Smallholder Farms vs. Large Farms: Whose Milk Is Safer and More Nutritious?

Viewpoint One: Smallholder farms are the main culprits behind the melamine incident.

Rebuttal: No, they are not.

According to the official determination, it was milk brokers who added melamine to raw milk. But why would melamine be added to raw milk in the first place? At the time, national demand for dairy products was booming, large amounts of capital poured into raw milk processing, raw milk became scarce, and milk prices surged. Raw milk is sold by weight. How could one sell more milk? Simply adding water would not do, because it would lower the protein content, and dairy factories test protein levels by measuring nitrogen content. That is when some people thought of melamine (C3H6N6), which has an extremely high nitrogen content, is white, dissolves in water, and is odourless — on the surface, it looked like the perfect additive.

So who would know these properties of melamine? The milk brokers who dealt with dairy farmers were mostly farmers themselves. In the research area, dairy farmers generally believed that the milk brokers had no knowledge of melamine’s specific properties, and the farmers themselves certainly did not. The perception that smallholder dairy farmers caused the melamine incident is inconsistent with the official determination of the incident and with the facts.

Viewpoint Two: In the raw milk production process, large farms are safer.

Rebuttal: That is not the case.

First, feed safety (roughage such as straw and concentrate). Feed safety means the feed is free from harmful substances. If cattle eat mouldy feed, the milk they produce may contain harmful compounds. Feed safety is distinct from the nutritional level of the feed.

Smallholder farmers source a small portion of their feed from home-grown straw and maize, with most purchased from the market. Large farms rely almost entirely on market purchases. After straw is bought, it must be fermented to make silage and haylage.

Smallholder farmers use the feed for their own cows, so they handle both the purchasing and the preparation themselves. Because their needs are small in scale, they typically buy from nearby sources and know their suppliers well, which provides a quality guarantee. The small scale also makes it easier to inspect carefully at purchase and to be meticulous during preparation.

Large farms rely on hired labour to purchase and prepare feed. Compared with smallholders, hired workers are paid to do a job, and their conscientiousness and loyalty may be compromised. Because their needs are large in scale, they purchase from farther away, and the relationship with suppliers is purely commercial, lacking the neighbourhood bonds that provide an extra layer of quality assurance. The large scale itself also makes it harder to be thorough in both purchasing and preparation. Once feed develops mould, aflatoxin levels in raw milk can easily exceed limits, and aflatoxin is a known carcinogen. Incidents in which dairy products from well-known dairy companies were found to have aflatoxin levels above the safe threshold are not uncommon.

Now, veterinary medicines. When cattle fall ill, they need medication. Whether cattle get sick is closely related to their environment. Smallholders practise small-scale, dispersed farming, while large farms house thousands or even tens of thousands of dairy cattle in concentrated operations. In the research area, a vet who had served both large farms and smallholders said: the incidence of disease in dairy cattle is related to stocking density — at high density, the cows are uncomfortable and fall ill more often; on a small farm, one person can closely watch over a dozen or twenty cows; on a large farm, it is impossible to give each animal enough attention, so endometritis, mastitis, and hoof inflammation are more common; large farms are willing to use generous amounts of concentrate, which can cause acidosis and also lead to hoof problems; large farms do a good job with vaccination and disease prevention, while smallholders are reluctant to spend the money.

But smallholder farms are dispersed, and the need for vaccination is inherently lower than on a large farm. So, is the milk safer when it comes from the healthier cows on smallholder farms, or from the cows on large farms that fall ill more often and require more medication?

Some might argue that smallholder farmers, being cheap, would use inexpensive, non-compliant veterinary drugs, or start selling milk before the withdrawal period has elapsed. First, large farms have an equally strong incentive to cut costs, especially now that many of them are publicly listed companies. Second, even smallholder farmers must retain samples when selling milk, and if a veterinary drug violation is detected, they will be held accountable. Third, what is needed most in this area is effective action by the relevant regulatory authorities to prevent non-compliant veterinary drugs from entering the market.

Viewpoint Three: In the distribution and processing of raw milk, large farms plus large dairy companies can guarantee safety.

Rebuttal: They cannot.

The quality of milking equipment and its management are linked to somatic cell counts and bacterial colony levels in the milk. After the milk is drawn, the quality of cold-storage equipment, its management, and whether any substances have been added by hand all affect raw milk safety.

In the context of smallholders being strongly pushed into organised dairy farming settlements, the safety of the smallholder milk distribution chain hinges on the milk collection station. The added step of a milk collection station does not necessarily mean the process is unsafe. During the melamine incident, Sanlu, in the phase when it operated its own milk collection stations, did not experience an incident of the melamine type. It was only after Sanlu allowed outsiders to run the stations that problems emerged.

Before 2008, China exercised little oversight over milk collection stations and itinerant milk brokers. After 2008, the state increased regulation of these intermediaries. When dairy farmers sell milk, the milk collection station retains a sample. If the sold milk is found to be substandard, the station checks the sample, identifies the source, and imposes penalties accordingly.

As for the processing stage, dairy product consumers interviewed in the research area generally felt that the dairy companies’ milk on supermarket shelves was something where they “had no idea what had been added”.

For the ordinary consumer, the processing of dairy products by dairy companies is opaque. Whether consumers can obtain safe dairy products depends solely on the company’s brand reputation and state regulation. Even under the current strict state regulation of dairy products, does that mean big-brand dairy products are safe? Not necessarily.

As shown in Figures 1 and 2, maggot-infested milk, mouldy milk — all the cases involved were prominent household-name brands. Because dairy companies process milk on a large scale, any safety issue that arises in the processing stage can affect a considerable volume of product.

This situation reveals that relying on top-down state regulation alone cannot guarantee safety at the processing stage. Against the backdrop of frequent food safety problems in China, even when no such obviously visible quality issue occurs and the ingredient list looks perfectly clean, many consumers remain uneasy about whether the product is truly safe.

First, whether it is smallholder dairy farmers or large farms, whoever fails to raise their cows properly and produces poor-quality milk should be phased out. This raises a question: under what circumstances would producers on the farming side fail to raise their cows properly? In other words, when do regulatory problems arise?

Consider this: if the milk is good, the price is high — would producers slack off? No. But if you use the best feed, the best veterinary medicines, and the most attentive care to produce the finest milk, yet you have no control over the milk price — or it is deliberately driven down — who would bother to raise their cows properly? The incentive to cut corners naturally follows.

This is precisely the situation facing China’s dairy farming sector, with smallholders bearing the brunt. Raw milk is perishable, and the farming end is inherently weaker than the processing end. The power imbalance between the farming end and dairy companies is stark, and it is even more pronounced for smallholders. This inequality in power gives dairy companies strong leverage to push down prices against dairy farmers.

At the same time, China’s raw milk also faces competition from imported dairy products. China’s predominantly stall-feeding model for cattle rearing carries an inherent cost disadvantage compared with pasture-grazing models. Yet China is one of the most open dairy markets in the world, with an average import tariff on dairy products of only one-fifth the international average. New Zealand is the world’s largest dairy exporter, and China has a free trade agreement with New Zealand. New Zealand dairy products currently enter China tariff-free. The influx of cheap imported milk has helped domestic dairy companies suppress prices at the farming end.

Given that high quality does not guarantee a good price and that investment may be entirely lost, farmers naturally are unwilling to invest, and regulatory problems naturally follow. This is not a problem with the smallholder production model per se, but with the structure of the dairy value chain and China’s dairy market openness policy.

Second, large farms plus large dairy companies plus top-down state regulation is the dominant model for dairy product oversight in China. The formation of this model is linked to the melamine incident. The unprecedented emphasis on dairy safety that emerged from the incident, coupled with the government-level mindset linking food safety to large-scale production, led the government to push for dual scaling-up of both the farming and processing ends.

Yet as Figures 1 and 2 show, this regulatory model has not delivered genuine food safety. On the contrary, it has reinforced the power of large dairy companies. As a source of local tax revenue, the strength of major companies can distort government behaviour, which is detrimental to food safety regulation.

The dairy companies’ practice of growing the large and culling the small has further deepened the power imbalance between smallholders and dairy companies, enabling them to squeeze smallholders harder, because the number of dairy companies available for smallholders to choose from has dwindled.

At the same time, this model has widened the distance between production and consumption, intensified the opacity of processing, and weakened consumers’ oversight of the production process. Therefore, this top-down, grow-the-large-cull-the-small approach to food regulation does not necessarily guarantee food safety.

Smallholder production and processing represent an alternative model of food safety regulation. Beyond selling through intermediaries to dairy companies, smallholders may also sell raw milk and yoghurt directly to consumers. This model emphasises localised production and consumption, making it easier for consumers to oversee producers — a bottom-up regulatory approach.

As shown in Figures 3 and 4, smallholder farmers produce and sell their own milk. Consumers come to the farmers’ homes and can see whether the cows are healthy, what feed they are eating, whether the barn is clean, how the milking is carried out, and how the milk is filtered and packaged.

The production and processing of milk sold in supermarkets are opaque, whereas for smallholder milk these processes are fully transparent, which in itself constitutes a form of oversight. Moreover, localised production and sales bring producers and consumers closer together, turning them into acquaintances, and this relationship further underpins food safety.

Under this model, the producer–consumer relationship is also more balanced, which is conducive to food safety. Not to mention the cost savings that localised production and sales bring, and the benefits they deliver to the local economy.

II. Raw Milk Nutrition: Smallholder Farms vs. Large Farms

First, in terms of nutritional content, smallholder milk is on the whole indeed less nutritious than large-farm milk.

The nutritional quality of raw milk is assessed mainly by indicators such as protein and milk fat. On the whole, smallholder milk does have lower protein and milk fat levels than large-farm milk, but it still meets national standards (see table below).

For example, among 30,351 raw bovine milk samples collected by the National Center for Food Safety Risk Assessment from 18 dairy companies across 17 provinces between January 2014 and February 2015, the protein content on large-scale farms was (3.18 ± 0.14)%, in organised dairy farming settlements it was (3.07 ± 0.12)%, and among individual smallholders it was (3.00 ± 0.14)%.

Second, do we really need the more nutritious milk from large farms?

Milk is regarded by the Chinese public as a highly nutritious food, particularly in terms of its protein content. According to the Chinese Dietary Reference Intakes for Nutrients published by the Chinese Nutrition Society in 2013, the recommended protein intake for adult males is 65 g/day and for adult females 55 g/day.

The 2016 edition of the Chinese Dietary Guidelines, formulated by the Chinese Nutrition Society, recommends that each person consume no less than 300 g of milk and dairy products per day; the 2022 edition is more specific, recommending 300–500 g per person per day.

Smallholder milk contains roughly 0.2 g less protein per 100 g than large-farm milk. Calculating on the basis of each person consuming 500 g of milk per day, the daily cumulative difference is only about 1 g of protein — negligible compared with the body’s daily protein requirement. As for other trace elements, the differences are even more marginal.

Moreover, China’s population is not deficient in protein. A 2015 survey covering 15 provinces and municipalities found that among residents aged 18 to 64, the median protein intake for males was 68.5 g/day and for females 57.9 g/day, already exceeding the Chinese Nutrition Society’s recommended intake.

The Report on the Nutritional Status and Chronic Diseases of Chinese Residents, published in 2020, monitored chronic disease and nutritional status among Chinese residents from 2015 to 2019, covering 31 provinces and municipalities, a population of nearly 600 million, with over 600,000 individuals surveyed in person. The report notes that, as of now, both urban and rural residents in China have adequate intakes of protein, fat, and carbohydrates.

Therefore, given the current nutritional status of China’s population, there is no need to pursue large-farm milk for the sake of a marginal nutritional improvement.

 

Third, the nutritional level of raw milk has no bearing on the scale of the farm that produces it.

Today, the average scale of dairy farms in China far exceeds that of New Zealand, Australia, and EU countries. The latter all rely primarily on smallholder farms for raw milk production. Yet as the table above shows, these countries enforce higher dairy nutrition standards than China. This is sufficient to demonstrate that small-scale farms can also produce highly nutritious milk.

So why is the nutritional level of smallholder milk in China lower? This is related to dairy companies. Dairy companies pay higher raw milk prices to large farms than to smallholders. They also rate large-scale farms, with one side of the rating tied to feed quality and the other to milk price. This incentivises large farms to use premium feed, such as imported lucerne. The lower milk price, on the other hand, constrains smallholders’ feed investment.

III. Summary

To summarise: on the safety of raw milk, large farms are not superior to smallholder farms. Specifically, smallholder farms are not the culprits behind the melamine incident. Large farms cannot guarantee the safety of raw milk throughout production, distribution, and processing. The difficulties in China’s dairy quality regulation stem primarily from dairy companies’ exploitation of the farming end, rather than from the dispersal of the farming end. The current “large farms + large dairy companies + top-down state regulation” model does not guarantee dairy product safety.

On the nutrition of raw milk, China’s large farms do outperform smallholder farms, but smallholder milk as a whole meets national standards. China’s population is currently well nourished, and there is no need to seek out large-farm milk for a marginal nutritional gain. The nutritional level of raw milk is also unrelated to the scale of the producing farm; small farms can equally produce highly nutritious raw milk. The key is to uphold the principle of quality commanding a premium price.

Author’s Note

For those interested in how China’s smallholder dairy farmers have been marginalised and how large farms have risen, see: Xiaojun Feng. 2025. Cost competition or power struggle? The exclusion of dairy farmers from raw milk production in China. The Journal of Peasant Studies. https://doi.org/10.1080/03066150.2025.2539842

References

[1] The Melamine Incident: A Critical Turning Point for China’s Dairy Industry and Food Safety Regulation, 2024, https://finance.sina.com.cn/roll/2024-11-15/doc-incwaxxq9762101.shtml

[2] History of China’s Dairy Industry (Special History Volume), 2013, China Agricultural Press, p. 336.

[3] National Dairy Industry Development Plan (2016–2020), 2017, http://www.moa.gov.cn/nybgb/2017/dyiq/201712/t20171227_6129544.htm

[4] Zhong Yuting, Wang Jun. 2016. An Investigation into the Current Status and Influencing Factors of Protein Content in China’s Raw Bovine Milk. Chinese Journal of Food Hygiene.

[5] A Comparative Analysis of Milk and Dairy Product Regulations and Key Testing Indicators in China and Abroad. 2021. https://www.cabidigitallibrary.org/doi/pdf/10.5555/20210528103

[6] Chinese People Are Not Deficient in Protein. 2022. https://www.cdstm.cn/gallery/media/mkjx/xgbnysdw_6453/202205/t20220515_1069139.html

[7] Why Did the Chinese Dietary Guidelines 2022 Increase the Recommended Intake of Milk and Dairy Products? https://www.news.cn/food/20220528/18cbfc0edd074ac2863e6b39f7e98af7/c.html

[8] Chinese People Are Not Deficient in Protein. 2022. https://www.cdstm.cn/gallery/media/mkjx/xgbnysdw_6453/202205/t20220515_1069139.html

Foodthink Author

Feng Xiaojun

Associate Professor in the Department of Sociology and Anthropology at China Agricultural University; holds a PhD from the University of Oxford. Main research areas: sociology of labour and sociology of agriculture.

 

 

 

 

Editor: Xiaodan