A major Chinese dairy company hopes Australian cows can help it quench China’s growing thirst for fresh milk.
China Dairy Corporation is considering expanding its milk supply operations into Australia to meet the insatiable demand for fresh milk, particularly for infants, in its homeland.
That expansion would be the company’s first offshore foray and may involve the acquisition of Australian farm land, cows, dairy producers, and technology.
The move has been welcomed by United Dairyfarmers of Victoria (UDV), which says the local industry needs money to upgrade both dairy farms and processing facilities.
«Our industry is under stress in terms of needing more capital to come into the industry. We’d definitely welcome new investment,» UDV president Adam Jenkins said.
China Dairy director David Batten says the Chinese dairy industry can’t keep up with demand relying solely on domestic resources.
«That’s one of the reasons why they are looking to come here,» Mr Batten told AAP on Monday.
«They just can’t buy enough cows, they can’t buy enough land.»
The Chinese government’s recent decision to end the one-child policy is expected to drive up demand for fresh milk and infant formula even further.
Mr Batten said demand for dairy products in China is expected to rise 38 per cent by 2022.
Mr Jenkins said supplying the Chinese milk market from Australia would require a «serious» amount of land and cows to warrant the infrastructure needed to send milk to China.
Most Australian dairy farms did not have that scale.
«That’s going to be the big issue: parcelling up enough land, cows and infrastructure. You’d be wanting 50 or 60 farms to warrant that sort of investment,» Mr Jenkins said.
«I think the future, long term, is doing some joint ventures with Australian companies that are already here.»
Mr Jenkins added that Chinese dairy players could also offer ageing dairy farmers in Australia the chance to exit the industry if they had no one willing to take over the family business.
To help it establish a base in Australia, China Dairy wants to raise up to $20 million ahead of listing on the local share market in January.
It is offering 100 million CHESS Depository Interests at 20 cents each.
Money raised will be used to help develop a new business stream to provide liquid milk for children and fund working capital requirements.
China Dairy is based at Harbin in China’s northern Heilongjiang province and has more than 40,000 cows, making it a significant player in the dairy sector there.
The company made a net profit of $40 million in 2015.
Mr Batten said a listing would generate prestige for the company to help it expand into provinces surrounding Heilongjiang in China. Those surrounding provinces have a market of around 150 million people.
Source: SBS