SOUTH EAST Asian countries looking to go down a path of dairy self-sufficiency appear to be taking the opportunity created by declining Chinese demand to lock in supply of Australian and New Zealand export heifers.
Australia’s largest cattle exporter, Wellard Limited, this week delivered its first shipment of 2000 pregnancy-tested-in-calf Friesian Jersey cross heifers to Sri Lanka under a contract to supply 20,000 head by the end of next year.
Most were sourced from the North Island of New Zealand. Wellard says the next shipment will be from Australia.
Sri Lanka has generally taken around 1000 to 1500 head a year from Australia over the past couple of years so the Wellard development represents a significant boost in business.
Dairy analysts said Sri Lanka, along with Indonesia, Malaysia and Vietnam, had stepped up to take Australian heifers in the wake China’s lowered buying activity taking some heat out of prices.
Dairy Australia analyst John Droppert said China was still far and away our dominant market but the peaks of three years ago, when 92,000 head went to China, have slowed in correlation with lower dairy prices globally.
Australia has exported a total of around 70,000 head of dairy heifers for the past two financial years.
Last year, China took 56,000 head, Pakistan and Kuwait took the next largest shipments and then South East Asia.
Rabobank senior dairy analyst Michael Harvey said dairy export heifers had proven an important cash flow market for milk producers in the past couple of years.
Generally, the market has returned a premium over domestic sales of around $200 to $300.
The boom in trade with China came on the back of the development of large scale herds to meet fast-growing demand for dairy but those herds were now starting to be able to breed their own replacements, Mr Harvey said.
While supply of dairy heifers out of Australia is expected to tighten, marketers say the fact South East Asian countries want crossbreds, while China wants straight Holsteins, should mean Wellard’s contract can be supported by Australian producers.
Mr Droppert said dairy heifers were in hot demand on the domestic market at the moment due to high culling rates.
“With beef prices at such a high level, in many cases it made more sense to cull mature cows and keep heifers so that has put a lot of pressure on the supply base,” he said.
“While prices are not quite at the $2000/head highs of 2013/14, they are still very high.”
Wellard breeding and dairy general manager Colin Webb said sourcing and transporting the dairy heifers was just the first step of an extensive process to improve both the milk production and genetics of the Sri Lankan dairy herd.
Cattle from the first shipment are now being delivered to farmers in up-country districts of Sri Lanka where the climate is cooler and more temperate, and therefore more suited to efficient milk production.
“The Friesian Jersey cross is well suited to the region,” Mr Webb said.
“ The Sri Lankan farmers will get the benefit of the productive capability of the Friesian combined with the nutritional requirements and durability of the Jersey cross.”
Each recipient farmer’s facilities have been inspected to ensure they are suitable and safe for the animals.
Wellard has three direct employees working in Sri Lanka on the project.
When the project is at maximum capacity, more than 100 people will be working on the dairying project, employed either directly or by subcontractors. They will be assisted by the Sri Lankan Government project staff and veterinarians.
“The health and production of the heifers will be monitored by our veterinarians and technical advisers throughout the duration of the project,” Mr Webb said.
“Nutrition and technical advice is a key component of the contract. Not only are we improving the country’s milk production capacity, we are also improving the capability through infrastructure, animal husbandry and nutrition.”