Opportunity to milk Fonterra fallout
Beijing has banned products from the world's biggest dairy exporter and New Zealand's main milk processor, Fonterra, after it was discovered earlier this month that some of the company's products contained bacteria that could cause botulism.
Australian Dairy Farmers president Noel Campbell said no Australian products have been affected and the government should accelerate its FTA negotiations with China, which have been running for more than eight years.
"It is a real opportunity for us because ... close to 50 per cent of the dairy products that go into China are from New Zealand, whereas we've only got about 5 per cent, so we have got 10 per cent of what they send in," he said.
Mr Campbell said New Zealand's advantage over Australia was predicted to grow.
He said entering a FTA with China was critical to avoid being left behind.
Australia exported $389 million worth of dairy products to China in 2011-12, compared with New Zealand's $NZ2.1 billion ($1.85 billion).
However, Mr Campbell said it was difficult to extrapolate New Zealand's competitive advantage from those figures alone because it depended on the product mix.
New Zealand entered into a free trade agreement with China in April 2008.
Mr Campbell said he had spoken to representatives from the Department of Foreign Affairs and Trade and Department of Agriculture, Fisheries and Forestry.
From what he was told, he said, Australia was closer than it had ever been to sealing an FTA with China.
"We believe there is significant work being done in that space at the moment, so we are hopeful of what might come out of it. But this Fonterra thing has given us increased impetus, there's no doubt about that."
Trade Minister Richard Marles said in a statement last month he had "stepped up" FTA negotiations when he visited Chinese Commerce Minister Gao Hucheng in Beijing on July 24, two weeks after Prime Minister Kevin Rudd and China's President Xi Jinping agreed to advance talks.
The New Zealand contamination scare was compounded on Friday when a Sri Lankan court also banned Fonterra's products, following a complaint by a health sector trade union that the company's marketing was misleading.
The National Health Services Union said it sought the court ban because Fonterra products suspected of being contaminated with toxic agricultural chemical dicyandiamide (DCD) were still on the market despite an order from the health ministry to recall them.
The health ministry has said tests by Sri Lanka's Industrial Technology Institute found DCD in some Fonterra milk powders and it had ordered their recall.
Fonterra disputed the accuracy of the testing, but said last week it had recalled two batches of its flagship Anchor-branded product in accordance with the ministry directive.
Frequently Asked Questions about this Article…
The Fonterra scandal involved the discovery that some of the New Zealand dairy co‑operative’s products contained bacteria that could cause botulism. Major markets such as China and Sri Lanka banned or restricted Fonterra products, prompting recalls and regulatory scrutiny—developments that can affect dairy sector revenues, export flows and investor sentiment in dairy companies.
Beijing banned products from Fonterra after the contamination was discovered. For exporters, a market ban in China can rapidly shift demand toward alternative suppliers, creating short‑term export opportunities for other dairy producers if they meet safety and regulatory requirements.
Yes. Australian Dairy Farmers president Noel Campbell said the scandal creates 'a real opportunity' because New Zealand supplies close to 50% of dairy products entering China while Australia supplies around 5%. If trade access improves, Australian dairy exporters could potentially increase their share of the Chinese market.
According to Australian Dairy Farmers president Noel Campbell, no Australian products have been affected by the Fonterra contamination. The issue related specifically to some New Zealand products.
The article says Australia’s FTA negotiations with China have been running for more than eight years. Officials told Noel Campbell Australia was closer than ever to sealing an FTA, and Trade Minister Richard Marles said he 'stepped up' talks after meeting the Chinese Commerce Minister following a bilateral agreement by Prime Minister Kevin Rudd and President Xi to advance discussions.
For 2011–12, Australia exported about $389 million worth of dairy products to China, while New Zealand exported NZ$2.1 billion (around US$1.85 billion). The article also cites a market‑share perspective that New Zealand supplies close to 50% of dairy products entering China versus roughly 5% from Australia.
Sri Lanka’s Industrial Technology Institute reportedly found the agricultural chemical dicyandiamide (DCD) in some Fonterra milk powders. Following a complaint by the National Health Services Union and a health ministry recall order, a Sri Lankan court banned Fonterra products pending action.
Fonterra disputed the accuracy of some of the testing but said it had recalled two batches of its Anchor‑branded product in accordance with the Sri Lankan health ministry directive.
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