New Zealand Milk Powder Ban Sparks Shortage Fears in China

New Zealand Milk Powder Ban Sparks Shortage Fears in China

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China imported 90 percent of its milk powder from New Zealand

Wikimedia/Michael Jastremski

China halted all importing of baby formula from New Zealand and Australia this week over concerns that the formula might be tainted with botulism-linked bacteria, and the move is likely to cause a shortage in China and cause milk powder prices to skyrocket.

There is an enormous demand for foreign-produced milk powder in China, and New Zealand supplied 90 percent of the milk powder imported to China. Last year China imported about $1.9 billion worth of milk powder from New Zealand.

Foreign brands are commonly believed to be safer and of higher quality than domestically produced baby formula, and many parents are willing to go to extremes to give their babies the best food. Demand for imported baby formula is so high that when in March Hong Kong put a two-can cap on the amount of baby formula a traveler was allowed to take out of Hong Kong, two times as many people were arrested for milk powder smuggling in two months than were arrested for drug smuggling in all of 2012.

According to Reuters, powder exported from New Zealand's Fonterra company to other countries, including China, was found to be tainted with potentially botulism-causing bacteria. Fonterra supplies some of China's biggest food manufacturers including Dumex and Coca Cola China.

"The authorities in China, in my opinion absolutely appropriately, have stopped all imports of New Zealand milk powders from Australia and New Zealand," New Zealand Trade Minister Tim Groser said.

Analysts told Reuters that there could be a potential milk powder shortage in China, and that already high formula prices would likely rise.

Fears about Chinese-produced milk powders are not likely to ease up in China, so China is likely in the meantime to try to increase milk powder imports from the U.S. and Europe.

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China banned the import of milk powder from New Zealand. The move came after New Zealand’s biggest dairy exporter, Fonterra, found in some of its products a strain of bacteria that can cause botulism. The ban could trigger a shortage of dairy products in China as it depends on New Zealand for almost 90% of its milk powder imports.

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Exports booming at inflated prices

In Greenacres, 8 kilometres from Adelaide's CBD, Chinese exporter Healseeway is also riding the baby formula boom.

Trucks, cars and vans deliver goods throughout the day, and deliveries witnessed by the ABC included plastic bags and cardboard boxes full of tins of baby formula.

The site appeared to be a hive of activity as boxes containing baby formula were unloaded from vehicles, while multiple pallets of the a2 brand formula sat in the driveway and warehouse awaiting shipment.

Do you know more about this story? Email [email protected]

Healseeway's business registration lists A&N Corporation as the business holder, with Chinese-born director Xin Wu A&N Corporation's sole shareholder.

Employees on site declined to respond to questions about the origins of their stock, and the company did not respond to a request for an interview by the ABC.

Gold kiwifruit exports continued to rise after a strong showing in March 2020. Gold kiwifruit increased $116 million (37 percent) in April 2020 when compared with April 2019. Exports to Japan led this increase, with gold kiwifruit exports to the country more than doubling compared with April last year.

“The value of apple exports increased $49 million as exporters managed to secure shipments, despite fears of clogged ports and worker shortages,” Mr. Allan said.

“This rise was led by exports to Japan, not typically a major market for our apples.”

Exports to Australia fell $161 million (24 percent), with crude oil being the biggest factor in the fall. Export prices of New Zealand crude oil began to fall significantly in March, coinciding with global crude prices crashing following the effects of the COVID-19 pandemic. New Zealand’s crude oil prices are now at their lowest level since February 2016.

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Chinese producers of milk powder have lost the confidence of Chinese consumers

In 2008, melamine-tainted milk by the company Sanlu caused the death of six children and sickened 3,000 children across the country. The scandal caused a national panic and devastated the trust in Chinese dairy companies.

A recent survey conducted by CCTV revealed that 70% of Beijingers are reluctant to buy a Chinese brand of infant formula because they are worried about safety. Nevertheless, the last official report of the Association of dairy products in China found no significant difference between Chinese dairy products and their foreign counterparts.

This phenomenon is not limited to the capital and even in smaller cities in China consumers do not hide their fears about the quality of domestic milk powder.

Imported brands have rapidly gained momentum since 2008. Starting with 40% of the market share in 2008, foreign companies now graze equality with their Chinese competitors. Customs services&rsquo data show that the country imported 400,000 tons of milk powder in 2012 which was the record in China.

Measures to ensure food safety of milk powder

Since March 1, people leaving Hong Kong are not allowed to take more than two cans of powdered milk for infants with them. Offenders are liable to pay 49,460 euros and up to two years in prison.

The new rule was implemented after a recent shortage of certain brands of powdered milk in the major cities of mainland China. The shortage has been attributed to the growing demand from mainland buyers whose confidence in Chinese infant formula has collapsed.

The Chinese government wants to restructure the supply chain of the Chinese dairy industry to regain consumer confidence.

There are at least five government departments responsible for health surveillance of infant formula in China. The lack of communication and coordination between these agencies has resulted in a lack of efficiency.

Anyway, since the milk scandal in 2008, the Chinese government has started to centralize services and ensure better control of the agro-industrial chain. Some have even proposed to set up a single centralized department to strengthen supervision. These reforms are still under study.

Zong (Chairman of Wahaha) and member of the AFN, calls for the conduct of strong law pursuits of the &ldquoblack sheep&rdquo of the dairy sector.

Distrust of Chinese consumers are disproportionate

The authorities stated that 99% of the formula on the mainland of China meet the international standards of quality.

Despite this, many Chinese people will keep buying infant formula powder abroad, which reveals the continuing lack of confidence when it comes to the domestic industry. Those fears are largely fantasy but it is an asset for European brands of infant formula.

The study of CIC about the consumption trend in China in 2013 places the &ldquopay for safety&rdquo on top of the trend for the next year.

Despite government attempts to reassure citizens the negative comments about the Chinese brands are still very present on social networks.

Infant formula powders and e-commerce

Tmall will sell foreign infant formula powders online starting from March 2013.

Tmall made this announcement following the arrest of 25 people in Hong Kong for violating the legislation concerning dairy products adopted in HK in March.

Xinhua Zhang Yong as president of Tmall said that &ldquoTmall stores will open official online shop for six brands of infant formula&rdquo adding that &ldquoChinese buyers can buy without fear these imported dairy products. &rdquo

3) Cow & Gate

5) Nestlé NAN HA:

The milk used for all of these products are from New Zealand, Britain, Germany, the Netherlands or Switzerland.

Consumers will order online then companies will import products from their home country and send them through Chinese customs. Orders will be shipped via express mail services.

Although most of the fears due to the milk crisis are unnecessary, foreign brands should take more and more advantage of this anxiety context and use it as an opportunity to strengthen their investment in digital communication and social media to build an image of a trustful brand . The partnership of leading European brands of infant formula powders with Tmall is a good initiative.

Fears of Easter chocolate bar shortage after 200 Cadbury workers go on strike

The production of some of the UK&aposs favourite chocolate brands including Twirl and Flake has been disrupted just ahead of Easter as 200 Cadbury workers went on strike.

Unions have vowed to keep picketing a factory run by the chocolate manufacturer over fears that jobs will be outsourced.

The threat comes just weeks ahead of Easter Sunday, which is on March 27 this year, when the nation celebrates by gorging on chocolate.

While the production of Twirl and Flake chocolate has been disrupted at the affected production site in Coolock, Ireland, Easter eggs themselves are produced in Bournville, near Birmingham.

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And Cadbury insist that supply to the UK market will not be affected.

This morning Siptu and Unite representatives are sitting down with owners Mondelez Ireland to discuss their concerns after 17 positions at the Coolock factory were reassigned.

The scheduled talks will be chaired by mediators from the Workplace Relations Commission (WRC).

Unite regional coordinating officer Richie Browne warned that the move to outsource 17 core roles in Coolock would herald a "move away from good permanent jobs to precarious work".

"The unions have put forward proposals which would achieve productivity improvements and cost savings with no loss of permanent jobs," he said.

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"We welcome the intervention of the WRC, and hope for a meaningful engagement."

Siptu sector organiser John Dunne said: "Our union representatives have decided to attend these talks in the hope that a resolution can be found to this dispute.

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"However, the work stoppage at the plant will continue tomorrow and the pickets outside the plant will remain in operation."

Cadbury in Coolock has been producing chocolate bars for five decades for the Irish, UK and other international markets.

A spokeswoman for Cadbury said: "Any form of industrial action only further undermines the future viability of both the Coolock and Rathmore manufacturing sites and this action ultimately endangers the jobs of the 700 people who are employed within the business.

"The management team remains available to meet again with the Siptu and Unite representatives to attempt to find ways to resolve this dispute and to work together on building a more sustainable future for the Coolock and Rathmore sites.”

The Dairy Milk bars produced in the factory are specifically for the Irish market only.

However the Twix and Flake bars that have had their production disrupted are for the UK markets.

NZ needs to step up its care in the Pacific – before other countries do

Last week&rsquos announcement New Zealand has secured enough vaccinations not only for its own population, but for Pacific Island &ldquoneighbour&rdquo nations, is significant for more than just the fact that we have a place in the queue.

The fact New Zealand has secured vaccinations for the Pacific pushes aside others who might have aspired to be the Pacific&rsquos vaccine provider.

Australia, the United States, Japan, Taiwan and China might all have stepped in to some extent. Some may yet do so. New Zealand&rsquos timetable for general vaccination roll-out is not scheduled before the middle of next year, at the earliest. It could be gazumped by a more ambitious or less cautious provider.

New Zealand is the natural provider of vaccines for several reasons. Most obvious is the large Pasifika diaspora that lives in New Zealand. To be able to move between Aotearoa and home, Pasifika populations need to be vaccinated at both ends.

Two-way caution

Secondly, New Zealand has a sorry history with viruses in the Pacific. Careless colonial administrators let passengers from Auckland ashore in Apia from the trading ship Talune in November 1918.

Samoa, which had been free of the flu sweeping the globe, lost one-fifth of its population after just six infected New Zealanders were allowed to land. It took another 84 years, in 2002, for the New Zealand government to apologise.

Throughout the Covid-19 response, there has been much talk about &ldquoopening up to the Pacific Islands&rdquo, as if the islands are passive recipients of New Zealand&rsquos actions. That misses how anxious Pacific Island governments have been not to import the virus, in part because of that dire history.

However, all those governments are equally focused on reopening their economies as soon as they can to allow their vital tourism sectors to revive. This underpins the third main reason why it&rsquos important New Zealand secure vaccines for the Pacific: we don&rsquot want others to get there first.

Poking the Panda

And by others, we mean China, even if we don&rsquot say so explicitly.

The foreign affairs and trade briefing to incoming ministers, published last week, talked of the risk that a &ldquomore contested region with non-traditional external partners increasing their presence in the Pacific has implications for stability and governance norms.&rdquo

That is: there is a fear that governments in the Pacific may turn either willingly or reluctantly to more generous new friends for assistance to finance their struggling economies through and beyond the pandemic. And that such assistance will come with unhelpful strings attached.

Most obvious among those would-be friends is China, whose regional expansionism is on display in its creation of artificial islands for naval bases in the South China Sea and a torrent of soft loans to the Pacific Islands in recent years. The Lowy Institute, an Australian think-tank, has tracked Chinese lending to the Pacific and last year &mdash pre-Covid-19 &mdash produced projections of six Pacific nations&rsquo indebtedness to China by 2024.

With the exception of Papua New Guinea, whose closest colonial ties are to Australia, the six are countries with either close geographic or political ties to New Zealand: Tonga, Western Samoa, the Cook Islands, Fiji, and Vanuatu.

&ldquoFour of the six countries that currently borrow from China &mdash Vanuatu, Samoa, Tonga, and Fiji &mdash are already effectively at our 50% warning threshold and, with the exception of Fiji, would be pushed well beyond this under our business-as-usual scenario,&rdquo Lowy researchers concluded. &ldquoVanuatu stands out as a particular concern, given in late 2018 it signed up for another large loan-financed Chinese roads project.&rdquo

An uncomfortable fence

This matters more in the year ahead because New Zealand&rsquos primary sphere of external influence is the South Pacific and New Zealand&rsquos relationships with China and its traditional allies face big, new challenges.

China&rsquos increasingly hot trade war with Australia, the closest US ally in the region, is a message to New Zealand and others there are consequences for too strongly criticising Beijing&rsquos increasingly authoritarian bent under President Xi Jinping.

Meanwhile, in Washington DC, a new American president with a desire to stitch back together frayed alliances is likely to call more strongly on New Zealand than the Trump administration ever did to declare which side of the fence it sits on.

There are signs of this already. For example, Wellington last month joined a Five Eyes intelligence network statement criticising China when, earlier in the year, New Zealand stood at one remove and made its own, more nuanced statement.

Meanwhile, the most important US ally in the Pacific &mdash Japan &mdash is suggesting the Five Eyes should become &lsquoSix Eyes&rsquo, with the containment of Chinese regional ambitions a clear, primary objective.

This is all very fraught for a small economic and diplomatic player like New Zealand, especially one so dependent on China as its largest single trading partner.

Buoyant trade with a back-to-normal China has been a key part of New Zealand&rsquos good news health and economic story as the Covid-19 pandemic plays out.

With exports to China heavily concentrated in the dairy sector, New Zealand&rsquos political, trade and diplomatic leaders are under no illusion that an Australia-style freeze-out could be very damaging. However, a spineless response to Chinese aggression and human rights abuses is not an option either.

New Zealand cannot afford to be seen to be silent simply to keep selling milk powder. But nor can New Zealand assume China needs New Zealand milk powder so badly it wouldn&rsquot seek to teach New Zealand &mdash always more friendly than Australia but also more malleable &mdash a sharp lesson, if it wants to.

Best foot forward

The diplomatic answer to this is simple: to play our limited hand of cards as best we can.

Firstly, New Zealand is chairing APEC for the next year. As a trade and economic grouping, APEC embraces both China and the US, along with the other key protagonists in the Asia-Pacific region. By holding the pen, New Zealand also gets to guide trade and economic conversations in the year ahead.

This is what lies behind a breathless and mangled report last week suggesting that foreign minister Nanaia Mahuta could &ldquobroker peace&rdquo between Australia and China. She would not be so presumptuous. What she can do, however, is use New Zealand&rsquos influence through its APEC position to try and steer conversations between hostile parties onto common ground.

New Zealand can do the same on issues where, for example, the US and China will be more aligned in coming years. For example, the Biden administration will take the US back into the Paris Agreement on climate change. To the extent New Zealand and China already make a virtue of working constructively on climate change while disagreeing elsewhere, there is a bridge for New Zealand to have conversations that bring China and the US closer where cooperation remains possible.

And in the Pacific, where the contest for influence between the two global superpowers is playing out already, New Zealand must do everything it can to leverage and, above all, deepen the relationships it has with Pacific neighbours.

It does that by doing what New Zealand, at its best, does best: listening, seeking to understand, assisting as needed, deepening shared cultural and people-to-people connections, and championing liberal values that are the bulwark against authoritarianism, debt-diplomacy and military expansionism.

This article originally appeared on BusinessDesk. Their team publishes quality independent news, analysis and commentary on business, the economy and politics every day. Find out more.

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Melbourne baby formula pop-ups 'not behind shortage of product'

The owners of pop-up shops around Melbourne selling and shipping baby formula to China say they are not behind a shortage of the product, as calls continue for Australian manufacturers to produce more of the in-demand product.

There have been reports of customers stripping supermarket shelves of formula, and selling the tins online to Chinese customers at an inflated cost.

Australian baby formula is so popular some predict the shortage could last another 18 months.

Clayton, a suburb in Melbourne's south-east, has at least 10 shopfront which sell and arrange to ship baby formula to China.

Among them is Australia SFX Global Express, but store manager James Shi said the business was not responsible for any shortage in infant formula.

"I don't think we have to take any responsibility, we just run our business, that is what we should do," he said.

He also denied newspaper reports the shop had been selling baby formula to Chinese customers only.

"We don't say we prefer to sell to Chinese," Mr Shi said.

"Our major customer is from China, yes that is a fact.

"We just provide the postal services as well as a product which is very popular."

Jan Carey from the Infant Nutrition Council said manufacturers in Australia had already increased production to fill demand.

"All the manufacturers have increased their supply, and increased their production of formula to the best of their abilities," she said.

Australia SFX Global Express also has a shop on Victoria Street in Richmond which has only been open a few weeks.

The shop owner there refused a formal interview but said the business had deliberately set up near chemists and supermarkets.

The owner added that almost half of the packages he sent to China were milk powder for adults and babies.

A woman holidaying in Melbourne arrived at the Richmond shop to send a package to China.

"My relatives asked me to buy six cans of formula for their baby," she said.

"When I see plenty of Asian faces taking six or ten cans from the supermarket, I feel it's bad. But I couldn't help it."

She added that not just Chinese people were buying the formula, but also those from Korea and India.