Interview with ABC 774 with Sally Warhaft - infant formula

MINISTER RICHARD COLBECK, INTERVIEW ON ABC 774 WITH SALLY WARHAFT

11 NOVEMBER, 2015

High demand for baby formula, exports to China

E&OE.......................................................................................................

WARHAFT: ...(baby formula) is in high demand in China. There are a lot of concerned people and I happen to be one of them, I have twin babies who are formula fed and I have a personal interest in knowing when my particular brand will disappear.

Richard Colbeck, the Assistant Minister for Trade and Investment joins me now, good morning.

COLBECK: Good morning.

WARHAFT: Look, can you tell us first of all why this has happened so suddenly?

COLBECK: Well it might be seemingly suddenly for some people but it's certainly not the first time that I've seen this happen, this has cropped up a couple of times in the past. I recall about two or three years ago supermarkets, particularly in Melbourne and Sydney, were rationing customers to a couple of tins each because there was a run of product at that point in time and that followed on from some restrictions that the Chinese government put in around imports and they do have a restriction around quantities that can be imported in without a permit.

WARHAFT: Is that a good enough way to do it though, leaving it up to supermarkets? We know from photos and news stories that in fact most of the supermarket staff don't know about the restrictions or don't know and don't care.

COLBECK: Well my conversations with the supermarkets at that point in time, and I haven't spoken to them recently, was that policy that they were working on. And if that's the policy that they're working on now it's their responsibility to make sure their staff understand the way that they're going to operate.

You've put it quite succinctly as a mum with a couple of children and you want to be able to access the product, so one of the responsibilities I see of the supermarkets is they need to properly service their customers but it goes back to the issue of supply.

You've got a clear demonstration of why there's been so much hype around the dairy industry over recent years, particularly with an understanding of those of us that have been to China of their clear understanding of the quality and the food safety aspects of Australian products, which brings it very much in to demand and that's why we're being targeted.

WARHAFT: Let's just say that the product though is something that keeps babies alive in the first few months of their lives. We've got a bit of audio here from Rafael Epstein's Drive Programme from yesterday afternoon of Elizabeth who's a Sydney mum who's behind the campaign.

Over the last five months I've been unable to buy any of the formula for my daughter (names brands) after numerous complications over the phone with Woolworths my complaints, it looks like they haven't taken my complaints seriously or made any changes so I really it's something that I've really taken on personally and I'm really passionate about the polity of buying formula.

WARHAFT: Well that's just one of many concerned parents. Richard Colbeck, at what point does your government stand in and provide some assurance and assistance to make sure that people are going to be able to get adequate supplies of formula?

COLBECK: Well the real issue is can the industry supply the volumes? So the work that we've been doing and I know that my colleague Andrew Robb has been working very hard and number in the ag portfolio have been working hard too to attract investment into the dairy industry in particular, which is the fundamental supplier of the product so that we can ensure the product is available.

I've just been trying to find some figures on the growth in production of baby formula over recent years and I know that some companies are looking to ramp that up, I saw some discussion recently about the A2 Company looking to develop some manufacturing here in Australia and I know a number of companies are ramping up their production. Fundamentally that is what we're going to need to do if we're going to meet supply demand.

WARHAFT: Well that supply demand if this continues is just going to get bigger and bigger. The Chinese announced an end to their one child policy a week or so ago there are so many profits to be made in this, it's obvious to see why suppliers will send their supplies overseas or middle people will come in to get an online jump in price. But it seems to me that you're missing a huge opportunity here and at the same time not really giving any guarantee at all that you're going to make sure the supplies are available here.

COLBECK: Well short of intervening in the market..

WARHAFT: well would you?

COLBECK:... that's the only option that we have and then so what is the mechanism that the government intervenes in the market? Are you suggesting that we ask farmers to stop exporting their products? That's one of the options and I know that's a difficult circumstance but we need to be able to service the market.

I think the best solution is for us to continue to grow the dairy industry to ensure that we've got enough products to supply our markets.

WARHAFT: Well that's not really an answer. Is there some point in this crisis, and for many parents that this is a crisis, that the government would step in and say were going to put a stop to this until we can guarantee supply for our local market. At what point would the government, if there's any point at all, do that?

COLBECK: Well look that's a question that I can't give you an answer to right now.

WARHAFT: Don't you think that the government should be able to give an answer to that? This is not any product is it?

COLBECK: Well it's a product that obviously in demand and the demand is something that we've seen and I know the dairy industry is ramping up its production so that it can meet demand but we need to ensure there is supply, it's something we're going to have to have a conversation about in government so that we can ensure that local people can get supply but also that we can meet a very very important export market.

WARHAFT: So at this point all you can say really is that it's up to supermarkets to enforce their limits and you're going to keep an eye on supply and there is no plan in the government about what to do in this immediate crisis about what point you step in?

COLBECK: As far as I'm aware and I haven't been privy to any conversations about market invention by government at this point in time. I am aware obviously about the cycle of the issue and there are some events occurring particularly in China that are driving that level of demand at the moment, and you make one particular point with the removal of the one child policy that I think is going to continue to drive demand.

Then of course as we've discussed there is that growth of production that's being driven by that growth of demand. If you go back three of four years ago there were dairy plants around Australia that were in serious trouble and considering closing. I know that those plants are now working to ramp up production on a number of products that they're looking to sell into both local and export markets because they want to meet that demand.

I think that's the most desirable way that we deal with this rather than the government having to intervene and I see that as being a last resort option, the preferable thing is for the government to ensure and the industry to ensure that they can meet product demand for consumers.

WARHAFT: Alright well I can't say that I feel terribly reassured about that but I'll be watching it daily with interest, my brand hadn't been affected yet but I'm nervous and I know a lot of parents are. Richard Colbeck, Assistant Minister for Trade and Investment thank you for your time this morning.

COLBECK: Thanks Sally - and I can understand people being very concerned about this because as you quite rightly say it is a product that is important to a lot of people.

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