THE CHINESE market opportunities for Australian dairy products go well beyond milk powder and heifer imports: the giant dragon economy is crying out for dairy technology, farm know-how and experienced farm managers.
Chinese dairy companies are even offering to help Australian farming operations set up dairy enterprises in China, and then buy their milk.
That’s the attractive message from leading Chinese dairy entrepreneurs attending last week’s 2010 Australian Dairy Conference in Wollongong,
In an entertaining address, the general manager of Chinese dairy equipment and consulting company East Rock Limited, Su (James) Hao, outlined what he saw as enormous potential for Australians to cash in on the growing demand for dairy in a country of 1.3 billion people.
“Jump on the boat to China waiting in your harbours now,” he said.
“China wants shiploads of everything Australian dairy, mates.”
The growth rate of heifer imports from Australia and New Zealand hit triple digits last year, with 45,000 head brought in, while milk powder imports were up 144.28 per cent.
That demand was only going to increase, said Beijing-based Mr Hao.
However, the melamine additives scandal, in which infants died after consuming Chinese-produced milk formula adulterated with the chemical in late 2008, had almost destroyed the fragile Chinese dairy industry.
“Infrastructure within the Chinese dairy industry is fragmented such that it will still take some time before it can supply a trusted and wholesome milk product, so the opportunity for Australia to fill this gap will be ongoing,” Mr Hao said.
“What it (the scandal) did was push people to raw milk where there is a clearer chain of supply.
“China is looking for technologies from developed dairy industries to do this – good housing barns, the infrastructure to make cows comfortable, waste processing, ventilation, cooling.
Mr Hao brought a message direct from the senior management of Yili Group, the biggest dairy foods provider in China with estimated sales of over $3.9 billion in 2009.
Yili, he said, was ready to help Australians “get land in China, launch your own farm and then buy milk from you”. They also wanted senior managers to run their own farms.
Milk producers in China were losing money, despite the fact their raw milk price was 50 per cent higher than in the US and Canada, because China’s per cow production was less than half what those countries achieved, Mr Hao said.
Although only 4.27 per cent (or $25 a week) of Chinese annual food expenditure went towards dairy purchases, the huge population and the fast-changing cultural acceptance of dairy food presented potential, he said.
Rabobank dairy analyst, Tim Hunt, said China was indeed a “big deal” for Australia: if it were not for the huge lift in its imported milk powder usage last year, the farmgate price crash on the back of the global economic crisis would have been much worse.
The potential went well beyond niche exports because China was poor in water and arable land and therefore unlikely to be able to produce all its dairy needs in the long-term, he said.
Chinese demand was still price-driven but the clean, green image of Australian product was becoming very important and it was critical Australia “kept its herds clean”, Mr Hunt said.
He warned there were plenty of competitors for the Chinese market and one outbreak of exotic disease would wipe out Australia’s status.
Meanwhile, Australian industry leaders said it was unlikely there would be too big a rush to “catch the Chinese boat” given the demand for top-end heifers, leading technologies and expertise here was also significant.
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