Powdered milk, especially infant formula, is known as «white gold» in China and the easing of China’s one-child policy could mean increased demand for dairy products worldwide and especially for Tasmanian Dairy Products (TDP) in Smithton, Tasmania, Australia.
“It will have a great stimulation effect for dairy demand which is growing at a higher rate than the ability of the world to supply the product globally,” said Tony Catania, chief executive of Tasmanian Dairy Products (TDP) in Smithton, Tasmania, Australia.
“The big opportunity for us is to capitalize on that demand by working together to see sensible growth and increase our ability to make more milk in Tasmania.”
Mr. Catania said more than 9 percent of milk powder products produced at TDP were exported to Asia and the Middle East. Some go to China, Japan and Sri Lanka as well as other parts of Asia.
China alone imported 1.4 million tons of dairy product last year and 90,000 tons was infant formula.
Dairy Australia industry analyst John Droppert described it as another «upside» in the China demand.
Estimates suggest the birth rate in China could increase by six to 12 percent. The growing Asian middle class is also prepared to pay premium prices.
“We’ve got to produce more milk in this state. It’s that simple,” Mr. Catania said. Tasmania had the capacity to more than double milk production, he said. But it would need a collective effort from the federal and state governments, the industry and private enterprise, he said.
“A fair milk price has to be paid to farmers to attract new farmers into the industry,” Mr. Catania said.
In recent years, farmers have had to deal with a volatile milk price and did not have a lot of confidence from year to year to spend money upgrading farms to produce more milk.
The other issue was the cost of production. “We can do more (as an industry) to lower the costs on farms,” Mr. Catania said. He said Tasmania was well placed for conversion of forestry and dry land to dairy. Mr. Catania said smaller dairy farms, such as a herd of 150 cows, could still be profitable if the on-farm debt was manageable and the farm was run efficiently.
TDP at Smithton employs 50 directly and many more indirectly. The factory has only been running a little over a year and is producing about half its capacity of 300 million liters of milk.
China and Japan are the two largest markets for Australian dairy exports, followed by Singapore, Indonesia, Malaysia and Thailand.
Source: ADPI