China’s Aussie milk splash

China’s Aussie milk splash

GREG Martin took 42 of his best heifers to Shepparton in Victoria, where he was paid about four times the rate a few years ago.

The heifers were put on a road train to Portland in west Victoria, then on a ship to China, joining the largest flow of breeding dairy cattle out of Australia in history.

The Australian writes that while Mr Martin's heifers boarded a ship, others are taken to China by air, as the Asian powerhouse raids Australia's dairy industry to meet its rapidly growing appetite for milk.

The expansion of live dairy cattle exports has reached such a pace, alarmed farmers liken it to "selling the family silver".

What was a niche export market for Australian producers of just 1600 breeding heifers five years ago has exploded into a multi-million-dollar earner involving the sale to China of 36,450 cattle in the first eight months of this financial year, worth nearly $ 44 million.

Dairy Australia says live exports will top 55,000 pedigree breeding animals by the end of June.

While China's determination to establish a viable dairy industry is good news for cash-strapped Australian breeders, dairy producers are concerned the industry will lose down the track as a shortage of breeding heifers hampers expansion of the domestic herd.

Nick Renyard, a dairy farmer from southwest Victoria, says: "It's like selling the family silver - you can only do it once. China has been targeting our best stock with the best pedigree, and they've been paying a premium.

"But it will be a problem in a couple of years when we don't have as many heifers."

Even Mr Martin, who received top dollar for his China-bound heifers of $ 1600 for the heavier animals and $ 1550 for the rest, is dubious about the long-term effects of the China trade.

"In the long term you've got to wonder about our own industry, given that so much of our breeding stock is going away," he says.

China's raid on Australian dairy stock was sparked by a 2008 health scare when the main Chinese dairy producer, Sanlu, had to recall large batches of milk powder after it became overloaded with the protein supplement melamine. Six children died after drinking the tainted milk, hundreds were left with permanent kidney damage and an estimated 290,000 babies became sick because of the supplement.

That prompted China to expand and tighten control over its dairy industry, which coincided with expanding demand for dairy products from Chinese consumers, who increasingly wanted milk and processed dairy products such as yoghurt and cheese.

According to The Wall Street Journal, the Chinese on average drink 11 litres of milk a year, less than a third of the figure for the Koreans and Japanese, and well below the 103 litres Australians consume. Chinese consumption is expected to increase in the next few years as more Chinese move to the cities, diets change, and the massive increase in consumer spending in the country - 90 per cent in the past five years - is expected to be maintained.

For those cows that make it to China, life as a milker there is different to being out in the open air in the pastures of rural Australia.

In China, the cattle will be in a huge indoor factory, with all their millk flow recorded and sent to a central computer while manure is automatically taken away. But they have aural stimulation to make up for the lack of fresh air - the Chinese play them music such as Andrea Bocelli's Time to Say Goodbye, which reportedly creates a sense of calm that helps them give better and more prolific milk.

According to Global Trade Information Services, China spent $ 250 million on 100,000 heifers last year, with Australia providing more than half the herd. Five years ago, China took 5 per cent of Australia's heifers sent overseas; this year it will be about 85 per cent.

For Australian dairy farmers, many of whom struggled with drought for years and are now coping with low milk prices because of the price war between Coles and Woolworths, the high prices have provided a welcome income source. But as several point out, with about one million heifers available to the Australian industry, losing more than 5 per cent a year is not sustainable.

Dairy Australia's strategy manager, Joanne Bills, said the number of milking cows nationally had been steady in recent years, but numbers needed to be built up to cope with the growth in demand.

Australia, New Zealand and Uruguay are the only three counties licensed to export dairy cattle to China - the US is still banned because of the mad cow scare a decade ago. Most of the Australian exports come from Victoria.

Victorian Farmers Federation dairy manager Vin Delahunty said the Chinese market had slowed in recent months, but his organisation was still aware of the potential for problems because of the sale of heifers.

"If there are high prices for heifers, that's going to have an impact on the domestic market," Mr Delahunty said. "In the past year we have had about 35 farms coming back into production in Victoria, and they have got to get their heifers from somewhere."

Read more at The Australian

Additional reporting: The Wall Street Journal

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