China’s liquid milk output for the first four months of 2008 totaled 4.802 million tons, a year-on-year growth of 10.1%, of which April was 1,184,000 tons, a year-on-year growth of 4.7%. BOABC believes that this is one of the months with the slowest growth in liquid milk production in close to one decade. BOABC is of the view that overly high dairy price is the important factor hindering dairy consumption among residents, while the sluggish consumer demand is the constraint for production.

List

BOABC VIEW POINTS 3

SECTION I. PRODUCTION of MILK and DAIRY PRODUCTS 3

1.1 Raw Milk Production 3

Focus of This Issue 3

Inner Mongolia 3

Heilongjiang 4

Ningxia 4

Zhejiang 4

Sichuan 4

Anhui 4

Raw Milk Price 5

1.2 Dairy Products Production 6

Liquid Milk 6

Solid Dairy Products 7

SECTION II. DAIRY TRADE 7

2.1 Import Trade 7

2.1.1 Analysis of Overall Import Trade 7

2.1.2 Analysis of the Import of Main Dairy Products 8

2.1.3 Importation Prices of Main Dairy Products 10

2.2 Export Trade 12

2.2.1 Export of Fresh Milk 12

2.2.2 Powder Export 14

SECTION III. MARKET TRENDS OF DAIRY PRODUCTS 17

3.1 Retail Price of Fresh Milk 17

3.2 Retail Price of Powder 18

3.3 Whey Powder Trend 19

3.4 Milk Powder Market Trend 20

3.5 Lactose Market Trend 21

3.6 Butter Market Trend 21

SECTION IV. DAIRY CONSUMPTION 21

SECTION V. DAIRY ENTERPRISES AND TREND OF INDUSTRIAL INTEGRATION 23

5.1Yili 23

5.2 Mengniu 23

5.3 Sanlu 23

5.4 Chenguang 24

5.5 AVA Dairy 24

5.6 Beingmate 24

5.7 BIOSTIME 24

5.8 Mead Johnson 24

5.9 Dairy Daily 24

5.10 Asahi Beer 25

SECTION V. NEW TECHNOLOGIES AND NEW PRODUCTS 25

Firmus Develops Formula Powder with Content of Refined Walnut Oil 25

Danisco Introduced Fermentation Chymosin 25

Natural Cheese Contain Bioactive Peptides That Could Bring down Blood Pressure 25

Emergence of Dairy Beer 25

SECTION VI. NEW PROJECTS OF THE MONTH 26

Heilongjiang: 400 Million RMB Investment of Phase II of Beingmate High Quality Infant and Young Child Milk Powder Project 26

ABOUT BOABC 27