The plan will help tackle problems such as low efficiency and profits, small scale processing, and lagging technology and facilities. The government did not reveal how much it will spend on the new initiatives.

China's food industry has been growing significantly in recent years as consumers with increasing incomes buy more processed food. The government says the sector has seen substantial foreign investment, and more than 30 of the world's top 50 foodmakers have established either a joint venture or wholly owned business in China.

In 2005, almost 4000 food businesses received foreign investment. These firms now account for 27 per cent of the total industry revenue, or CNY536.75 billion (€53.7bn).

However the government is pushing for higher processing and a bigger presence on the global market. It wants to promote its domestic industry by encouraging innovation and food science, as well as brand building, better quality and safety, and better resource management.

Several sectors are set to benefit from the five-year plan, formally announced on 19 October, including edible vegetable oils, fruit and vegetables, meat, marine products, dairy products, beverages and sugar.

Wang Dingmian, deputy chairman of Guangdong Dairy Industry Association, is convinced that the plan "will contribute to the orderly and healthy development of the food industry".

In dairy, the government is expected to invest a large sum of money in creating new farms and in research on breeding to boost its milk supply, one of the major barriers to the sector's growth.

"Currently, China's dairy industry is facing two problems - the scarcity of resources and limited market demand. Only 50-60 per cent of our processing capability has been utilized, which means we are able to handle much more production as long as there are enough resources and market demand," he added.

Chinese consumers consume an average 21.7 kg of milk each year, one fifth of the world's average. The number is expected to rise to 25kg in the next two to three years but industry is hoping that increased marketing can increase consumption further.

For city-based food companies, the plan is expected to place greater emphasis on environmental protection while farms will be encouraged to improve their management and adopt more advanced technology.

Additional reporting by Pan Yan.