By RICK GLADIGAU, PRESIDENT, AUSTRALIAN DAIRY FARMERS
You might have heard about the slow-down in China’s economy. Things have not taken off post-COVID, as expected.
While it is true the heifer trade has all but evaporated, do not think for a minute that the opportunities for Australian dairy with our biggest trading partner are also on the slide.
In June, I was fortunate to join the first Australian dairy trade visit to China since COVID. I spent six days there with Charles McElhone, Catherine Taylor and Sarah Xu from Dairy Australia.
As part of the trip, I attended the China Dairy Industry Association conference in Nanchang and met with Dairy Australia Scholarship alumni. I attended industry meetings at the offices of Coles, Austrade and the Victorian Government in Shanghai and met with Chinese dairy manufacturers.
It all left me with the resounding feeling that there are many significant opportunities in China for Australian dairy businesses, albeit in a slightly different guise than what we are used to.
China is Australia’s biggest dairy export market, taking more than 30 per cent of the dairy product that leaves our shores.
Traditionally, we have sent milk, infant formula and yoghurt. But Chinese consumers are developing a taste for cheese and frozen creams … the fats, essentially. From what I observed, their tastes are predominantly sweeter. We saw processed cheese that looked like lollipops – flavoured and on a stick – for kids!
In some good news, local nutritional guidelines are promoting dairy consumption.
The dairy packaging we saw in China also lends itself to on-the-go consumption. Milk was commonly sold in 100-250ml bottles and cheese was individually wrapped in single serves.
In China, there are many modern styles of cuisine, as well as the more traditional dishes, so there is plenty of scope for the use of Australian dairy products in Chinese meals and diets.
For now, China will be importing a lot of cheese, as opposed to producing it locally. It will be mainly the cheddar style, as consumers have not quite developed a taste for soft cheeses yet.
Free trade deal a saviour for dairy exports
The China-Australia Free Trade Agreement (CHAFTA) is invaluable to Australia. When it comes to dairy, Australia enjoys marketing advantages over other countries, with minimal tariffs. Australia’s liquid milk exports attract a 1.5pc tariff, compared to 15pc from the US and European Union.
Milk powders are taxed at 2.5pc compared to 10pc and cheese 1.2pc instead of 12pc. Infant milk formula wins the race, with zero tariff compared to 15pc from the US and EU. That said, we saw a lot of product from the European Union and the United States on supermarket shelves, as well.
Pleasingly, Bega cheese was available in many places and our A2 milk was quite popular as well.
There is also a significant appetite for bulk ingredients like frozen cream and whey powders, as opposed to retail products. The bulk trade outweighs Australian retail offerings in China.
Wherever we went, I noted that all these Australian products were still well respected and trusted. The Chinese are still looking for Australian dairy.
However, like us here at home, they are concerned by the dwindling Australian milk pool.
Dairy scholarship program pays dividends
Meeting with alumni of the Dairy Australia Scholarship was a highlight of the visit.
The scholarship program has been running for more than 20 years, bringing people from China, Japan, southeast Asia and South Korea to Australia to see our industry.
The great thing about the program is that many of the participants climb the corporate ladder. Some go on to become managing directors and CEOs of Chinese dairy companies.
It means Australia enjoys strong relationships with these companies. The scholarships and ensuing relationships mean we have contacts who are open and honest with Australia about what is happening in their industry.
Whether it is the scholarship, trade meetings, export potential or cheese lollipops, it really was inspiring to see the value and opportunity that exists for the Australian dairy industry in China.