Keen to experience the Chinese dairy market first-hand, 14 northern Victorian dairy farmers visited the world’s largest dairy market last month.
On the week-long trip, the members from the Rochester Dairy Business Network and local Rabobank operations followed the supply chain from Australia to China.
Rabobank senior dairy analyst Michael Harvey said the tour was eye-opening and invaluable.
“Being able to see each link in the supply chain in the world’s largest dairy import market – and Australia’s most important export market – provided incredible knowledge and understanding to bring home to Australia,” Mr Harvey said.
Mr Harvey said one of Australia’s key challenges was to produce enough milk to service the Chinese customers.
“If Australia doesn’t grow its production, then it won’t grow with its customers. We’ll be left behind because other countries’ brands will build market share because they’ve got more product and volume to reliably supply to that market,” he said.
Mr Harvey said putting a ‘made in Australia’ logo on Australian dairy products bound for China would not be enough and more needed to be done to grow the branding and production.
The tour included visits to Alta-Agricorp China, Nestle’s China operation, the Dairy Association of China, the Alta bull stud which houses mostly Australian-bred Holstein sires, Huaxia Dairy Company, Heilongjiang Wondersun Dairy Co. Ltd, Sinofarm and the Indonesian-owned Austasia Dairy Company. The expedition culminated at the World Dairy Exposition in Harbin City.
Rabobank Echuca branch manager Michael Napier was impressed with the quality of the dairy businesses the group visited.
“We saw [UHT] long-life milk selling for approximately AUD3.50-4.00 per litre and Chinese branded fresh milk was selling AUD8.80 per litre,” he said.
“You can see why the Chinese dairy farmers are ramping up production. There is plenty of incentive for the local farmers to work hard to make their own milk and reap the returns.”
Additionally, Australia has been a major supplier of [dairy] breeding stock to China, a trade which has been slowing in recent months.
Mr Napier said China might not want to continue to pay the prices it had been paying for imported dairy cattle.
He said its operators were looking at alternative sources, including Latin America, and were ramping up their own breeding programs.
“We heard of one operation milking 20,000 cows using sexed semen which will result in a large number of heifers either being used to increase their milking operation or sold to other Chinese buyers.”
Despite the ambitions of the Chinese dairy sector, Mr Napier said productivity growth takes time.
“With a challenging logistical landscape – geographically, climatically and environmentally – China is unlikely to realise its self-sufficiency production ambitions overnight,” he said.