New development in Australian dairy makes my stomach churn

Ningbo Dairy Group vice-president Harry Wang, left, and owner Yin Chong Zhang inspect farms near Phillip Island. Picture: Aaron Francis, published in The Weekly Times.

This is the blog post I hesitated to write. Yes, we need foreign investment, absolutely yes, but an article about a particular Chinese investor’s plans written by Sue Neales makes my stomach churn.

Ningbo Dairy Group runs 20,000 cows on 30 farms in China. It is buying up Australian dairy farms and plans to fly 100,000 litres of fresh milk to China every day but there are problems, say Ningbo. Sue Neales writes:

“The downside of Australian dairying to the Chinese newcomers is the low milk price paid by Australian processors to farmers, high labour costs, excessive red tape, a slowness to innovate and the lack of good young workers.”

The most disturbing elements of Sue Neales’ story were:

  • Housing thousands of cows indoors
  • Increasing the average cow’s production by 50%
  • Bringing some of Ningbo’s 2000 Chinese employees “…to Aust­ralia to milk cows and help lift farm production levels to Chinese standards”.

I was astonished to read how openly Ningbo will exploit loopholes in our IR system to replace Australia’s “expensive” farm workers with Chinese employees at a fraction of the cost. Will the government act or is this simply the collateral damage of being “open for business”?

“With labour so expensive — three times more than in China — and milk cheaper, it makes profitable farming very hard; we see the only way is to process the milk ourselves, export it to China and to bring some of our workers here.”
– Ningbo Dairy Group vice-president, Harry Wang

We are not used to factory farming in Australian dairying but this takes us a giant leap towards it. The losers will be Australia’s workers, milk drinkers and, most of all, our cows. New Zealand has the Overseas Investment Office to protect its interests from unsavoury investors. Maybe it’s time Australia followed suit.

 

53 thoughts on “New development in Australian dairy makes my stomach churn

  1. China sees the benefits of producing their own milk why don’t we ? Australia needs to invest in agriculture or china will own all of our farms before we know it .

  2. Marian,

    Well posted but a disturbing article to say the least and as others have already said “…on so many levels…”

    Get out of the road Australia we are here to buy and operate YOUR dairy farms as we can do it better, cheaper and faster than you have ever been able to. We don’t understand your silly fascination about land care and not having lots and lots of cows in one place at the same time all feeding from the one trough. We aren’t Australian so we don’t accept your self interest in red tape and we prefer our people to work the farm so we will provide the labour and pay them in yuan and besides we need the milk for our own purposes so get out of the road Australia we are here to own and operate OUR dairy farms for the milk is for our families back home.

    Politically correct? Probably not. Factually accurate? Probably not. Xenophobic? Probably. Remember though, this post is in response to the initial article, not the initial article itself. In defence though the initial article is only in response to an invitation by Australia, something about “…we are open for business…”

    It might be worth going back to the previous article on this blog and also follow its upcoming companions.

  3. Marian, I’m struggling to see what is wrong with the plan these guys have, apart form the cheap imported labour. If they can do a better job than the locals then good luck to them. If it shakes up the locals then maybe that is not a bad thing.

    Also, I doubt there would be the same sort of reaction as is shown in the comments section if the two guys in the photos were Anglo Saxon heritage from the US or UK. Just because they are from China does not automatically make them economic vandals hell bent on destroying the land and the cows. If Australian companies can not work out how to supply the massive Chinese market then we can hardly complain when Chinese companies come to Australia to do it themselves.

    (I am writing this from Tongxiang in Zhejiang province)

    • Ian A.

      Nice to see a post from offshore and I hope all is well where you are.

      However one of the nice things about here in Australia is we can agree or disagree and on your points I disagree. The article points to testing the boundaries of legitimacy and eludes to offensive conduct in Australian terms no matter where its intent has originated from.

      The problem we have in Australia is the rules of the game for international investment are far too open for unconscionable conduct and as Marian pointed out New Zealand has the OIO that can make a moral determination for overseas investment on grounds of “good character” whereas the FIRB doesn’t. No matter where it comes from, let me remind you of the ADM and GrainCorp takeover debate last year and they were US not Chinese.

      It is simply that the claims and statements like those made in the original article are inflammatory and fly in the face of animal welfare, food quality and safety, IR & ER laws, land care, EPA, various “red tape” statutes and possibly good farm governance as a short list of examples in this country and that alone leaves many to speak out against it.

    • Thanks for presenting a challenging view, Ian A.

      The plan outlined by Ningbo Dairy Group would still stink if it was delivered by Mother Theresa.

      Ningbo is here primarily because it can only achieve a retail price of $2 per litre for Chinese milk while Australian milk commands up to $10, as acknowledged in Sue Neales’ article.

      The reason for the difference is that Chinese consumers consider Australian milk safer than Chinese milk. Why? Because Australia’s milk is wrapped up in precisely the “red tape” that the Ningbo pair reportedly have little time for.

      The last thing Australia needs is to have the same tarnished Chinese dairy system implanted here with the same disregard for “red tape”, the milk marketed back to Asia as “proudly Australian” and then watch as our reputation for quality suffers along with it.

      It is timely that we discuss the other elements of the Ningbo plan: thousands of cows housed in the Australian spring. “Farmageddon” is not pretty. As a human being and a farmer who loves our cows, this is gut-churning stuff.

      So, too, is the idea that our children may soon have to compete for a job with others paid a third of their wages.

      I imagine you are writing from China because you’re trying to broker a deal there and that this discussion could be problematic. But it’s one Australia has to have.

    • The problem is that there is no regard to our high standards of animal welfare in this country or to occupational health & safety. We have these rules & “red tape” for a reason, as much of a pain in the butt it may be. Also in regard to your comment on nationality…. Would I be allowed to purchase a dairy farm in China? I serious doubt the answer is anything other than no.

    • I am confused about this question. I thought the government here has put limits on foreign investments and that farming practices here hve to comply with Australian laws. Is this not so?

  4. Ian A,

    On the second observation you made “If Australian companies can not work out how to supply the massive Chinese market then we can hardly complain when Chinese companies come to Australia to do it themselves.”

    This relates to the current trade terms and flow between China and Australia and perhaps others might like to talk about the FTA4DAIRY and the current uphill battle the dairy sector has with securing fair and reasonable exports to China. There are and will continue to be examples where it has been achieved but by in large it is a market that has barriers to entry.

    Don’t try and merge export of product to another country with that countries right to invest directly and do it themselves. That type of idiocy is for Canberra to prattle on about with little relevancy and also we wont even talk about reciprocity of investment type or your argument falls over badly.

  5. Assuming all foreign entrants have to play by the same rules ( I realise this is a point of contention) and we don’t want them in Australia, then what is the plan B? Australia is stagnating badly. Every time I come to China and see the progress and improvement I get more anxious about where we are heading in Australia.

    We need foreign investment.

    Also no problem on commenting from here Marian. I’m not constrained from criticising China’s policies.

    • Hi Ian A,
      I was really careful to begin my blog post with the statement that we absolutely do need foreign investment. Not playing by the same rules is the main point of contention (although I have no idea how the Ningbo style of investment helps Australia)!

      Even more importantly, we need to look at how we can make all players – including the average Australian-owned family farms like mine – more profitable and resilient.

      That’s why I’m featuring a few initiatives (not the only solutions) that others have developed over the next few weeks. The first of these is the one featured in the post before this one. If there are any you can recommend, please do let me know!

    • Ian A,

      “…and we don’t want them in Australia…”. I am not sure what this refers to as there is no blanket denial of foreign investment as it is important and has been in existence for a long time.

      However there are ways of doing it to encourage domestic business, grow export opportunities and add value without compromising onshore investment and equally important of preserving the social, economic and cultural framework that we have.

      The article about Ningbo Dairy supports none of this and presents in a confrontational manner.

      Also your comment about “Every time I come to China and see the progress and improvement I get more anxious about where we are heading in Australia.” reminds me of comments by Stephen Jennings when he left Russia to focus on Africa and he said it was easier to profit from improving a $1/day economy to be a $2/day economy than it was to profit in development markets. China and Australia are not comparable on that basis either.

      Here are two links to good business transactions with offshore parties as examples. Both very different in their approach but both smart.
      1. http://www.businessspectator.com.au/news/2014/9/19/dataroom/archer-seeks-asian-jv-partner-brownes-dairy-report
      2. http://www.stockandland.com.au/news/agriculture/agribusiness/general-news/bega-seals-china-uht-milk-deal/2712825.aspx

      • Like they say Ian, I guess it all depends on how you look at it. The more I look at the original WT Ningbo article, the more it smells of hyperbole (and a touch of cow manure).

        And in China…we are not talking about $1 a day vs $2 a day . This is a common misconception from Westerners who don’t fully comprehend what is going in in China.

        Most of the companies I have met this year in China have complained about labour shortages. Yep, labour shortages in China. And the wages for normal factory workers have increased significantly. For example, an average textile factory worker on the Eastern seaboard costs about USD 800 per month (when you add all costs). One guy I met was paying USD 900 per month. This is for a person working on the factory floor. Even with these wages, one mill I visited was short 100 workers. They are only 15km from the centre of a large city but still they couldn’t get people. Free food, free accommodation, income tax paid by the employer, free healthcare, free insurance, free buses to the city and still under-staffed.

        Another example (just because I’m on a roll!). Today I travelled from Tongxiang to Shanghai. Fifteen years ago Tongxiang was a backwater and it took over 3 hours to get there from Shanghai in a car on shitty roads. Today I travelled on a bullet train, 300 km/h, in comfort unknown on Australian trains. Took 40 minutes.

        The reason I am concerned about Australia is that I see we are being left behind. Big time. Yet we continue in our cosy insular existence, occasionally shaken awake when FDI offends our NIMBY or NIH sensibilities. My point is pretty simple. As long as any company complies with all Australian laws then good luck to them. Welcome to Australia.

        If what they are doing if against the law or regulations, contact:
        – your local council
        – your state government representatives
        – your state farm organisations
        – your commodity group
        – NFF
        – State Ag Minister
        – Federal representative (house and senate)
        – Federal Ag Minister
        – Dep Ag (federal)
        – DPI (state)
        – RSPCA ( is the a regulation for housed cows?)
        – Murray Goulburn
        – etc, etc, etc

        And as you say, in the articles you cite, most foreign companies try to fit in with local conditions. Funnily enough I was have dinner tonight with a company who wishes to buy rural properties in Australia because they wish to improve the quality of the supply they are receiving. They wish to start small (USD 10 million) but will ramp up if they can make a fair return. They want local (Australian) staff and local management of the properties because they think local knowledge is vital. How do we feel about these people? In the words of our Great Leader, are they ‘goodies’ or ‘baddies’?

        • Ian A,

          I have to defer to Marion as this is her blog and it is supposed to be about the day to day life of an Australian dairy farmer.

          You have taken the thread to another world. My email address and contact details are in the previous blog article if you want to discuss further, which I am more than happy to do so.

          The initial point was concern about Ningbo Dairy as written by Sue Neales.

  6. If China is used to higher prices, why don’t we step up the industry and start exporting it in higher volume to china, creating more jobs…

    • Hi Andy,
      The Australian dairy community is working hard to do just that and is already making inroads. A free trade agreement with China would be a big help as tariffs currently put as as much as 18 per cent behind our Kiwi competitors.

    • Andy,

      Exporting dairy product is the game of the processors and their downstream partners and many are stepping up to do just that. Two small items remain at risk:
      1. What about the dairy farmer as the benefits of all this rush to export isn’t flowing back to improved value and capital value for the dairy farmer.
      2. If we swing too far into exporting we run the risk of a shortfall in dairy product for domestic use and a large part of the domestic market has committed itself to $1/litre for up to the next 10 years which also denies diary farming as an attractive investment proposition.

      So smarter ways need to be used to attract and deploy investment, secure the industry, increase milk production whilst meeting both domestic demands and capturing export opportunities.

  7. Where does investment like this stop? I believe this is bigger than just agriculture. Most businesses in this country could be run by foreign owners from countries with cheaper labour. All profits destined for the foreign country.
    Foreign investment is a self sustaining spiral. The more you have, the more you need because farm prices are artificially driven up. Great for the retiring farmer but nobody else. It’s the same for the Sydney and Melbourne housing market.
    Cheers
    Michael Thorn

    • Hi Marian,
      The reason I am reading this in April is that it was just posted on Facebook by a reader. (Can’t tell you who as the thing refreshed).

      When the china free trade agreement was being discussed by Andrew Robb he made some interesting statements about the deal on 774 Melbourne to Jon Faine. His comments were very very believable, but were the usual lies. He basically said nothing is different in this deal than in any others.

      The next day i did a spreadsheet comparison of China, Korea and japan and they are all different. China has a side letter re skills and that is very problematic.

      There is also a problem with Labour market testing. As there ar in all of these trade deals.

      Look at the link to the 457 Visas and do a search for Korea and Japan and then read the context there. China isn’t there yet, but I am sure that it will be in the near future.

      Here is the link to my blog.

      https://vinceogrady.wordpress.com/2015/09/16/the-china-free-trade-agreement-some-facts-and-the-bigger-picture/

      Thanks for yours.

  8. Ah MilkMaidMarion

    I imagine the reason for the new reads is that this matter has gone from talk to a planning permit application for the feedlot and processing plant with objections closing on 28 January, so many Kernot and district locals are frantically trying to catch up on events and put in objections.

    MF

  9. Slowly and very deliberately China is taking over world domination. This is another example. Seriously, the world as we know it is changing really fast. I am very saddened by this news and I am heartily sorry.

  10. If you examine the pedigree of the China “miracle” and it’s engineers you will discover the regular Rothschild Gang and beneficial cronies who are advancing their monopoly through all the internationally integrating schemes and “free trade” deals they can put in effect.
    Australia has a few billionaires but it is the international banking interests that finance them that gain the biggest benefits.
    China also has many new wealthy who are keen to take what benefit they can from the program of monopoly and centralization.
    The result is the concentration of the dividends and benefits of natural resources, human labor and knowledge.
    If we allow it the money printing tricksters create unlimited trillions of “investment” from thin air and take possession of the planet fooling all with their mischievous chaos and “market” convulsions that fuel artificial tension and crisis that keeps the masses totally confused.
    Ruling Global finance is the peak of the mafia culture that exploits and plunders mankind with rigged and corrupted markets and politics.
    Where necessary, in mafia style, war is employed to kill and frighten into submission, any threats to the monopoly over all the rackets in the neighborhood.
    The world is abundant and could easily provide generous stable and secure sufficiency with just relative dividends for all our contribution and moral inheritance.
    Unless the money trickery deception, practiced in the best traditions of the “money changer” high priests, is studied, understood, exposed and corrected, low milk returns and dairy industry ownership will be the least of our troubles.
    As I type this post, a raging war in currency and energy markets is driving the world towards the precipice of war between two nuclear powers, the United States and Russia.
    I see very little evidence as I read the rural media of any accurate understanding of the unfolding tensions and the real issues that have brought the world towards another potential escalating world military conflict.
    Australians only get a highly biased story regarding Russia and almost no truthful information about the battle for control over the money “printing press”. In fact most readers here and almost everywhere are totally illiterate when it comes to understanding the centrality and power vested in proximity and benefit from “money creation”.
    Without a thorough knowledge of the essence and nature of “money”, it’s present monopoly impact and it’s just freedom potential can not even be imagined.
    If our millimeters were monopolized by a tiny few and all loaned into existence as a debt with interest owing, before we could measure the natural world, the dilemma of humanity would mirror in many respects our present money predicament.
    The illusion is so amazing in scope and effect it paralyses the mind which stops people from contemplating the staggering deception and facing the fact we have been fooled to an extraordinary degree.

    • Anyone who subscribes to Port Phillip Publishing has a very good idea of the international finance struggle that’s been going on between the West and China for too long.The mainstream media misses the point.

  11. This horrifies me in terms of the welfare of the cows. This is outright exploitation with scant regard for the well being of the animals. This proposal is wrong in so many ways and I hope it is vehemently rejected.

  12. Hi there, Just started following this as i’m originally from that area of South Gippsland. Its seems that a lot of workers and council members ? were not aware of the actual plan until Australia day. But this blog had information last year. How is that ?
    Also Marian can you explain the difference in the farming practices that are being introduced on these farms. It seems to be an animal welfare issue from what i understand – feedlot type of sheds with large numbers of cows being fed grain. As opposed to the 1 cow per acre we usually have here ? Is that the difference ? Also there are environmental impact issues with the run off over winter when the Kernot farm floods and housing of the imported dairy workers.

    • Hi Amelia,

      I can’t offer any insights about the awareness of the council members but I became aware of it via articles in The Weekly Times and The Australian, so it was hardly a secret!

      Most Australian dairy cows are free range and while they are fed grain, their diets are pasture-based. The Ningbo plan reportedly is for thousands of cows in sheds most of the year with feed brought to them by low-paid overseas workers to maximise milk output. This is as close as it gets to factory dairy farming.

      I have not visited the site of the Kernot farm but hope it would have a good effluent distribution system that would prevent effluent leakage.

  13. I read all the ag news papers on-line, none have anywhere near the amount of comments on this or other dairy matters as your blog. I’ve just stumbled on this blog myself, and think it’s great. I have many friends who own dairyfarms and they all used to envy my 9 to 5 (well 4 to 4 actually) job, but as we got older and had familys they’ve all said to me they wouldn’t swap for quids. I’ve watched them grow to really love what they do. Keep up the good work , Regards Jeff

  14. My understanding is that as an Australian, I cannot purchase land in China outright as it’s on a 70-year lease. Why don’t we have reciprocating laws in Australia?

    I cannot purchase land in SE Asia (eg Thailand) outright unless I married to a Thai person or have a Thai business partner. Why is Australia so quick to sell off all our land and industry?

    It seems as if in the last 20+ years and regardless of what government is ruling the roost, they’re all hell bent on selling chunks of our country, especially our farms.

  15. The problem i see with all this investment from offshore is that there is nothing in it for Australia. The product will be produced and sold to their offshore company at cost or just below so that no profit so no tax is paid the produce will be shipped by another of their company`s to the overseas country where it will be sold at a premium so making a large profit for the parent company

  16. Unbelievable…….this country needs to look after THIS country…..get that rigjt first thank you very much…..CHINESE deal is very unAustraluan

  17. If this is all too hard for the Chinese under OUR rules,for God’s sake when are our politicians going to tell them the difference between investment and ownership?

  18. China has not got a good reputation for it’s dealing with animals ,when they come here they must live by our standards not theirs ,does this mean the cattle will no longer be able to graze and be kept indoors? as if they don’t suffer enough ,also the 2,000 workers must not live by their customs of eating cats and dogs it is against öur”laws and they must be enforced ,no special treatment ,our culture is being decimated to appease others.

  19. Anyone who thinks this is a good idea has rocks in the heads. This will eventually drive all Australian owned farms out of business and being bought up by foreign buyers. It also undermines the standard of living we have come to enjoy.
    We are now importing goods from China that are second rate like parts that have asbestos for insulation when it is banned in Australia and second rate steel and other goods.
    If this is what buyers want then they should also not complain when the unemployment rate goes up and more businesses take themselves off shore.
    The Government can only support a certain number of people on Welfare without having to put up taxes. If there are less people working and consumers buy less because they can not afford to pay their weekly bills then you can expect to have all standards of living to decline and more and more foreign buyers move in to buy up Australian businesses and dwellings.

  20. This needs to be stopped more capitalist craziness that money justifies anything, the cruel treatment of animals, etc etc

  21. Why hesitate to write this? Too many people are afraid alto speak up about the sale of Australia to the Chinese. Rest assured the Chinese are not buying our agricultural assests for our benefit.

  22. Innovative dairy production is a huge advance. The cows present for milking when they feel like it. Their vital signs, temperature and health are checked each time they are milked. They wander about outside in the sunshine eating grass then settle down indoors on straw tp rest an digest, then wander off through the system when they feel like it. Great system. 10000 cows with all food grown on site. Milk is processed to powder products by Aussie companies.

  23. It’s all about food security.
    China knows its practices have damaged & degraded the land with little or no way to rehabilitate it.
    So it’s looking to Australia to solve its future food supply problems.

  24. Sick and tired of Asians buying anything here in Australia – we should only lease or sell our highly sought produce to them for a cracker of a price to help Australian economy…

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