Norco has begun exporting fresh milk to China, in a plan that will take milk from Australian dairy farms to Chinese tables within seven days.
The dairy co-operative plans to export 20 million litres of fresh milk in the next 12 months, which will sell for as much as $8 a litre, The Chronicle reports.
Norco contracted dairy producer Steve Blanch said the export agreement has the potential to increase the on-farm price of milk and keep the local industry alive.
"We're absolutely following this thing with Norco," Blanch said. "In the first 12 months they're saying 20 million litres will be exported to China. And that's just in the first year. That's about one third of the Coles home brand contract. So it's a big new player in the market place."
Blanch said Norco’s test shipments saw 4000 litres shipped per week.
"With that amount they don't need milk from everyone. But the way they're talking, they're going to be ramping things up. I don't think they've got a concern they can't sell it. They're targeting the middle class there and that's booming."
Lockyer Valley mayor Steve Jones said the move could keep dairy farmers on their feet.
"The opportunities for dairy products into Asia are huge and I've seen first-hand fresh milk selling in Asian supermarkets for the equivalent of $13 Australian," Jones said. "This could prove a huge boost to local dairy farmers who have been copping the rough end of the pineapple from processors and ultimately supermarkets for too long."
The demand for dairy in China has been described by Bega Cheese as ‘insatiable’, with the country’s local milk production struggling under structural change in the supply chain.
Pactum Dairy Group (PDG) has also entered the Chinese market, and signed a strategic supply agreement between Shepparton based PDG and China’s Bright Dairy last month.
Managing director of Freedom Foods Rory Macleod said “Australia has a unique advantage in the supply and manufacture of high quality premium agriculture based foods. With increasing demand from markets in China and SE Asia for high quality value added product, Australia through companies such as Pactum, is well placed to play an important role in this supply chain.”
Bright Dairy is one of China’s largest dairy producers, with products including fresh milk, yogurt, cheese, powder and yogurt. It sells these under 6 value-added brands, including Excellence Plus and Momchilovtsi.