---
title: "Can Alibaba and JD.com Solve the Long-standing 'Milk Dumping' Problem?"
description: "On both sides of the market, supply and demand have always maintained a 'fragile balance.' When the COVID-19 pandemic hit, the impact on the economy became increasingly significant, and the fragile balance was further disrupted. Following the milk dumping illustration in middle school history textbooks, we have witnessed a repeat of the 'milk dumping' event. Recently, dairy farmers in Wisconsin, USA, were forced to dump hundreds of thousands of gallons of milk due to a sharp drop in demand caused by the pandemic, sparking market discussion again. Although such a scene is absurd, under the pandemic, oversupply and insufficient demand have amplified the contradictions on both sides of the market."
author: "财经新媒体"
publisher: "New Distribution"
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published: "2020-04-18"
language: "en"
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# Can Alibaba and JD.com Solve the Long-standing 'Milk Dumping' Problem?

> On both sides of the market, supply and demand have always maintained a 'fragile balance.' When the COVID-19 pandemic hit, the impact on the economy became increasingly significant, and the fragile balance was further disrupted. Following the milk dumping illustration in middle school history textbooks, we have witnessed a repeat of the 'milk dumping' event. Recently, dairy farmers in Wisconsin, USA, were forced to dump hundreds of thousands of gallons of milk due to a sharp drop in demand caused by the pandemic, sparking market discussion again. Although such a scene is absurd, under the pandemic, oversupply and insufficient demand have amplified the contradictions on both sides of the market.

On both sides of the market, supply and demand have always maintained a 'fragile balance.'
When the COVID-19 pandemic raged, its impact on the economy became increasingly significant, and the fragile balance was further disrupted.
Following the milk dumping illustration in middle school history textbooks, we have witnessed a repeat of the 'milk dumping' event. Recently, dairy farmers in Wisconsin, USA, were forced to dump hundreds of thousands of gallons of milk due to a sharp drop in demand caused by the pandemic, sparking market discussion again.
Although such a scene is absurd, under the pandemic, oversupply and insufficient demand have amplified the contradictions on both sides of the market, making milk dumping a helpless act.
In fact, similar situations have also occurred in the Chinese market during the pandemic. **According to a February report from China Times and information released by the China Dairy Association, as of February 7, 13 provinces in China had experienced milk dumping, with an estimated total of over 30 tons of milk dumped.**
During the same period, dairy product sales in major supermarkets in first- and second-tier cities fell by more than 50% year-on-year, and the dairy industry continued to be affected from production to market.
'The entire dairy product production, sales, and distribution system has almost come to a standstill. From late January to early February, the daily capacity utilization rate of several large dairy companies was less than half.' According to Xu Ke, Secretary-General of the Inner Mongolia Dairy Association, the reasons behind milk dumping are not purely economic; disruptions in the production and supply chains have indirectly intensified the market's supply-demand contradictions.
So, when we think from an economic perspective—under the market's supply-demand contradictions, is the only option to dump (destroy) the 'milk' (products)?
**From 1932 to 2020, from the industrial age to the digital age, economic capacity has continued to increase, and the market system has been continuously improved, but the 'milk dumping phenomenon' has been difficult to eliminate.**
Is this an unsolvable problem for the market?
**-01- Why is 'milk' dumped?**
Before discussing the above question, there is a more direct question that needs to be answered: Why is 'milk' dumped?
During the pandemic, when the market came to a standstill, we saw many industries under pressure, such as home appliances, automobiles, and tourism, but it seems that no industry has been as severely affected as the dairy industry, which saw product dumping and capacity reduction.
**The reason is that the special attributes of milk determine its special treatment.**
Milk is essentially an agricultural by-product with a short shelf life, requiring secondary processing and high distribution standards. A dairy industry practitioner explained in more detail: 'Daily drinking milk requires sterilization, and it must be sterilized within 48 hours of production, otherwise it will spoil.'
As we all know, spoiled milk has almost no value. During the pandemic, due to restrictions on resuming work and epidemic prevention controls, the milk processing process was delayed to a large extent, causing some milk to fail to be processed in time and end up in the sewer instead of the market.
In summary, **the market needs value, and milk is a product whose use value continuously declines as time passes after production.** When the value of a product inevitably diminishes over time, the eventual outcome is self-evident. Fresh products are similar.
Once produced, if they cannot be delivered to the market in time to meet demand, they will lose value and face dumping and destruction, resulting in 'waste.' In contrast, in the Chinese market, fruit problems are even more common and have more media attention than milk dumping.
For example, **since February, the media has repeatedly reported that many regions in China have faced unsold fruit problems, especially tangerines, ponkan, and green jujubes in Guangxi and Jiangxi. Either they are dumped by the ton on roadsides or rot in the fields, unable to realize market value as expected.**
Human achievements cannot benefit humanity as desired. These scenes reflect the helplessness of the market and the absurdity of society.
**-02- Can 'milk' only be dumped?**
Admittedly, whether it is milk, fruit, seafood, vegetables, or other fresh products, due to their short shelf life, once produced, if they cannot be sold and processed in time, they will eventually face destruction.
So, some may wonder: why can they only be dumped? Are there no other options?
From a social perspective, the answer is yes (there are).
From a market perspective, there is almost no choice.
Rooted in the market's supply-demand contradictions, the 'milk dumping phenomenon' mainly has two manifestations.
**First, short-term overcapacity: oversupply, insufficient demand, falling prices. Either destroy part of the capacity or expand the market to increase demand, so as to stabilize the 'fragile balance' on both sides of the market;**
**Second, market supply chain disruption: there is supply and demand, but goods cannot be transported (no sales channels), and the market supply-demand relationship cannot be established. Either destroy the goods to reduce storage costs, or quickly open up the market supply chain to connect both sides.**
In addition, what is more critical is that when the market falls into a similar situation, it is almost impossible for the forces on both sides of the market to self-adjust in the short term to restore normal market order.
This is why milk, fruit, and other products are dumped rather than sold normally to the market.
**Generally, at such times, third-party forces or strong market players need to intervene to rebalance the market.**
In China, the government has long played this role.
In previous government measures, for similar situations, either fiscal budgets were used to purchase unsold products for destruction, reducing supply-side losses and ensuring market balance; or public officials were mobilized to purchase products voluntarily, forcibly establishing a supply-demand relationship chain to ensure supply and demand connectivity.
However, from a market perspective, although such measures can reduce some losses in the short term, they are not a long-term solution. **Market problems must ultimately be solved by the market.**
To this end, in recent years, judging from various poverty alleviation measures or unsold product solutions, the government has increasingly paid attention to using market methods to solve market problems.
Taking this pandemic as an example, on February 14, the Poverty Alleviation Office, together with the Cyberspace Administration, the Ministry of Agriculture and Rural Affairs, and other seven units, issued the 'Notice on Carrying out Consumption Poverty Alleviation Actions,' stating that 'extensive mobilization should be carried out for eastern regions, central units, private enterprises, and social organizations to build platforms and purchase poverty alleviation products. On the one hand, achieve effective supply for urban vegetable baskets and rice bags to meet the upgrading consumption needs of urban residents. On the other hand, promote the healthy development of poverty alleviation industries in poor areas and increase the income of poor people.'
In simple terms, it is **for the government to promote the building of platforms, facilitate the normal operation of the market, allow normal buying and selling, and leave market problems to the market to solve.**
If this is not obvious enough, then on the evening of April 7, the strong emergence of the 'Xiao Zhu Pei Qi' duo further confirmed the current mainstream path to dealing with market problems.
Taobao Live, in conjunction with CCTV News, had Zhu Guangquan paired with Li Jiaqi. In nearly two hours of live streaming, the cumulative views reached 122 million, with 660,000 orders sold, covering multiple Hubei specialty products, with a total transaction value of approximately 23 million yuan.
This cross-dimensional 'public-private' combination instantly ignited market enthusiasm, bringing not only the resurgence of live-streaming e-commerce but also a typical reference for solving market problems in the future.
At the same time, the intervention of e-commerce platforms in this process is also noteworthy.
With the development and maturity of the digital economy, we can see that **a platform model independent of both supply and demand sides of the market is emerging and gradually becoming a new force that influences market order.**
It is precisely the addition of this new force that, when the market faces supply-demand imbalances, the role played by platforms cannot be ignored, in addition to the government's power.
On April 1, JD.com launched the 'Buy All Hubei Products' campaign and announced that it would sell on a contract basis approximately 6 billion yuan worth of Hubei crayfish. With the promotion of the JD platform, within just six days, JD Fresh sold nearly 1,000 tons of fresh Hubei products, with sales increasing by 445% month-on-month.
On April 2, Alibaba subsequently released its latest report on helping farmers. On April 1, sales of Hubei agricultural by-products on Taobao and Tmall increased by 93% compared to the daily average in March, and announced that its Hema business group and Digital Agriculture division would purchase 1 billion yuan worth of Hubei crayfish, 'helping Hubei shrimp farmers win back time!'
Unlike the government's role of building platforms and connecting parties, these fresh food platforms, which are already active in the market, not only have their own e-commerce platforms but also gather a group of active consumer groups. Their short-term intervention in specific markets has achieved remarkable results that are obvious to all.
**More importantly, guiding the seemingly 'help Hubei' agricultural assistance issue into normal market transactions inadvertently eases the supply-demand contradictions on both sides of the market. Clearly, platforms born out of the market have operational advantages that are more in line with market order.**
In this way, when all market supply-demand problems can be solved by market forces as desired, rather than through government fiscal intervention, it will undoubtedly be of epoch-making significance for market development.
Using platforms to ease supply-demand contradictions and give the market the ability to self-adjust may also be the ideal state expected in the digital age!
**-03- Can platforms prevent 'milk' from being dumped?**
If it could develop in such an ideal state, it would be gratifying. But reality rarely develops so smoothly.
Since the rise of the internet economy, the fresh food e-commerce trend has been blowing for nearly a decade. During this period, platforms of various sizes have emerged, rising and falling, but the final outcome has never been reached, nor have they been able to bring stable supply-demand order to the market.
To this day, milk is still flowing into sewers, fruit is still rotting in fields, and the long-standing supply-demand contradictions that have plagued the market have also trapped eager e-commerce platforms.
Positioning as a platform to enter the fresh food market, where product shelf life is the shortest, poses severe challenges. It is no wonder that Xu Xin, founder of Today Capital, bluntly said, 'The last fortress of e-commerce is fresh food.'
So, in the view of 'Tanglang Finance,' **if 'milk' (fresh products) is not to be dumped, at the very least, the two chains of the market—the information chain and the supply chain—must be synchronized within the shelf life.**
**First, the information chain corresponds to the flow of market information.** In simple terms, the supply side needs to know where consumer demand exists, and the demand side needs to know where product supply exists. As the connection hub, the platform's two-way information flow is the first step.
**Second, the supply chain corresponds to the flow of products in the market.** Completing real-time delivery of fresh products is the most critical and currently the most challenging aspect that tests platform capabilities.
Taking this pandemic as an example, supply chain disruptions affected many fresh food platforms and retail supermarkets. 'Winning the supply chain' suddenly became the most severe market test, shifting from a previous market slogan.
Supply chain integration capability has become the biggest advantage for fresh food giants to stand out.
After the outbreak, JD Fresh quickly cooperated with JD Logistics to open a green special channel to ensure cargo delivery; then, the Seven Fresh supermarkets and Seven Fresh Life, which are connected to JD Retail's main station supply chain, coordinated local suppliers to ensure fresh products are stocked with quality and quantity, forming squad operations under the legion.
Alibaba further implemented its digital supply chain concept, building the first digital supply chain in Hainan within two days. The digital agriculture division organized farmers in the production area to pick, sort, and process, and was responsible for distribution; Tmall Fresh organized merchants for online procurement and sales; Cainiao united logistics partners to open national logistics lines, ultimately completing the market supply loop.
It is conceivable that if 'milk' is not to be dumped, platforms must race against time (product shelf life). Information flow must be fast, and supply chain operations must be even faster.
Obviously, the difficulty is not hard to imagine.
Such idealized operations, for the current market model and industrial development, are far from being achieved by platforms and all parties.
Supply-demand contradictions have always existed in the market. The platform model may offer some opportunities to ease them, but in the face of emergencies like the pandemic, what is destined to happen cannot be avoided.
'Milk' will still be dumped and flow into sewers. We can only hope that with the increasingly improved market system and platform model, and with the help of digitalization, there will be less of it.
Source: Tanglang Finance (ID: TanglangFin), Author: Xing Chuan
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