Chinese buyers demand quality baby milk

Posted by Stuff on 30 April 2013 | 0 Comments

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Calls are growing for New Zealand to tighten its standards for infant formula manufacture, as dairy industry players wake up to the potential earnings in the Chinese baby milk market, estimated to be worth US$7 billion (NZ$8.2 billion).

The New Zealand Infant Formula Exporters Association, formed last year to protect and enhance the reputation of infant formula, is taking a lead in the drive to protect the New Zealand-made brand from counterfeiting, making a presentation to a big turnout of Chinese media at this month's Mother and Baby Expo in Beijing to outline its work accrediting suppliers and approving brands.

Chinese parents are acutely sensitive about milk product quality after the 2008 melamine baby milk powder doctoring scandal in China, which resulted in the deaths of babies and long term kidney problems.

The association has 13 company members representing 20 brands.

Westland Milk Products, which is not a member of the association but belongs to the Infant Nutrition Council, a body of Australasian companies making baby formula, is the latest to call for a focus on standards.

Chief executive Rod Quin who has just returned from China as part of a trade and political mission led by Prime Minister John Key, said there was a need to align New Zealand infant formula standards.

Westland, a farmer-owned co-operative, recently finished its first manufacturing run of infant formula for export to China after investing $30 million in a new nutritionals processing plant. The company now had a proven product to take to the Chinese market, Quin said.

The most exciting prospects for the company were in nutritionals production - especially infant milk formula where the demand was "huge and growing", he said.

Asked if Westland with its debut into the infant milk market would join the exporters' association, Quin said through a spokesman: "NZ Inc needs to align infant formula standards and larger companies are expected to provide more international influence than members of the IFEA [exporters' association]."

The council to which Westland already belongs includes market heavyweights Fonterra, Nestle and Heinz.

Apart from Fonterra, which exports infant formula through its Hamilton-based Canpac division, the Waikato-based Dairy Goat Co-operative, and Westland which are members of the council, and the exporters' association's 13 members, there are at least six infant milk powder exporters working out of New Zealand.

Industry sources said not all these non-aligned players get their milk powders from Fonterra, which collects nearly 90 per cent of New Zealand raw milk and is the world's biggest dairy exporter.

The Primary Industries Ministry is understood to be working on the issue of standards alignment, but could not confirm details yesterday.

Fonterra chairman John Wilson, who led the business delegation of the trade mission to China, said in the company's latest Farmlink magazine that within seven years, Chinese dairy consumption will reach 70 billion litres.

"China is growing rapidly and confidently. However, it is talking of the challenges ahead and ensuring their people are well and safely fed and that agricultural land is protected and productive to ensure food security."

Fonterra aimed to produce one billion litres of milk in China by 2020, Wilson said.