With milk selling for one dollar a litre in supermarkets, you’d be hard pressed to find anyone prepared to pay eight dollars a litre.
But that’s what consumers in China’s largest city are paying for fresh milk from Australian farms.
5,000 litres a week are air freighted to Shanghai by Melbourne company Lian He.
It’s the first company in Australia to send fresh milk to China, and expects sales to quadruple by the end of the year.
Director Chris Hsu, a former I.T. professional, has spent the last 12 months giving wealthy Chinese consumers a taste for Australian fresh milk.
‘The Chinese are so used to the U.H.T. (long-life milk) taste, they’re so used to the creaminess, so they actually find fresh milk a little bit watery.’
‘This is fresh milk, 22 days shelf life. You have all the goodness of the fresh milk, all the good bacteria still in it, so different to U.H.T. milk.’
Chris Hsu makes a point of advertising Australia’s clean, green pastures to consumers anxious about pollution levels in China.
‘We still have this image of our cows being free to graze in the green fields, and that’s something where I think not a lot of countries can compete with us.’
At a dairy industry conference last week, Federal Agriculture Minister Barnaby Joyce predicted a ten fold increase in dairy exports to China by 2030.
But that level of increase depends on a free trade deal, according to Grant Crothers of Victorian dairy company Burra Foods.
Mr Crothers and his brother William started Burra Foods in 1991 in a former butter factory at Korumburra southeast of Melbourne.
Their workforce of 5 employees has grown to 150, manufacturing milk powder.
Mr Crothers is hoping to reach sales of 15,000 tonnes of infant formula annually, and says Chinese consumers are anxious about contamination of their local milk supply.
‘There’s plenty of stories of tourists purchasing cans by the dozen… and sending them by post to their relatives and friends.’
But he warns that New Zealand’s has a head start on Australia, with dairy exports to China ten times greater than Australia’s, thanks to a 2008 free trade agreement.
‘They haven’t had a drought, they haven’t had a 1.05 dollar to fight against, so we’ve had some headwinds in Australia to fight against.’
While dairy farmers are hopeful the trade boom will eventually flow back to farm gate prices, Chris Hsu warns that exporting to China is not a road to instant riches.
‘If you think about the air freight costs and also the V.A.T. import tax, on top of everything, you’re really not making much margin at all.’
Source: ABC