MILKING TIBET

NEOLIBERAL CHINA FINDS NEW WAYS OF EXPLOITING TIBET

China’s failure to make constructive use of Tibet’s traditional economy is a major tragedy. For decades there was opportunity to build linkages with the Tibetan livestock raising economy and the growing Chinese demand for dairy and animal products. There was ample opportunity, if the Tibetan nomads had been treated as respected actual partners, for a steady growth in production, in value adding, and integration into the wider Chinese economy.

Now that opportunity has passed, and China has declared the nomads redundant, no longer needed for any purpose on their ancestral pastures, neither for conservation of biodiversity, sustainability and watershed protection; nor for their production of butter, wool, skins and meat. The time has passed for such a mutually beneficial integration, which could have demonstrated to the nomads that China did actually care about their welfare, incomes and opportunities, and to provide China with what it now sources from around the world, notably from New Zealand and Australia.

It is now too late, in every sense. No longer would the big global lenders such as World Bank or Asian Development Bank consider lending to enhance China’s domestic supply of animal products from its deep inland. No longer does China wish to be considered as a poor country with poor people in need of special assistance. No longer does China imagine its far interior as a source of protein or productivity. China has decisively passed the Lewis inflection point, its economy growing out of reliance on cheap and plentiful labour, turning instead to imports to meet the demand for urban high fashion products such as yoghurt. China now concentrates its domestic animal protein production on national champions, huge corporations made bigger by central subsidies, that feed their dairy and beef cattle in industrial feedlots, on American soybeans. In every possible way, the vast lands of Tibet remain a relic, China’s past, a premodern, unproductive hinterland of raw nomads roaming with their animals, which were seldom brought out into the market economy.

Industrial strength agribusiness is China’s future, leaving Tibet far behind, surplus to requirements. It matters little whether those agribusiness giants are global multinationals selling to China, or Chinese multinationals operating increasingly on a global scale; because that is no longer a meaningful distinction. The biggest Chinese dairy companies now have global companies as major shareholders, and China’s emerging national champion agribusinesses have global reach, not only in sourcing meat worldwide, but in buying the farms, owning the land worldwide on which China’s food is grown.

Anyone suggesting today that the pastoralists of Tibet could benefit by greater access to China’s urban markets will be laughed at, as three decades too late. If there was a time when Tibet’s comparative advantage as a specialist livestock producer could have been beneficial to both Tibetan producers and Chinese consumers it was in the 1980s and 1990s. In those two decades the market economy boomed, Chinese farmers had their land restored to them, long term land tenure guaranteed, and economic decentralisation gave local governments, at prefectural level and below, greater latitude to experiment with new industries and enterprises based on local specialities. This was the time of the Township and Village Enterprises (TVEs), usually owned and operated by county level officials to add value to local products, finding new markets and greater returns for local communities and their surpluses. While the return of animals and land took longer in Tibet than in lowland China, and the issuing of secure land tenure documents was slow, the conditions were right for mutually beneficial integration of the specialist upland Tibetan economy with the lowland demand for greater consumption.

The 1980s is considered, throughout China, a great turning point, away from the revolutionary command economy, to be driven instead by capitalist opportunity to get rich, led, as Deng Xiaoping famously said, by those best situated to get rich first. Deng opened the economy to capitalist competition, embracing the ideology of neoliberalism, along with its inevitable consequence of today’s extremes of inequality. That has long been a standard narrative, uniting proponents of the market economy and its critics.

Identifying the arrival of neoliberalism in Tibet in the 1980s, Kabzung’s ethnography of Rakhor, one village in eastern Tibet, looks not only at the individual Household Responsibility System that contractually connected the state and the pastoralists, he goes further and identifies the psychological shift in the mentality of the pastoralists under neoliberalism. Kabzung (or Ga’errang, to use the name he is known by among the Han Chinese) names the mental changes inherent in the neoliberal market economy: “It means a complete transformation of their lives internally and externally, a historic transformation of primitive and backward nomads who subsisted on livestock production into market-oriented entrepreneurs.”

Kabzung depicts this as a state-driven project of “reshaping the western regions into a specific cultural landscape, instilling people with certain beliefs, desires and behaviours, replacing traditional spiritual culture with market-oriented, materialized and secularized culture.” He argues that the state persisted in intervening in the nomadic mode of production in “an effort to transfer labourers from pastures to secondary and tertiary industries, encouraging herders to be settled in towns and making their living by other means; at the same time the project encourages the remaining herders to increase their livestock production by modernizing and intensifying the system through grass cultivation, building shelters for livestock and grass storage, constructing roads between the pastures, improving yak breeding, and so forth.”

This is not at all neoliberal governance by markets. The above list of statist interventions in the pastoralists’ mode of production is long, to which Kabzung adds the construction of permanent housing, for which the nomads had to pay half the construction costs, even if it meant going into debt. These interventions were seldom just a menu of options on offer from above, which nomads could choose or ignore. They were mandatory, although implementation was often patchy. This is far from what is usually defined as neoliberalism. The state retains its dirigiste regulatory authority to require pastoralists, in the busiest time of year, the summer production season, to fence, sow, reap, dry and store fodder crops for winter feed, to build overwintering animal shelters etc. Even the road building and road mending which often gave nomads their first off-farm cash income, was usually done in summer.

Yet Kabzung rightly emphasizes the desire of the state to kindle desire in the hearts/minds of its pastoralist subjects, “the production of culturally governable subjects who are materialistic and secular.” This, he argues, is a project of self-fashioning and self-ownership.

yak milk infant formula 1

Yet the state, far from retreating, remains highly interventionist, its Animal Husbandry Bureaux active in social engineering projects all aimed at intensifying livestock production. This can be considered neoliberal, but the command and control economy of the 1960s and 1970s was equally productvist in its ideology, although its methods were different.
The highly centralised pastoral productivism of the 1960s and 1970s, and the decentralised individual pastoral household productivism of the 1980s and beyond both largely failed. Neither the revolutionary coercive model, nor the post-revolutionary incentivised model succeeded in intensifying the raising and slaughter of animals to a rate China wants. Based on modern agribusiness operating procedures, China aims to have half of all sheep and goats driven to market each year, and one quarter of all yaks. If the annual statistical yearbooks of the several pastoral provinces of China are to be believed, slaughter rates have gradually risen, but nowhere near the rates defined as modern and efficient.

In the late 1990s Dan Miller did detailed fieldwork in Nagchu, a nomadic area north of Lhasa. He found that: “Many nomads interviewed indicated that an ideal herd for an average nomad family (about 5 people) would be 40 yaks and 200 sheep/goats. On average, nomads in Taking and Dingo only have about 30 yaks and 50-75 sheep/goats. Much of the nomads’ production is for home consumption. There is little excess for sale.”

Nonetheless, the “come out rate” did gradually increase, to use the term China’s statistical yearbooks use, a direct translation from the Chinese, for what in other countries is called offtake or turnoff, in developed country markets where the exchange economy has become so normalised that the sale of animals for slaughter is naturalised by language suggesting a routine process. Not so in the vast pastoral regions of China, where the desire of the state, both in its revolutionary and neoliberal phases, for intensified production has largely been thwarted by pastoralists for whom animals on the hoof are the only wealth, social security, and insurance against disaster. Animals on the hoof are beyond the scrutiny of the state, hidden by the pastoralists up winding valleys whenever the state seeks to inspect, to make pastoralism scrutable, visible, legible and accountable.

Ever since the communes failed, in the late 1970s, China lost the capacity to enumerate each animal and impose a quota for slaughter. Kabzung, who grew up in Rakhor, the pastoral community that is the focus of his dissertation, says: “The slaughter rate during the commune system was very high. When I was young I observed that the local slaughterhouse had been slaughtering several hundred yaks per day in the fall of every year.” The collapse of the coercive communes meant a new system, with neoliberal incentives for animals to “come out” to market, coupled with command economy directives on mandatory herd size, stocking rates, carrying capacity, fixed land allocation, compulsory fencing and much urging to invest in fodder crop planting and harvesting.
This mix of inducements and incentives, command and market, failed to address the most basic human needs of the pastoralists; especially their need, in a risky environment, to retain capacity to recover herd size after extreme weather events. The combined carrot and stick approach was, as the pastoralists often said, ramalug, meaning neither sheep nor goat, a hybrid that promised individual choice but compelled nomads to plough, far, fence and store crops, at a time of year when all hands are needed to maximise animal production.

yak milk infant formula 2

So the nomads remained, in the eyes of cadres sent from urban Animal Husbandry Bureaux, stubbornly irrational, refusing to adopt a neoliberal market mentality. As Kabzung says: “It is very common for many government officials, including some Tibetans, to say that Tibetan herders are very irrational for keeping so many yaks on their pastures instead of selling them to improve their living conditions and educate their children.” In Tibetan, this is known as being “green-brained”; having a brain so little used that moss grows over it.

However, the pastoralists who did accept the urgings of the state that more animals “come out” quickly discovered that the terms of trade were stacked against therm. A functional neoliberal market requires, at the least, several market access technologies, usually provided by the state, to enable a market economy to operate, starting with roads connecting pastoral sellers with animal buyers. Even when roads exist, Tibet’s pastoralists quickly discovered that if you sell to the Chinese Muslim (Hui) trader who comes to you, you have no choice but to accept his minimal price for animals you have spent years rearing. So the nomads realised they needed trucks of their own, to take their stock to the urban markets, where there are many buyers. Under the neoliberal Household Responsibility System few pastoralist families could afford a truck, but in many areas money was pooled, or one enterprising individual set up a trucking business for the whole community. In these ways, the “green-brained” nomads turned out to be highly adaptable, taking to motorbikes and then trucks, treating them much like horses.

What deterred these entries into the market economy was the actual outcome. Across rural Tibet, few county towns bothered to build stockyards where animals, after transport, could be watered, fed and rested to recover from the journey to market on bad roads. No orderly marketing system was created, nor was animal welfare considered to be part of local government responsibility. So the nomads found themselves in town, with a highly perishable commodity and no facilities for them, facing cartels of Hui buyers who agreed among themselves to offer one low price, and not negotiate. The herders found themselves helpless, again and again, in the face of price fixing collusion and the lack of any sustenance for their animals. They could only sell as price takers, never as price makers. This is what has happened in town after town, repeatedly, all over Tibet.

Ironically, the failure of livestock intensification of slaughter rates to meet China’s expectations has been due not to some stubborn green-brained irrationality, but by state failure to emplace basic market infrastructure, or to understand the need of nomads for maximum herd size as insurance against climate disasters. Far from being irrational, Tibet’s nomads, with their customary flexibility, tried to realise the promise of the neoliberal market economy, and withdrew when it became clear the system was rigged. Kabzung tells of nomads who did intensify production, and were praised in the prefectural official media as exemplary. Kabzung translates these stories, originally published in Chinese, for example the story of Konchog Tashi, who invested the money from selling animals to “enjoy a comfortable way of life” in a new house, plus he bought a van, then “he boldly sold most of his 100 yaks and kept only a dozen female yaks” and now plans to build a second house to serve as the basis of a new enterprise: “His plan with this new house is to run a home-stay hotel, and with the advantage of its location near the provincial road, the future hotel is expected to earn over a hundred thousand RMB a year.” There is no information on whether this rosy picture, published in 2011, worked out well.

 

Official media frequently run cheery stories, featuring Tibetan role models who opt for the market economy and prosper. Seldom do such stories bother with crucial details, such as how Konchog Tashi is going to advertise his “home-stay hotel”, or how nomads close to the rail line connecting Lhasa to inland China can use it to get their dairy products or wool to distant urban markets.

The experience of most rural Tibetans is that the promise of the market is seldom fulfilled, even though it is normal, in a neoliberal economy, that the state, at a local or higher level, subsidises the construction of infrastructure such as saleyards, feedlots, animal fattening facilities on urban fringes, while also paying for road maintenance and even broadcasting price signals to remote producers. Today’s neoliberal China heavily subsidises the big “national champion” dairy companies that control the fast growing Chinese market for dairy. “According to the central government´s ‘Number 1’ Policy Document of 2013, the government will continue to support the scaling up and consolidation of the livestock industry. As part of that plan, subsidies will be provided to purchase improved varieties of dairy cows and livestock insurance, and for building standardized farms.Large dairy farms will also be supported through general incen¬tives provided by the Ministry of Agriculture (MOA) for large scale farms given MOA’s general bias toward scale, standardization and consolidation as an answer to food safety problems and management of natural resources and environmental concerns.”

All four central ministries with power over the dairy industry in 2014 agreed on a state-directed and financed plan of agglomeration. Caixin reported: “Beijing has vowed to form 10 strong domestic dairy companies by the end of 2018 which combined will account for more than 80 percent of the country’s total market share, according to a document jointly issued by four central government departments. The plan also includes building three to five of the big 10 into leading baby formula providers with annual revenue of more than 5 billion yuan. Both the central and local governments will contribute capital into the initiative to facilitate the consolidation of existing dairy firms, the announcement said.”

The current dominance of a small number of huge corporations in China’s booming dairy industry, assisted by state subsidies, is now typical of the pattern of contemporary Chinese neoliberalism; and a major reason why it is now too late for Tibetan livestock producers to enter the market. The barriers to entry are now formidable, requiring from the outset economies of scale, and an industrialised agribusiness model unavailable, unfamiliar and unattainable by Tibetans. Even if Tibetans were to wholly embrace the prevailing model of animal production in penned feedlots on urban fringes, it would at best provide employment for only a small fraction of the current pastoral population.

 

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None of this has dimmed the attractions of getting rich by entering the market, especially for rural Tibetans whose land grows not only grasses, sheep, goats and yaks but also the ingredients of traditional Tibetan and Chinese medicines, notably yartsa gumbu (ophiocordyceps sinensis), a much prized fungal infection of caterpillars of the Tibetan turf. Not all Tibetans are bound to be losers in the neoliberal market. Yartsa gumbu is in such demand that many fortunes have been made, not only by collectors on their knees in the sward, but by pastoralists able to seek rents for entry by collectors onto their land, and by Tibetan middlemen able to compete with Chinese dealers in the urban supply chain.

Some pastoralists have made so much money collecting rental for seasonal access to their pastures that they no longer bother with the hard work of rearing animals. They often spend their money on mansions filled with modern furniture and electronics, seldom entering fully into the chain of capital accumulation neoliberalism requires in order to build a corporation with a life of its own, in competition with similar corporations to become the biggest and most successful.

There are areas in Tibet, especially where the plateau land is vast, uninterrupted by mountains, where pastoralism can also succeed by following the logic of neoliberal accumulation, agglomeration, upscaling, consolidating land holdings into a much bigger enterprise, and herds into specialised, segregated flocks grown for specific markets, some for their milk, some for meat, some for wool, and some for breeding. This is the global logic of “get big or get out”, of economies of scale, of specialist ranching strategies in use throughout the rangelands of rich countries such as US, Australia or Canada. In Tibet, such operations cannot formally incorporate, nor (yet) legally agglomerate land holdings, yet they do occur. The inevitable result is wealth accumulation for the few owners of big, specialised herds, and, at best, wage labour for the poorer Tibetans who do the actual herd management for the newly rich. As in the ranching economies of the US or Australia, a few prosper, and the rest must leave the land, because neoliberal logic declares them inefficient and redundant.

China’s official policies for rural Tibet clearly see this as the direction for the future; with peri-urban feedlots fattening animals prior to slaughter. Official statements present this as inevitable, a law of efficiency that implicitly makes most pastoralists redundant, and most of Tibetan pasture land irrelevant to producing penned, feedlot-fattened beasts ready for slaughter, of the body conformation best suited to butchering into fashionable cuts displayed on the supermarket shelf.

To sum up, Tibetan pastoralists are attracted by the opportunities presented by China’s embrace of neoliberal markets. Yet ongoing regulatory restrictions severely restrict the creation of surpluses that could “come out” into the market. Tibetan wool is no longer used by China’s woollen mills; Tibetan dairy products have barely entered the dairy commodity chains of China, except for very local consumption. China has instead turned to imports, both of fine wool for manufacture into woven cloth, and of dairy products, to meet the booming urban demand for hip health foods such as yoghurt. The demand for imports is so great that the biggest global multinationals all have a major presence in China’s dairy industry. These industries are now so dominated by big players that new entrants face enormous barriers, and no longer have opportunity to scale up gradually, growing incrementally by ploughing profits back to grow their business. Any new entrant would now need from the outset a high end brand name and a national distribution chain, and a capacity to produce high volumes with the low transaction costs that only a concentrated enclave operation can create. Scattered pastoral nomads across a vast landscape will never be able to compete: there are too many hands the product must go through, the costs of establishing, maintaining and quality controlling a network of dairy collectors and aggregators are now too great.

Yak dairy pure land of saintly Tibetans

When asked why they don’t participate in the market economy, Tibetan pastoralists often say they simply don’t have the surplus to sell. Their production is for subsistence. Herd sizes have shrunk, as has the size of adult yaks, as pastures degrade. Regulatory limits on herd size have been imposed and increasingly policed. In Yushu prefecture, one of the better pastoral districts of the Tibetan Plateau, in 1989 rural families had on average 8.04 yaks per person, 11.72 sheep or 51.92 sheep equivalents if each yak is counted as equivalent to five sheep. This was sufficient to live well, with the poverty line defined as 25 sheep units (SU) per person. However, by 2005, according to official prefectural statistics, the number of animals per person had declined to 3.52 yaks and 7.57 sheep, adding up to 25.17 SU, right on the poverty line. However, when one looks not only at the entire prefecture, a huge area much of which is semi-arid, but county by county, especially in the more densely populated counties which sustain the best quality, well-watered pastures, in Trindu, Yushu and Nangchen counties, by 2005 the number of sheep equivalents per nomadic household member had fallen well below the poverty line to 18.5 in Trindu, 15.7 in Yushu county and 18 in Nangchen. On the basis of detailed fieldwork, Gruschke says: “The 2006-2007 sample survey of Yushu households reveals that less than half of them own enough animals to live above the subsistence level (25SU per person). Between 12% and 20% of rural households did not even own livestock. Almost half of the livestock owners interviewed could not earn any cash from animal products, most of them not even producing enough for their own subsistence.”

This slide into poverty, even extreme poverty and destitution, has many causes; regulatory restrictions on land allocation and herd size being one. Climate change and extreme weather is another, leading to accelerating degradation on the unduly small allocated areas to which pastoralists are restricted. A further factor is population growth. Another factor is the absence of livestock insurance enabling nomads hit by blizzards to access finance to buy new stock, to recover from natural disasters. The descent into poverty happened quickly, at the height of neoliberal China’s market embraced. On Gruschke’s figures, in 1992 the number of animals per rural person was well above the poverty line, in all counties of Yushu prefecture, with even the poorest county sustaining animals per person 30% above the poverty line.

While the pastoralists slide further into poverty, neoliberal China has discovered in Tibet a high-end brand that can be used to market packaged milk to urban Chinese consumers who have adopted milk as a health food, for infants and adults, are terrified, after a succession of scandals, of poisonous milk products sold in China, and have sufficient income for a private solution. The Treasure of Plateau Yak Dairy Co., and its Feifan brand of infant milk powder and Tetrapak whole milk is a case study of how, in today’s China, fortunes can be made, aided by central subsidies, by spending far more on marketing and brand building, than is paid to Tibetans to provide the milk of their dri, sold to China as “yak milk”.

Treasure of Plateau 高原之宝 pays Tibetan pastoralists four yuan per litre of “yak milk” and sells it online, on tmall.com, for 128 yuan per litre, or far more as infant formula, which sells for 440 to 580 yuan per tin weighing less than a half kilo. This extraordinary mark-up finances a marketing budget aimed at the fears of the urban elite who want to consume milk, safely. It also pays for lobbying central authorities to be one of the small number of companies privileged to emerge as state-financed winners of a compulsory agglomeration, of intensive mergers and acquisitions designed to not only replace reliance on imports but also to create China’s own team of “national champions” capable of exporting dairy products worldwide. The marketing budget is huge. “Treasure of Plateau has budgeted 100 million yuan from 2008 to 2010 to explore the domestic and international markets. It also hired Shenzhen-based China Winwin Consulting to be its branding and marketing agency to make “Feifan” the name to know when it comes to fresh yak milk products.”

This effort paid off for the private company, not listed on any stock exchange, in 2014, when China finally announced which companies would be the beneficiaries of the state-driven campaign to substitute domestic production for imports running at over one million tons of milk powder a year. The announcement was delayed by several months, as many ministries were involved, and the whole “national champion” approach of officials picking winners goes against Xi Jinping’s emphasis on letting market forces play the decisive role.

Treasure of Plateau Yak Dairy Corporation is a winner because of its unique selling proposition: the milk of the dri (or yak, as it insists on naming the male of the bos grunniens species as the milk provider), to the great amusement of Tibetans. Even though its tonnage of product is small, it has a favoured slot in the government’s compulsory merger and acquisition program, because China hopes “yak milk” will be a winner globally, and China’s Tibet gives China control of 80 per cent of all yaks in the world.

From a Tibetan viewpoint, “yak milk” sold at exorbitant prices will always be a niche product, and can never get to market significant quantities of Tibetan milk. It will not popularise Tibetan milk as an everyday health food, instead taking the much more profitable role of niche player to an exclusive elite proud to pay premium prices.

Wang Shiquan, boss of Treasure of Plateau, is a shrewd operator, taking full advantage of the lingering fears of the urban new rich after China’s big domestic milk companies were caught up in the scandal of poisoning the kidneys of millions of pampered urban babies, with infant formula to which melamine plastic powder had been illegally added. Many other Chinese entrepreneurs also saw the opportunity, after the 2008 melamine scandal, to create new brands, often in New Zealand, a major dairy exporter, producing a range of brands specifically for the Chinese market, utterly unfamiliar to New Zealand consumers. A professor of farm management and agribusiness in New Zealand comments that: “Most of these new brands are custom manufactured in two Auckland factories. The owners of the brands are a mix of Chinese immigrants and New Zealand born Kiwis. These small New Zealand brands have been developed by entrepreneurs who saw an opportunity to make good profits. Chinese consumers have been paying extremely high prices for infant formula, including extra-large premiums for anything of foreign origin. The profit margins have been so great that there was good money to be made.”

The Chinese operating from New Zealand were smart, trading on New Zealand’s reputation as a clean and safe source of milk products; but Wang Shiquan was even smarter, foreseeing that the allure of the foreign source enables a huge mark-up, but China’s government would tire of the import bill and seek to boost domestic production. In Treasure of Plateau Yak Dairy Corporation, the sales pitch combines everything that sells not only to consumers but to government as well. Treasure of Plateau emphasizes how hygienic and scientific and health-giving its product is, and also how foreign and exotic it is as well, coming from Tibet, where the pure Tibetan people are guardians of milk purity, according to the company’s publicity: “For Tibetans, the friendliness and honesty is golden quality. Their eyes, a little shy, but pure. They smile, a little shy, but sincere. Their words, and perhaps not much, but no hypocrisy and no deception. They still regard honesty as a virtue, and fraud and treacherous, will provoke the gods punishment. Perhaps, they are God’s chosen guards of Tibet – the world’s last piece of pure land of the people.”

Trading on the Tibetan reputation for saintly, unworldly honesty as a brand guarantee, enabling profit margins as fat as any New Zealand infant formula pitched to the Chinese market, is a new move for neoliberal China. This is marketing genius, making Tibet as exotic as New Zealand, yet also domestic, but different to the China familiar to urban consumers, where rip-offs are often considered smart.

This could be considered a new kind of exploitation, in which real Tibetans, and Tibetan livelihoods have at most a peripheral role, as highly disciplined producers of modest quantities of raw material, namely milk. Treasure of Plateau makes it clear, on its website, that it does not hesitate to discipline its Tibetan milk suppliers, as part of a publicity campaign aimed at overcoming the popular Han Chinese depiction of Tibetans as dirty. A 2008 China Daily article commending Treasure of Plateau quoted boss Wang: “Wang remembers that yak milk sent to the factory had some too-natural ingredients in it – insects and yak hair among them. ‘I told them if you don’t clean it up, you will be forbidden to send milk to us,’ he says. New stainless-steel pails were given to yak herders, along with instructions on how to keep the milk clean.”

Turning the clean air and honest folk of Tibet into private corporate brand equity, while calling this most private enterprise a blessing for Tibet, does little for Tibet beyond monetising its’ supposed other-worldliness. Far from enabling Tibetan pastoralists to gain entry to the now massive Chinese urban market for whole milk, yoghurt and infant formula, the extreme prices limit Tibetan dairy to luxury items for the super-rich, status symbols not meant for the masses, a brand which would only be cheapened if mass produced.

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