October 14, 2008
Asian consumers seeking a safer alternative to China's tainted milk products are turning to Australian dairy farmers, but their demands may be difficult to meet because Australia's grass-fed cattle can only produce that much milk.
The largest Australian milk exporter, Murray Goulburn Co- operative, has seen a recent spike in Asian sales of its products since scores of Chinese dairy goods were found to contain the industrial chemical melamine, prompting one of the worst food contamination scares in decades.
Murray Goulburn, which accounts for 9 percent of the global milk trade, has so far been able to accommodate the demand from its existing supply, according to Mal Beniston, the company's general manager for international sales and marketing.
But any further demand for Australian milk products will be hampered by the simple fact that the country's dairy cows, which are raised primarily on open pasture, can only eat so much.
Unlike in the US, where the diets of grain-fed dairy cows can be adjusted to increase their milk supply, Beniston said there was no practical way to boost the short-term output of Australia's mainly free-range cows.
Beniston said cows in Australia graze and are not raised in feedlots. It's like a different model and it can't respond as quickly, it is not possible to increase the supply.
Asian consumers have moved away from Chinese-produced milk, baby formula and other dairy goods since tests revealed that several Chinese companies were selling products laced with melamine, which can cause kidney stones in children. The additive has been blamed for killing four infants and sickening more than 50,000 children in mainland China.
Beniston said requests for Australian-made milk products had risen by about 20 to 30 percent since the scare, particularly in China, Taiwan and Hong Kong. Actual sales of full cream milk powder, Murray Goulburn's main Asian export, were up about 10 percent, mostly from existing stock.
But consumers hoping to find a safe haven in the product of Australia label may be disappointed as there is only how much the demands can be satisfied. Another Australian milk producer, National Foods, which sells its Pura brand milk products in several Asian countries, said it, too, was seeing a rise in demand for fresh, long-life and powdered milk products.
In Hong Kong, where National Foods markets Pura to a largely expatriate consumer base, some stores have been struggling to keep up with the demand for the Australian-made dairy products, while Chinese and Asian-made dairy goods have remained stagnant on the shelves.
Spokesperson, Julian Caples said there's about a 15 percent lift in demand which has been met, but it's unlikely to meet much more increased demand beyond the scale and processing industry.