China’s milk demand a lifeline for farmers

WITH Beijing milk stands selling out of their daily supplies of fresh milk before 9am most mornings, things could be looking up for western Australia’s dairy industry.

In fact, much of the State’s agriculture sector could be in for a boost as the rapidly developing Asian monolith increasingly looks to Australia for agricultural goods and services.

The local resources sector has already been taking advantage of China’s surging demand, with several companies, particularly iron ore and gas producers, signing multi-million dollar contracts with Chinese interests.

However, China’s Ambassador to Australia Fu Ying, on her first trip outside Canberra since taking up her position seven weeks ago, last week told WA business leaders resources was not the only industry that could benefit from China’s expanding economy.

At the WA Business News Meet the Ambassadors breakfast, Ms Fu Ying said a primary aim of the Chinese Government was to improve quality of life for Chinese, which was beginning to happen as a result of almost 25 years of reform.

Last year was a turning point for the Chinese people, she said, as per capita GDP exceeded $US1000, which was shifting the consumption orientation of China.

“The people are turning from making a living to living a better life,” Ms Fu Ying said.

As a result, consumer goods was an area where Australian businesses could “find a huge market”.

The ambassador highlighted fresh milk and other dairy products such as cheese as a significant opportunity for WA, saying Chinese people were starting to drink much more fresh milk.

Currently about one third of the milk supply is fresh and Ms Fu Ying said this was growing as the population could not only afford fresh milk now, but were drinking more because of a government push to try and improve health.

However, while WA has already scored a couple of milk-supply contracts with China, it is not just China’s growing preference for fresh milk that could benefit local dairy farmers.

With many, including the Chinese, concerned about the Chinese economy overheating, Ms Fu Ying said the key was to maintain domestic stability.

Milk, or rather dairy cows, was a way to do this.

Ms Fu Ying said a big threat to domestic stability was the growing income-divide between China’s large rural population and the wealthier urban population.

As a result many provincial governments were assisting farmers purchase one or two dairy cows, a valuable commodity given the growing demand for fresh milk.

Several Chinese delegations have recently visited Australia, buying or enquiring about large numbers of dairy cows. Just last week Elders Ltd set up a wholly owned Shanghai-based trading company (Elders China) on the back of signing a $6.5 million contract with the large agricultural group, the Xuzhou VV, for a third shipment of live dairy cows.

WA-based livestock exporter Ian Halleen, who has contracts to supply the Chinese with 12,000 head of dairy cows worth almost $US17.5 million, said Chinese demand for dairy cows was proving to be a saviour of much of dairy industry.

He said many WA dairy farmers, struggling with deregulation, were now receiving “top dollar” for their cattle.

Pastoralists and Grazier Association president Barry Court said he was encouraged by the agricultural opportunities emerging in China.

Mr Court said the dairy cow trade would boost the local dairy industry, while WA was more than happy to assist China in the supply of actual dairy products.

He said the whole agricultural sector was growing excited about a proposed free trade agreement with China, particularly the wool industry.

“China’s agriculture is lacking and they are calling on raw produce from Australia,” Mr Court said.

The Australia China Business Council said the livestock trade between WA and China went back more than 30 years, and current demand for dairy cattle illustrated the long journey required to complete business and trade with China.