A Missed Opportunity !

The Australian economy boomed when China's ever expanding manufacturing sector was devouring iron ore and coal and sending prices skyrocketing. Now that China has turned towards a services economy our resources sector is not delivering big tax dividends and there is gloom and doom in Treasury statements.

A newspaper headline this week tells a story of missed opportunity.  A Federal government authority seized a sixty tonne shipment of baby formula destined for China and we have the situation where our supermarkets are rationing baby formula for Australian families because shoppers are panic buying to serve a buoyant shortage of this product in Chinese cities.  A tin of Australian baby formula which sells here for $25 brings a black market extortion price of $ 84 in Shanghai !

Why is this so ?   Way back in 2008 a scandal in China destroyed confidence in the local baby formula industry.  It was discovered that some Chinese factories were substituting Melamine for milk and this led to the death of several babies and widespread illness in others.  Chinese mothers turned to imported products for safety - and milk formula from Australia and New Zealand quickly became the gold standard.  Demand quickly outstripped supply.

Chinese mothers appealed to Chinese students studying in Australia to buy and ship formula and this profit opportunity saw demand snatching formula off supermarket shelves and creating shortages. Individual supermarkets rationed the product, but seven years later an Australian mother is still not assured of getting her needs without a fight and this sixty tonne seizure illustrates how the black market has risen into overdrive.

When are we going to learn that market forces are there to be harvested - and if we are a "  Clever Country "' we must seize opportunities and exploit them to our advantage.

The most populous country in the world demands our baby formula - and they are about to abandon their one child policy forced on Chinese families.  It is nothing short of a scandal that we are not manufacturing formula to meet this demand and responding to the new opportunity that is going begging - and forcing actual formula shortages in our own country.

The Australian dairy industry has been decimated and we are seeing both Coles and Woolworths offering milk for just one dollar a litre, having used their monopoly status to force down the price at the farm gate to it's lowest level.   The demand for baby formula should see the dairy industry booming as we revert from digging things up and sending them overseas - to a more sustainable economy of producing goods that are in short demand.

Seven years is an eternity for an unsupplied market to be left stagnant.   Opportunity is not just knocking, it is raining hammer blows on our export door - and it seems we are deaf to this opportunity.   How can formula manufacturing be still at a level when Australian mothers are having to search from shop to shop to buy this product and yet unfulfilled demand in China is forced to pay extortionate prices.   It is not Chinese regulations limiting our exports - it is manufacturing apathy that has not risen to demand.

If we do not act to seize this opportunity, entrepreneurs in Europe and the rest of the world certainly will !