China pays US$8 per litre of Australian milk

Publish time: 18th March, 2014      Source:
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March 18, 2014



China pays US$8 per litre of Australian milk




Consumers in China''s largest city are paying US$8 a litre for fresh milk from Australian farms.



Melbourne company Lian He, the first Australian company to send fresh milk to China, air freighted 5,000 litres a week to Shanghai, and expects sales to quadruple by the end of the year.



Chris Hsu, a former information technology professional, has spent the last 12 months giving wealthy Chinese consumers a taste for Australian fresh milk.



He makes a point of advertising Australia''s clean, green pastures to consumers anxious about pollution levels in China.



At a dairy industry conference last week, Federal Agriculture Minister Barnaby Joyce predicted a 10-fold increase in dairy exports to China by 2030.



But that level of increase depends on a free trade deal, according to Grant Crothers of Victorian dairy company Burra Foods.



Crothers and his brother William started Burra Foods in 1991 in a former butter factory at Korumburra southeast of Melbourne. Their workforce of 5 employees has grown to 150, manufacturing milk powder.



Crothers is hoping to reach sales of 15,000 tonnes of infant formula annually, and says Chinese consumers are anxious about contamination of their local milk supply.



But he warns that New Zealand''s has a head start on Australia, with dairy exports to China 10 times greater than Australia''s, thanks to a 2008 free trade agreement.



While dairy farmers are hopeful the trade boom will eventually flow back to farm gate prices, Chris Hsu warns that exporting to China is not a road to instant riches considering the air freight costs and the value added tax on import which would not make much margin at all.