Dairy cow exporters look beyond China
Southeast Asia is proving an alternative to China as a market for New Zealand heifer exporters.
New Zealand sent 84,000 dairy heifers to China last year, including about 12,000 to Fonterra’s farms.
The trade this year might only just top 20,000, exporter and trade group leader Dave Hayman said.
Livestock companies were looking at other markets to spread their options, as milk processors had done, he said. His company, Central Pacific Livestock, had booked ‘‘one small flight’’ of cattle to the Philippines for April 2016.
A plane would usually take up to 400 young heifers or 250 bigger cows, he said.
Rabobank senior dairy analyst Michael Harvey said New Zealand and Australia had new options in Asia and the Middle East, although some of these markets would require ‘‘a particular focus on sustainability and animal welfare’’.
Indonesia, Sri Lanka, Malaysia and Vietnam were ‘‘wellpositioned’’ for the heifer trade, he said. Several Southeast Asian nations were trying to increase their own milk production.
Demand for dairy was expected to increase by more than three billion litres by 2020, Harvey said.
China would remain a cornerstone of New Zealand’s export heifer trade but ‘‘structural changes’’ in China’s dairy industry had hit demand.
The country accounted for nearly all of New Zealand’s dairy heifer exports last year but demand was now ‘‘subdued’’, partly because China was becoming better at raising its own heifers.
Some Chinese farm-developers had scrapped plans to import cattle after their domestic milk price fell by 20 per cent.
In 2013, China rushed to import cattle after an outbreak of foot and mouth. The country culled two million cows in 2013/14, Harvey said.
Beef prices were high at that time, so Chinese farm owners had sent less-productive cows to the meatworks.
He expected that most of these cull cows were sent away by smallscale farmers.
New Zealand’s live export cattle can only be shipped overseas for breeding. It also cost up to US$4000 (NZ$5900) to buy, ship and transport an animal, so their new owners would want to milk them, he said.
China started building largescale farms in response to the 2008 melamine food safety crisis. The switch had been supported by tax incentives and other government help, Harvey said.
But falling profits had made Chinese farming harder. Milk prices were lower and costs had risen.
It had also become harder for farm developers to raise funds in debt and equity markets.
Hayman at Central Pacific said Chinese buying New Zealand cattle had them tested for disease and demanded they be kept in a single location for at least six months before shipping.
MPI was now using the National Animal Identification and Tracing scheme to confirm this. Animals had to be at least 180kg to travel and Chinese buyers preferred to buy unmated heifers. Fonterra did send pregnant heifers to its own farms, Hayman said.
The cattle were usually 12-18 months old and generally fetched $200-$300 more than animals sold in domestic cattle markets.
Central Pacific Livestock shipped 14,000 heifers to China in the past two years. Seven animals had died on these trips, he said.