Red tape may sour Chinese milk deal

17 Oct, 2012 07:56 AM

FRESH Australian milk will be flown directly into China by the container-load under a bold plan by dairy farmers to cash in on the Asian giant's burgeoning middle-class.

But the plan, which is set to deliver a massive new market, risks being scuppered by Chinese red tape and the state government has been asked to step in and smooth the way.

David Lord, the chief executive of Warrnambool Cheese and Butter, told The Age it had secured ''formal arrangements'' with Chinese distributors, who had a growing appetite for high-quality Australian milk due to better knowledge of nutrition and greater purchasing power and had been put off local product due to the prevalence of food-safety scares in China.

But the lucrative deal, for up to a billion litres a year, is being held back by Chinese quarantine rules - which require milk to be held and tested for two weeks upon arrival in the country. The issue was raised by the delegation led by Premier Ted Baillieu on a recent trip to China.

Premium fresh milk can retail for more than $7 a litre in China, a stark contrast to the heavy discounting at supermarket giants Coles and Woolworths in Australia.

Mr Lord said the Victorian dairy company could deliver milk from its plant direct to Chinese shelves ''within a day'' via Avalon Airport.

Avalon airport's chief executive, Justin Giddings, said that Chinese distributors wanted ''as much milk as we can provide''.

''A billion litres [a year] to start was mentioned,'' he said.

Mr Lord was more reserved, saying the complex logistics meant exports in the millions of litres were more likely initially.

''I don't know what the size of the opportunity is, that remains to be seen, I don't think our [distributors] in China know what that is either,'' he said.

But having successfully flown a test shipment to Shanghai more than a year ago, the ambitious plan now risks being scuppered by stringent quarantine requirements in China.

''This is just a new hurdle that has been put in our way and we wouldn't have found out because of the barriers and the way we communicate when you're abroad and you don't have the right people around, it's just so difficult,'' Mr Giddings said.

Warrnambool Cheese and Butter has roped in the Department of Business and Innovation and state Agriculture Minister Peter Walsh to make representations on its behalf, after initial hopes that discussions at the federal level over a long-mooted free-trade agreement with China could help its cause.

The stalled free-trade talks have earned the ire of the dairy industry, which says it is at a big disadvantage compared with its biggest rival, New Zealand. Australian dairy imports into China attract up to a 15 per cent tariff. New Zealand, which has clinched a free-trade agreement with China, will pay no tariff within two years.



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Good observation Itz Me. As big as it is this fleece will pale into insignificance if the Paris
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Agree 100 % with Ed Story. Jock, buy a full length mirror and have a good look at yourself.
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looking under beds for red herrings and ranting at every shadow about trade agreements is a sign