Caijing Magazine's website reports today that an official with Yili, one of China's largest milk companies, said that the dairy industry is about to raise prices as the peak season for milk consumption arrives. The industry has been under rising cost pressure since August, presumably due to rising raw material prices, and profit margins have been shrinking.
The vice director of Guangzhou City's milk office told the reporter that the industry is under great pressure and probably cannot avoid raising prices. They will probably concentrate on raising prices for premium high-value products. Factors behind the price increase include rising prices for raw milk and consumers' rising income and acceptance of higher prices.
Comment: current conditions are strikingly similar to those of 3 years ago. In the fall of 2007 milk prices rose rapidly and the Chinese government imposed price controls. The rising costs and booming demand put pressure on margins and sent companies on a scramble to find low-cost milk suppliers. This occurred about the time melamine adulteration became rampant (the pattern of sick infants was recognized in mid-2008, about 6-9 months after prices shot up).