The State Council said it will offer farmers assistance including up to 500 yuan for each breeding cow

Milk production has expanded quickly over the last decade. Output of milk products reached over 30 million tons in 2006, an increase of 24 percent on the previous year.

But nearly half the country's dairy farmers are making losses. Some farmers cull livestock or dump milk because they cannot sell it at higher prices.

Experts said the status quo in dairy is similar to that of the pork industry last year. Pork prices have soared this year because many farmers stopped raising pigs due to rising costs.

The cost of raising dairy cattle is increasing as raw material prices increase. The price of corn was 1,550 yuan per ton this May, up 15.7 percent on the same period last year. The cost of water, electricity and transport is also rising.

Source: China Daily