Dairy industry to capitalise on live export trade to China after ban in NZ

Adam Poulsen and Aidan SmithCountryman
Bottles of milk are rinsed.
Camera IconBottles of milk are rinsed. Credit: Brendon Thorne/Bloomberg

WA dairy farmers are in a prime position to capitalise on New Zealand’s impending live export ban, with Australia set to fill at least some of the void amid increasing demand from China for high quality dairy heifers.

All live animal exports from New Zealand will cease from April 30 after the NZ Government legislated to end the practice, signing an animal welfare amendment Bill into law last September.

New Zealand’s live dairy cattle export industry has been predominantly targeted towards China in recent years and in 2021, all 110,000 plus breeding cattle exported by sea from NZ were sent to China.

Australian dairy farmers are in pole position to fill this gap in the market if it can overcome a handful of challenges.

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This includes increasing the national herd size quickly to provide the numbers China may need, and breeding cattle with a higher butter milk fat content.

But either way, Australian dairy farmers are in a good position to capitalise on a growing industry as other markets emerge in South-East Asia and Indonesia.

Forest Grove dairy farmer Ian Noakes. Taelor Pelusey
Camera IconForest Grove dairy farmer Ian Noakes. Taelor Pelusey Credit: Taelor Pelusey

In 2020, Australia exported 170,000 breeding cattle, 95,000 of which were dairy cattle, to a value of almost $258 million in 2020-21.

About $180m was retained by dairy farmers.

In WA about 52 per cent of dairy farmers participated in the live export trade in 2019-10, making it an important part of the local business model.

WAFarmers dairy section president Ian Noakes said the local industry was optimistic about the future of dairy breeder exports because of its herd’s disease-free status.

He said the live dairy trade was “quite significant” for local producers and about 6500 head had been exported in 2020, which was the latest figure available.

He expected the number to be higher than that in the past few years because it was a good option for producers to offload excess breeding heifers — which had been selling to $2500 but were currently at $1800 per head.

The Live Dairy Cattle Export Industry Economic Assessment commissioned by LiveCorp, Meat and Livestock Australia and Dairy Australia, showed the live dairy cattle export market provided an additional income stream for farmers and a way of diversifying risk in a “volatile” environment.

“The income derived from live export is separate from milk prices and is something farms can achieve relatively easily without significant investment,” the report said.

The most important destination country for Australian live dairy cattle is China, especially in 2020-21 when it accounted for 95 per cent of the number and 96 percent of the total value.

Bottles of milk are rinsed after being filled on the production line at the a2 Milk Co. plant in Sydney, Australia, on Friday, Feb. 26, 2016. Founded in 2000 by New Zealand scientist Corran McLachlan and multimillionaire farm owner Howard Paterson, a2 Milk's market value has more than tripled to NZ$1.2 billion over the past year. Photographer: Brendon Thorne/Bloomberg
Camera IconBottles of milk are rinsed. Credit: Brendon Thorne/Bloomberg

Other countries of significance include Indonesia, Japan and Malaysia, and the Middle East.

The report said dairy farming in China had evolved from small scale to big milking operations of more than 100,000 cows and it was importing record numbers of young, unjoined heifers and in-calf heifers to strengthen its genetics.

Australia has world class dairy cattle genetics and milk production rates, particularly of the Holstein, Friesian and Jersey cattle breeds which are sought after by Chinese dairy farmers.

New Zealand’s impending ban on the live cattle trade could mean Australia’s exports to China will double — China looks to Australia to replace all of the lost numbers.

In a statement, Australian Livestock Exporters’ Council suggested it was “simplistic” to assume the entire live dairy cattle export business from NZ would fall to Australia, although expect to see some potential for growth.

For the past 15 years, China has imported dairy heifers from Australia, NZ, Uruguay and, more recently, Chile, in a bid to boost its genetic pool.

Few countries have access to the Chinese market, so Australia’s position as an exporter is advantageous, particularly as the US does not export live dairy cattle to China.

However, industry also believes the time required to increase the national dairy herd to meet the demand means the ban may not have an immediate boost for Australia.

The type of dairy cattle exported from NZ were also different to those from Australia, producing a much higher butterfat content in their milk, while Australian cattle were generally targeted for their high milk volumes.

Live dairy cattle to Indonesia is also expected to grow as the Indonesian Government looks towards domestic dairy production to meet increasing demands.

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