May 27, 2015

The Chinese dairy industry is angry, and fearing that the finalization of the recent free trade agreement between China and Australia in December will only make a bad situation, worse.

Currently, the 1,500 page agreement is being translated into Mandarin and going through the process of being “scrubbed” – when lawyers from Australia’s trade department and China’s Ministry of Commerce go through the document line by line to ensure it is legal, however once this process is completed in approximately three to six months, it will be ratified.

Once fully in force, the agreement will phase out tariffs on approximately 95% of Australian imports including dairy, beef, wine, seafood, and horticultural products, with dairy tariffs eliminated within the next four to eleven years, and the Chinese dairy sector is not happy. Earlier in 2015 Chinese farmers were reportedly dumping up to a ton of milk per day, and slaughtering cattle for lack of a market. Chinese dairy producers fear that after the FTA is ratified, conditions will worsen, and feel that their government is sacrificing its dairy industry in order to promote free trade.

“After the free trade agreement is signed, we expect China’s dairy industry is going to suffer a lot,” Dr Shen Giuyin, from China’s Ministry of Agriculture told Australian journalists through a translator.

Australian dairy producers are more competitive than China’s, with access to better land and pastures, making dairy production less expensive, but the industry is still shipping a high-demand, premium product to China, where high-end milk can sell for up to $12 per liter in Beijing and Shanghai, indicating to many that the invasion of Australian dairy will only continue to grow.

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