AGRICULTURE by Peter WestmoreNews Weekly
Hope Dairies' big export venture to China
, December 6, 2014
Hope Dairies, an Australia-China joint venture led by passionate and outspoken business woman Gina Rinehart, has announced plans to invest $500 million in the dairy industry in south-east Queensland, in order to produce pharmaceutical-grade infant formula for the Chinese market.
The company has announced that it is buying 5,000 hectares of Queensland farmland north of Brisbane for dairying, and plans to start manufacture of infant milk by the second half of 2016.
Hope Dairies plans to process 30,000 metric tonnes, equivalent to 35 million tins, of infant formula per year at a processing plant in Queensland. The company has said the facility will also create more than 800 jobs.
Hope Dairies and the Queensland government signed an agreement on the purchase of farmland in November.
The Chinese market for infant formula is forecast to almost double over the next three years.
Hope Dairies is majority-owned by Mrs Rinehart, with minority investment from state-owned Chinese industrial giant, China National Machinery Industry Corp, and Hong Kong investors.
“Australia has some of the finest agricultural products in the world and we need to position ourselves to meet the demands of our region,” Mrs Rinehart recently said.
A spokesman for Hope Dairies, Jason Morrison, told ABC News on November 23: “Australia’s reputation and the Queensland dairy reputation is incredible.
“And so we have this premium product, we have an avenue to get it there, we’re going to do the complete value-adding in Australia.
“It’s processing, it’s canning, it’s exporting, right down to the marketing of it, so it’s a real integrated program and strategy.”
He added, “Gina Rinehart is a firm believer in Australia … and this is a real ‘money where your mouth is’ situation.”
The Chinese milk industry has been beset by scandals over recent years, including the use of toxic additives and contamination. This has led to a major expansion of its imports.
Hope Dairies said it plans to manufacture pharmaceutical grade product which will help allay fears after a spate of food safety scandals in China involving infant formula.
The reaction of leaders of the dairy industry in Queensland has been positive. The industry has been in decline for decades, as a result of drought, floods, dairy deregulation which had cut farm-gate prices, and the role of the supermarket duopoly which dominates retail sales.
Queensland Dairyfarmers’ Organisation (QDO) president Brian Tessmann said about one-third of the milk required for the facility would come from farmers around the region, “so that amount of milk will certainly provide quite a bit of competition [for the supermarket chains]”.
Local dairy farmers are also hoping to benefit by supplying dairy cattle for the project. Mr Tessmann observed, “There’s a huge ability for farmers in Queensland to supply the cows if they’re given the signals soon to do so.”
The QDO welcomed news of plans for this major investment in the state’s dairy sector, the first new investment for many years.
Mr Tessmann commented, “The local industry is excited by the prospect of this new project, which would include big investments in both farms and milk-processing facilities, and was bypassing the problems associated with the domestic milk value chain and proving the high value for the long term for Queensland milk.
“The investment would restore dairy-processing capacity which Queensland has lost over the last decade and a half.
“China presents a real opportunity for our industry to form close partnerships to supply high-quality dairy products to their growing population, and in particular infant formula.
“This opportunity will provide much needed diversification for our Queensland dairy industry.
“We hope it will provide a range of opportunities for our existing Queensland dairy-farming families, which have suffered greatly in recent years from natural and man-made disasters, including from the supermarket milk price war and now drought.
“We have lost over 130 farmers since the price war started, when we should not have been losing any.”
The project may offer some new opportunities to the industry after deregulation in 2000 had a devastating effect on the dairy industry.
According to statistics from Dairy Australia, milk production following deregulation fell from 11.3 billion litres in 2001/02 to 9.2 billion litres in 2012/13.
Thousands of farmers have left the industry.
Deregulation has meant that thousands of Australian dairy farmers provide an undifferentiated product to either the duopoly supermarkets that determine the domestic price or onto the global market where the price of dairy product is influenced by heavy government subsidies in other countries.
Australian milk production statistics: 1979-2014, Dairy Australia.