Baby Milk Piracy: China Milk Distrust Feeds Baby Milk Underground Market, Australia Moms Restricted To Two Cans As Security Measure

Refusal of young Chinese mothers to breastfeed their babies has opened the door for enterprising individuals to make a pretty profit off Australian baby formula in China. This is compounded by a prevalent distrust against China's government on its willingness and capability to enforce food and drink standards in the country. As a consequence, supermarkets in Australia imposed a policy that is designed to discourage milk hoarding by allowing only two cans of milk per customer at a single time.

According to China's National Health and Family Planning Commission, as low as only 16 percent of new mothers engage in breastfeeding exclusively in this country that has been riddled by several scandals on milk contamination. Despite food policies in China reportedly being as tough as policies in Australia, Procter & Gamble, Nestlé, Danone and similar milk formula brands from other countries have become prime commodity among Chinese families. 

The Washington Post reported that buyers are careful to keep the cans of formula they send home to China well under the 22-pound limit to avoid restrictive paperwork. Meanwhile,  Australia's Department of Agriculture and Water Resources commits to the investigation of reports that shipping rules are being breached in attempts to send formula overseas.

Although Britain, Hong Kong and New Zealand are also target sources for milk resale, formula milk consultant and former milk powder factory owner Simon Hansford said that Australia's reputation for cleanliness and food safety hold the biggest appeal. Apparently, brand-consciousness among the  Chinese extends to their children's milk.  

"They love their Louis Vuitton and BMWs," Hansford explained. "They think if the formula is sold in the big supermarkets and pharmacies, it's a famous brand."

Jan Carey, chief executive of Australia's Infant Nutrition Council, agreed with this observation. "The Chinese consumer wants the formula with the English writing on it," she said.

According to Michael Harvey, a dairy-industry analyst of Rabobank, a can of milk weighing two pounds can fetch in China three times its price in Australia. "There is clearly money in it," he pointed out.

In truth, Australian infant and children's formula are often supplied from other countries. Aptamil, which is among the top brands in the country is a French brand produced by Danone in New Zealand. Danone is available in China under the Karicare brand, which is supposed to be 100 percent a New Zealand product.

Breastfeeding advocates think that the underground market are exploiting mothers in China especially considering the sky-high prices placed upon the goods. According to Nina Berry, Sydney School of Public Health researcher and Australian Breastfeeding Association spokesperson, says this is extortion. 

Perhaps, the answer is similar to China's Beingmate Baby and Child Food Company Ltd and New Zealand's Fonterra Co-operative Group Limited joining forces to produce nutritional powders, including infant formula, in Fontrerra's Darnum plant in Australia. As part of the China Australia Free Trade Agreement, this will largely respond to the growing demand from Chinese consumers. The venture may satisfy the consumers' health and safety concerns while keeping the prices within reasonable range.

"The partnership will create a fully integrated global supply chain from the farm gate direct to China's consumers, using Fonterra's milk pools and manufacturing sites in New Zealand, Australia, and Europe," Theo Spierings, chief executive of Fonterra, explained. "By working with Beingmate, we are creating additional demand for ingredients and high-value paediatric and maternal nutrition products made from our New Zealand milk, complemented by milk drawn from other international milk pools."