Let’s milk deal for all it is worth
Your first reaction was problem “Oh, no”. The thought of a WA institution such as Brownes Dairy being owned by foreigners just doesn’t sit well, does it?
And of all the people to buy it, the Chinese? Who knows what motives the People’s Republic has for a brand that has been part of WA for a century, right? Will it mean our dairy farmers will be screwed (even more) by a faceless corporation listed on the Shanghai Stock Exchange?
No. The economic reality is the supply/demand pendulum is going to tip back in favour of the people who own the cows.
Anyone who thinks having 1.4 billion more customers compete for your product won’t put upward pressure on farm-gate prices is letting belligerent xenophobia override economic reality.
Will all our milk be sent straight to China?
Here’s the grey area. It’s a free market and Shanghai Ground Food Tech will send Brownes products wherever margins are best.
If Chinese shoppers are willing to shell out big amounts for fresh milk and tight-fisted West Australians remain wedded to paying $1 a litre then supplies will flow north. Guess what happens then? A price signal is sent to WA farmers to increase their herds and produce more milk to satisfy the local market.
And don’t forget the new owners know that when you operate a business in a foreign country you are a guest relying on the goodwill of a host that decides whether you get things such as export licences.