Australia's Murray Goulburn Says China Milk Crisis Lifts Demand

By Madelene Pearson

Sept. 24 (Bloomberg) -- Murray Goulburn Cooperative Co., Australia's biggest milk processor, said Chinese demand is rising as consumers seek alternatives to tainted milk products in the Asian country.

Demand from Southeast Asian countries has also gained, Mal Beniston, general manager of international sales and marketing, said today in an interview. The Melbourne-based cooperative accounts for 9 percent of global dairy trade.

Melamine-laced milk, found in the products of 22 Chinese dairy companies, has killed at least four babies and sickened 53,000, spurring countries in Asia and Africa to curb Chinese imports. Sales of infant formula may climb 19 percent to $8.5 billion in Asia this year, Euromonitor International Plc. said.

``From China we've seen increased demand for our milk powder products and also a lot of inquiry about availability of infant formula,'' Beniston said by phone in Melbourne. ``We do have some supplies of full-cream milk powder above forecasts that we can make available.''

China's purchases of milk powder accounts for 6 to 7 percent of sales, he said. The dairy cooperative made 260,000 metric tons of milk powder in 2007, its largest product.

Murray Goulburn processed about 35 percent of Australia's milk production in 2006-07, with export sales of A$1.2 billion ($1 billion) in 2007, according to its Web site.

Prompt Shipments

``The market has been pretty tough over the last few months, so it's noticeable now we are getting inquiries for prompt shipments'' in other parts of Asia, Beniston said.

Taiwan today banned the sale of products manufactured with Chinese milk powder, joining restrictions in 15 other places including Singapore, Malaysia, Vietnam and Indonesia.

Starbucks Corp., the world's largest coffee-shop chain, has switched to soy milk in China to replace products made by China Mengniu Dairy Co. Mengniu was one of 22 Chinese companies which sold products containing the industrial chemical melamine, normally used to make plastic and tan leather.

Melamine has been added to diluted milk by some suppliers to dairy producers to make the protein content appear higher than it is, according to the Chinese government.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net