow. This shed milks 140 cows two times a day and collects about2000kg of milk meaning that the average cow only produces about 14kg of milk/day. At the moment they are paying RMB2.3 ($NZ0.41)per kg. It is hard to maintain quality control as all of

the milk is mixed into one tank but if there is a problem with the milk quality from that particular shed then the company will investigate. The shed manager says that it is his job to visually inspect the cows to see if they have any problems.
Due to restrictions on grazing put in place to protect grasslands most cows are housed in stalls. Yili tell the farmers what type of feed they should be giving their cows but thereality is that the farmers feed them whatever is available including crop residues, silage and other forage. A lot of farmers could be seen grazing their cows on empty fields.
Later our driver says that his brother runs a private milking station. He explains that the goal is to meet the minimum quality standards but not to exceed them
by too much. As they are paid by weight it is quite common for them to add water to the milk when the quality is good. This can be pure profit for the milking shed operatorbut not the farmer. It is easy to see why quality will remain an issue within the local industry.