Diederik Brasser, managing director of Trilobes and its sister company Milkways, says some dairy regions of Australia have a rare opportunity to ship milk to meet the lucrative and seemingly insatiable demand from well-off Chinese for Australian fresh milk.
Dr Brasser predicts that Australia’s dairy industry could double its annual milk production from 9 billion litres to more than 20 billion litres and become much more profitable if it was able to bulk-ship fresh milk to Asia and the Middle East rather than export commoditised milk powder.
His company has already developed modular refrigerated tank technology that allows bulk freighters to take fresh orange juice from Brazil and Mexico to Europe without spoilage.
The proposal is particularly attractive to isolated pockets of milk production such as in Western Australia, northern NSW or Tasmania, where small domestic markets limit expansion opportunities or force a reliance on low-price milk powder.
Fresh milk in Australia retails for just $1 a litre — with farmers receiving less than 50c a litre — while the small volume of fresh Australian milk airfreighted to China sells for $8-$10 a litre, with demand outstripping supply.
“The high demand for fresh milk in China and the prices they are prepared to pay will only have a real impact on farmers if you can do it in large quantities and large-scale; what is being done with airfreight is nice but won’t help every dairy farmer,’’ Brasser says.
“Australia has a comparative advantage over New Zealand to supply this fresh milk demand by ship because it is closer to major Asian and Middle East markets, and we know we can keep the milk fresh that long.”
Since 2000, Australia’s share of growing world export markets for dairy products has fallen from 16 per cent to 5 per cent, while NZ’s slice has soared from 19 per cent to nearly a third.
Paradoxically, total Australian national milk production has slumped from 11 billion litres to 9 billion litres a year as farmers have struggled to turn a profit, although it appears to be improving, following higher farmgate milk price trends.
“How can you reverse Australia’s falling market share? The answer lies in product differentiation from New Zealand and making the most of the comparative advantages your dairy industry has,” Brasser says. “You are closer to Asia and the Middle East and your milk production is much more all year round than New Zealand’s. That means while it will always be the champion in milk powder production, Australia’s can differentiate itself with a fresh milk product.”
He says liquid milk is a premium ingredient and can demand top prices if it can be shipped in sufficient quantities, quickly and hygienically.
He estimates supplying 500 million litres of fresh milk to China a year by a weekly refrigerated ship would not make a dent in the Chinese market, but would revitalise dairy production in Australia.
Brasser, who is in Australia talking to major dairy companies such as Murray Goulburn about his milk shipping concept, says it takes less than four days to get a bulk perishable liquid like fresh milk from Perth to Jakarta.
Similarly, milk could be shipped from WA to Hong Kong or southern China in 8 days and Dubai in 11 days, while shipping milk from Australia’s east coast to China would take nine days.
In contrast, it takes 10 days for a bulk freighter to sail from Auckland to Jakarta, 19 days to Dubai and 11 days to southern China, making the option more costly and risky.
China is now the biggest importer of dairy products worldwide, while Japan, Indonesia, Malaysia and Singapore rank in the top 10 list.
So too does Saudi Arabia, while UAE is the 12th biggest dairy importer — both within easy reach of fresh milk freight ships from Perth.
Brasser believes that by using modular temperature-controlled refrigerated containers filled with pasteurised milk that are placed in freighter holds and ultra-clean systems of terminal storage and transfer, his company can deliver fresh milk that is not UHT-treated for as much as four weeks after the cows were milked.
He is now looking for partners — dairy companies, co-operatives like Murray Goulburn, farmers or investors — who might be interested in establishing an Australia business or investing the $20 million-$30m needed to develop the dedicated port terminal, infrastructure and shipping options.
Similarly, port terminals could be developed in parts of Australia suitable for dairying, such as northern NSW or southwest Western Australia, where economics and a lack of processing options have previously limited the industry’s growth.
“This is not a concept; the technology is there and we already do this for 2-3 million tonnes of orange juice from Brazil every year,” Brasser told The Australian during last week’s Global Food Forum.
Source: The Australian