China’s growing thirst for milk boost for dairy co-op Norco

The melamine scandal that rocked China’s dairy industry back in 2008 may have faded into the memory, but the Chinese government has cracked down on the local industry in recent years. While industry standards have picked up as the regulatory environment has changed, the new problem for China is a rising middle class now can’t get enough milk.
Share on twitter
Share on facebook
Share on linkedin
Share on whatsapp
Share on email
The good news for Australia is we’re one of the beneficiaries of this demand.
Lismore-based dairy co-operative Norco began exporting fresh milk to China in April, following a successful trial in collaboration with Dairy Connect NSW and international export consulting company Peloris Global Sourcing (PGS).
“China does have very high standards, which is a good thing, and we just needed to work on getting a process in place that allowed the timing we needed for fresh milk exports,” said Norco chief executive Brett Kelly.
It now takes eight days to transport fresh milk from local farms to Chinese supermarkets – a process that took 14 days under the original system.
The co-op, which is made up of nearly 300 active members, exports up to 30,000 litres of milk a week to the Chinese market, more than six times the volume shipped at the start of the export operation.
 

INCREASE IN VOLUME

Mr Kelly said the co-operative would aim to increase export volumes to 50,000 litres a week within the next month. He hopes to establish a channel with the capacity to ship around 20 million litres a year in the next two to five years.
“We’re very cautious and very careful to make sure that we partner and work with the right retailers. Working in China we want to make sure that what we’re doing is for the long term,” he said.
“The co-operative is 120 years old, it’s owned by Australian farmers. Everything we do, we do with a long-term view so we’re not jumping in any direction … just for the sake of volume. We’re looking to build volume carefully through the right retail channels.”
Fresh Australian milk fetches about $8 in the Chinese retail market, a premium price middle-class consumers are willing to pay, said Mr Kelly.
He said China’s growing middle class were “well-educated” and “very focused on quality products”.
“They see Australia as clean and green, and when you add on top of that a 120-year-old Australian farmer-owned co-operative, that gives a really good point of difference [regarding] credibility.”
Australia’s reputation for safe, high-quality products has driven sales of dairy products to China. In 2013, dairy exports to China totalled 2.2 million tonnes, representing a 36 per cent increase compared with 2012, according to data from Australian Dairy Farmers (ADF).
“The boost in demand for dairy products in China is primarily due to the rapid increase of the region’s wealth and purchasing power and an increasing thirst for all things dairy among China’s burgeoning middle class,” a spokesperson from ADF said.

REGULATORY BATTLES IMPEDE GROWTH

But regulatory barriers continue to slow growth in this market, reducing the competitive edge of local farmers against international dairy exporters. “The key barrier to the Chinese market is tariffs, which the Australian dairy industry is strongly pushing to be reduced to enable us to compete on a level playing field with other dairy exporting nations in the Chinese market,” said the spokesperson.
Sales of dairy products to Asia made up about three-quarters of Australia’s total dairy export value in the last financial year, accounting for almost $2.5 billion of dairy exports.
A growth in Chinese demand for fresh milk exports could benefit local farmers over the long term. “If we can develop another major channel to sell our fresh milk, then we have another channel to market at a good price which then gives us the opportunity to improve our farm-gate milk prices. That then means that our farmers can reimburse in their farms,” Mr Kelly said.
 
Source: Financial Rewiev

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

Te puede interesar

Notas
Relacionadas