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Strong demand in China for milk powder in the wake of the deadly baby food contamination scandal of 2008 has created a boom for New Zealand, the world’s biggest exporter of dairy products, according to Earth

New Zealand sold dairy goods to 151 countries last year, but China was the biggest customer by far, paying out $1.33 billion, the report says, citing NZ Ministry of Agriculture and Forestry (MAF).

For the firs time China headed the list of New Zealand’s dairy buyers although it overtook sales to New Zealand’s traditionally large markets in the European Union, headed by its former colonial power, Britain.

China now spends more than twice as much on imports of New Zealand dairy produce as the EU which bought NZ$515 million in 2009.

The EU was the fifth-biggest market behind the US ($1 billion), Japan ($592 million) and Australia ($531 million), MAF says in its annual inventory on the farming industry.

New Zealand’s total agricultural and forestry exports to China rose 49% last year to $2.19 billion driven mainly by milk powder ($610 million) and lumber.

The report notes that Chinese demand for New Zealand products soared with the drop in consumer confidence in domestic milk products after the widespread contamination of infant milk powder with the industrial chemical melamine, which killed six babies and put hundreds of thousands more in hospital.

It predicted the boom would continue with Chinese consumption continuing to rise and New Zealand production jumping rapidly as farmers recover from a drought that limited a predicted rise in output in the past dairy season, which ended May 31.

The ministry’s director general, Murray Sherwin, acknowledged that dairy product prices had become volatile over the past few years and said rapid price shifts, up or down, could not be ruled out.

He also cautioned that New Zealand should avoid becoming too reliant on one country as a market for its goods.


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