Dairy

Baby formula supply not a problem: processors

By Alana Christensen

There may be empty supermarket shelves and rationing, but processors say there is no problem with baby formula supply.

With an estimated value of $600million, the Australian-made infant formula market has proved a lucrative one for ‘daigou’ shoppers, who purchase the product in Australia before selling the tins at a significant premium in China.

Although this ‘grey market’ is thriving, the baby formula market presents enormous potential for Australia’s dairy industry, according to NAB agribusiness economist Phin Ziebell.

He said demand for Australian infant formula had been ‘‘very strong’’ for a number of years as a result of the melamine contamination scare in Chinese product more than 10 years ago.

‘‘The dairy industry could see more success in exporting to markets with those high wealth consumers where there is a lot of demand for quality product overseas,’’ Mr Ziebell said.

Yet dairy processing company Freedom Foods, who makes Australia’s Own Diamond pro+ infant formula, said Australian parents should not be subjected to ‘‘scare campaigns’’.

‘‘There is enough supply for Australian mothers as well as exports to China,’’ group general manager of nutrition Sonja Kukuljan said.

She said there should not be extended issues with supply.

‘‘If there are, perhaps the individual infant formula manufacturers facing such hiccups need to review their historical trend analysis and production schedules to better manage the demand and supply cycles.

‘‘In the short term, families can vote with their feet and choose premium infant formula brands which are produced and marketed specifically for the domestic market, to make sure their supply is guaranteed.

‘‘Australia’s Own closely monitors its historical sales data to inform its production schedules, and mitigate any possible supply issues, because we understand that making infant formula in a way that guarantees supply is critical for families. Anything less is unacceptable,’’ Dr Kukuljan said.

Booming baby formula sales in China saw The a2 Milk Company’s 2016-17 profits triple, including a jump of more than 130 per cent in revenue from China and Asia.

a2 Asia Pacific chief executive officer Peter Nathan said the signs on supermarket shelves were indicative of the strong demand for the product, however he said there was no shortage of milk formula across the board.

‘‘I dare say that if you went into a supermarket in Shepparton you would be able to find milk formula, but you may not find a certain type,’’ Mr Nathan said.

‘‘There are only a couple of brands which are experiencing very high levels of demand. The A2 platinum is drawing very strong demand in China.’’

Mr Nathan said the company had taken action to reassure Australian parents they could secure the brand’s powder by offering online, direct deliveries of the product.