PARLIAMENT OF NEW SOUTH WALES

Contact us | Advanced search |   search
  1. Home
  2. Hansard
  3. Legislative Assembly by date
  4. 7 November 2001

Dairy Exports To China

Printing Tips | Print selected text | Full Day Hansard Transcript | « Prior Item | Item 29 of 46 | Next Item »


About this Item
SpeakersAmery Mr Richard; Slack-Smith Mr Ian
BusinessMatter of Public Importance


    DAIRY EXPORTS TO CHINA

Page: 18215
    Matter of Public Importance

    Mr AMERY (Mount Druitt—Minister for Agriculture, and Minister for Land and Water Conservation) [4.57 p.m.]: I ask the House to note as a matter of public importance the increasing opportunities for dairy exports to China. This House has debated dairy industry issues many times over a number of years. In more recent times our debates have highlighted the negative aspects of dairy deregulation, the impact on regional communities and dairy farmers' margins and job losses. During our last debate on the dairy industry we highlighted successful aspects of the industry. Whilst the dairy industry in this country and in this State is changing, both as to regional locations and the number of farmers involved in the industry, our export focus will also change as the industry moves away from its traditional base of domestic supply. I am pleased to be able to report to the House the tremendous potential for increased dairy exports, particularly to China.

    The consumption of dairy products in China is well below the world annual average of approximately 105 kilograms per person. China's Dairy Industry Association has estimated that its annual consumption of dairy products per capita is just six kilograms. When we think of the population of China, we can see the potential to increase the market. If Chinese people increased their annual intake of dairy foods by just one kilogram, an additional 1.2 million tonnes of milk would be required to meet the demand. This equates to 11.5 per cent of Australia's milk production. They are the sorts of figures one talks about when referring to a country with an enormous population.

    We often hear that it would have required every bale of our 4.7 million bale wool stockpile to make one woollen sock for every person in China. The reality is that the Chinese could not afford it and that proposal was not a priority of the Government of the day. I have been advised over the past couple of years by various Chinese communities and organisations that one of the objectives of China's Central Government is to increase the consumption of dairy products, particularly milk. A substantial increase in consumption per capita will occur over the next five to 10 years. The Chinese Government is actively encouraging its citizens to consume more dairy products.

    The most significant example of this encouragement is the schoolchildren's milk program, which the Chinese Government trialled in five major cities in 1999-2000. Under this program each child consumes 225 millilitres of milk per day. The Chinese Government has extended the trial to all major cities. China's dairy herd cannot meet the demand generated by that program, so imports are the only solution, and this creates opportunities for our country. Australia is well placed to capitalise on this demand. We already provide 10 per cent of China's dairy imports. New South Wales Agriculture has been monitoring the situation in China very closely and has identified export opportunities in several areas. These include stocking new and expanding Chinese dairy farms with cows and equipment, meeting increased demand for milk powder and long-life milk and cheese, and promoting New South Wales dairy genetics and management skills to Chinese investors.

    The New South Wales dairy herd is known for its high productivity and clean health status. Hence the interest of the Chinese Government in our industry as a supplier. The use of performance records, combined with adoption of technologies such as artificial insemination and good management, has enabled the industry to lift production per head from 3,781 litres in 1989-90 to 5,008 litres in 1999-2000. In 1999-2000 China's dairy herd was estimated at 4.45 million head, producing 6.9 million tonnes of milk per annum. That is an interesting figure but it should be compared with the production of Australia's 2.16 million cows, that is, 10.483 million tonnes of milk a year. We are getting increased production because of our experience in milk production and our technology. China certainly wants to learn from us. For these reasons, the New South Wales herd is a great asset that can be marketed to other countries.

    New South Wales Agriculture's export marketing arm, Agsell, has been actively promoting the benefits of New South Wales dairy products and genetics to Chinese businesses and investors. In 2000, Agsell held discussions with the Guangzhou Farm Management Bureau regarding the importation of New South Wales dairy cows. Following those discussions, New South Wales Agriculture hosted a delegation that inspected New South Wales dairy farms and processing factories and held discussions with livestock exporters. As a result of this visit a trial shipment of 250 cows, worth $750,000, was exported in December 2000. The Guangzhou Farm Management Bureau has now informed New South Wales Agriculture that the New South Wales cows have exceeded expectations and that they will purchase 200 embryos from the New South Wales based company RAB Australian Animal Genetic Pty Ltd.

    In April this year I had a meeting in the south-west of the State with the San Huan group from Liaoning Province. As a result of this meeting, two New South Wales based companies are working with the San Huan group to export cows to northern China. New South Wales Agriculture has also met with investors who are establishing a 5,000 cow dairy farm in Foshan. Agsell is working with investors to source cows from New South Wales, as well as technical services and milk powder. It is hoped that a shipment of 1,000 cows will be exported by next March, generating more than $2.5 million. Agsell is working with a number of other investors and dairy operators seeking to expand their cow numbers. Sales of dairy cows to these clients could be worth more than $2 million in the next 12 months.

    This is only the tip of the iceberg. New South Wales Agriculture has been conducting research to open up new markets, including a trip by Dr Peter Kirkland in July this year to renegotiate the protocol for the export of cattle embryos and semen from Australia to China. I advise the House that the trip was extremely successful, and that the export protocol will soon be in operation. This is a new market for Australia and one that holds considerable potential. Agsell expects the export of embryos and semen to China to exceed $2 million in its first year. Another strategy Agsell is pursuing is contract packing of long-life milk in New South Wales for Chinese companies, as is happening with a Victorian dairy co-operative. That is yet another example of the dairy industry, since deregulation, focusing on the export market.

    With the previously mentioned schoolchildren's milk program and China's expected entry into the World Trade Organisation perhaps later this month, we expect a significant reduction in tariffs for a number of Australian dairy products. For example, the tariff on long-life milk and milk powders will reduce from 25 per cent to 10 per cent, the tariff on cheese will reduce from 50 per cent to 12 per cent, and the tariff on yoghurt will reduce from 50 per cent to 10 per cent. Australian dairy products will become much more attractive and much more competitive as a result of those reductions in tariffs.

    China's dairy industry is predominantly a feedlot system. As the demand for dairy product increases, so will the need for stock feed. China will be able to meet some of this demand, but will also have to import a considerable amount. Agsell is pursuing the possibility of New South Wales grain and hay exporters satisfying this demand. With all that positive news about our export market I conclude by saying that while there are still some negative aspects to the dairy industry following deregulation, it is good to bring to the House some positive aspects of how the dairy industry will be reshaping itself in the years ahead. This potential for increased market share of product into China is one of many opportunities that the dairy industry of this State and around Australia has found for itself in the past couple of years. [Time expired.]

    Mr SLACK-SMITH (Barwon) [5.07 p.m.]: The Opposition supports this matter of public importance, which relates to increasing opportunities for dairy exports to China. China and Australia has many similarities as well as their obvious differences. Both are totally focused on agriculture. Beijing places a larger focus on agriculture than on anything else. Australia and China are also very good friends. Australia is China's third-biggest trading partner, and Chinese is the second language spoken in Australia today. So, we have very important links with China. The Central Government of Beijing has virtually told the provinces that the target is for every schoolchild to consume 145 millilitres of milk per day. That is a huge increase. The total number of cattle in China, 160 million, compares to only 30 million in Australia, but, as the Minister said, the average lucerne mill cattle in China, which are yellow cattle, produce less than 2,000 litres of milk per annum. For the Holstein and Jersey cattle going to China the target of 7,000 litres per annum is quite achievable.

    The lucerne mill farm in Forbes has a feedlot of approximately 1,200 head of cattle. China wants to increase its feedlots and dairies to 5,000 head in one feedlot-dairy operation. China is fair dinkum about increasing its dairy herd and milk consumption. Australia has 23 million cattle, most of which are beef cattle; our dairy numbers are somewhat limited. Recently Mexico took more than 5,000 head of dairy cattle from Victoria. The United States of America took out about 1,000 head. Dairy cattle in the southern part of the State are becoming quite scarce. The Minister referred to the Australian Quarantine and Inspection Service and the Chinese Quarantine Service. I was pleased to hear him acknowledge the hard work of Dr Peter Kirkland, a person with a lot of commonsense. His attitude is: We do not want to mess about with the bureaucracy; we want to get the job done, we want to make sure that the protocols are in place, and that we are strategically and positively placed to achieve our goals to export not only dairy cattle but all cattle to China.

    Dr Peter Kirkland is referring to embryo transfers, which are expensive at the moment because of the protocols. The export of semen to China has its problems. If the Government were to follow Dr Peter Kirkland's negotiations with the Chinese Quarantine Service, the protocols to permit the importation of embryos into China would be greatly enhanced. I support the Minister in that regard. Current protocols, which have been in place for 20 or 30 years and which are restricting our trade in China, are obsolete. Pacific Rim Australia is quoting for the export of more than 3,000 dairy cattle to three different provinces in China. The increase in China in the consumption of yoghurt and cheese is astounding. China has McDonald's, KFC and other fast food chains that provide what one might loosely term "western cuisine". It tastes like sawdust! The emphasis in China is on western food, and dairy produce is definitely western food.

    Mr Amery: I haven't actually tasted sawdust.

    Mr SLACK-SMITH: The Minister should try McDonalds. China is totally changing its diet. Trials indicate that the emphasis on milk production and consumption in China have resulted in children growing bigger, which is why our dairy industry is keen to make its presence felt in China. The increase in children's size has been attributed to the increase in their intake of calcium. There is no doubt that China, with its rich country and sizeable work force, has the potential to improve the quality of its dairy herd. But its need for imported agricultural produce will continue. China's economy is growing. The number of people in China with money to spend is growing at a rapid rate. Its population is continuing to increase. However, that will start to slow down in about four or five years, even with its one-child policy.

    Some 1.25 billion people, compared with 18 million people in Australia, are earning more money than they have ever earned and, therefore, have a greater spending capacity than they have ever had. They are the people who will consume more and more agricultural products. Australia is well placed to provide China with its agricultural products. Europe has mad cow disease, and foot and mouth disease. America and Canada do not have the capacity to supply China and, in fact, they have been purchasing dairy cattle from Australia. Mexico is finding that it is much more convenient to purchase cattle from Australia than it is to pay huge prices to purchase them from America. China has nowhere to go. Australia's biggest problem will be its capacity to fill the demand. Embryo technology is in its infancy and it is expensive.

    Exporting semen to China for use in artificial insemination procedures will be a great asset. This is a long-term project. Australia and China will be trading partners in the dairy industry for a long time. It is interesting to note that Australia has only 2.5 per cent of the cattle in the world. India has 312 million head of cattle, China has 160 million and Australia has less than 30 million. The dairy industry in Australia is the third-largest rural export earner in Australia, and exports products worth in excess of $2 billion per year. The potential trade in China can be expanded even further. The Opposition supports the Minister raising this matter of public importance. This project has a long-term future. Opportunities for the dairy industry in Australia, particularly New South Wales, are positive.

    Pursuant to sessional orders discussion interrupted.

         Contact us | Job opportunities | RSS feeds | Site help
Copyright & conditions of use | Privacy | Authorised user login