State Council to Offer Subsidies to Powdered Milk Producers

State Council to Offer Subsidies to Powdered Milk ProducersSeveral milk powder makers will be getting a part of a 30 billion yuan in official funding that will support sector consolidation. China Mengniu Dairy Co., Inner Mongolia Yili Industrial Group Co., Wondersun Dairy Co. and Feihe International Inc will be among the companies to benefit the funding.

Officials said that they feel the need to consolidate the domestic milk powder sector in the efforts to increase the abilities of these companies to compete with international brands that dominates the lucrative premium end of China’s infant formula market. These firms will gain the support in the form of government subsidies, funds and favorable tax policies.

Powdered milk is a sensitive topic in China after a situation that involved milk that was tainted with melamine surfaced. This placed a dent in the reputation of domestic diary firms and boosted the market share of imported milk brands. But international powdered milk came under the spotlight as China banned some dairy products from New Zealand after a milk scare.

The Ministry of Industry and Information Technology was planning to release a plan to cut down the number of domestic infant formula firms over the next couple of years from 50 to the previous 200.

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