The firm will spend between up to ¥3.5bn ($435m, €373m) in the next three years to ensure that its supply of raw milk comes entirely from large-scale farms and ranches, phasing out the small farmers who have until now provided around 20% of the firm’s raw milk supply.
The firm currently collects approximately 80% of its supply from ranches and large-scale farms.
In an effort to achieve this goal, Mengniu will also build between eight and 12 ranches this year in the Hebio Province, Inner Mongolia, and in the northeast and southern regions of China.
These ranches will each house between 1,000 and 10,000 cattle.
Enhance milk quality
Mengniu spokesperson Chris Kwok told DairyReporter.com that through its increased focus on scale farms and ranches, the firm will be able to better ensure the safety of the milk it sources and its finished products.
“By focusing on large scale farming, we can encourage more scientific methods and the quality of the milk produced will be enhanced,” said Kwok.
“Through this strategy the farms will have better quality cattle, control and feeding can be enhanced in the long term. It means more scientific and more modern methods.
“It will improve the safety of the milk produced,” Kwok added.
In 2008, six children died and more than 300,000 were sickened after consuming infant-formula contaminated with melamine.
A constant stream of food safety scandals have followed, leading to the implementation of strict legislation, including one law which states that dairy processors must control at least 70% of the raw milk they use.
The law was implemented in an effort to address quality and safety issues.
¥30m equipment investment
The announcements followed a media tour of its Hehua Ranch, during which attendees were given an opportunity to inspect the quality control processes and production procedures implemented by the firm.
During the visit, Mengniu also announced that it has spent ¥30m ($4.7m, €3.7m) on the purchase of new, more advanced inspection systems, as part of an additional effort to assure the quality and safety of its products.
“Every drop of milk produced at its facilities has passed 9 procedures, 36 control points and 105 indicators, thus the quality of milk exceeds the national standards. In 2012, to further enhance its quality control, Mengniu has largely increased its investment in the inspection of raw milk and finished products,” said a statement from the company.