Formula production is ‘complex’

By Country News on December 15, 2015

The rationing of infant formula continues nationwide and while manufacturers have committed to increasing production, consumers should not expect to see the demand met any time soon.

Dairy Australia industry analyst John Droppert said the production of infant formula was a complex process and required a number of minerals and vitamins sourced from overseas and speciality suppliers.

‘‘They’re very high specification products and it’s something that production can’t respond to as quickly,’’ Mr Droppert said.

The process of manufacturing infant formula is complex and involved, as all ingredients and processing steps are highly regulated, according to an article by Mark Fink, published by Dairy Innovation Australia Ltd.

Mr Droppert said the demand from China had been around for a long time but he believed the new channel — the on-selling to overseas markets, which had been occurring since 2013 — has only taken off more recently and retailers had responded by enforcing stricter per-transaction limits.

‘‘At the retail level it’s happened very quickly and that demand has got ahead of supply,’’ Mr Droppert said.

‘‘Now, it’s actually noticeable on the shelves.’’

Mr Droppert said Australian manufacturers could not simply supply more product to local retailers, and contractual agreements with local and international retailers needed to be considered.

‘‘They don’t want to short-change customers overseas.

‘‘They need to continue supplying them ... in the short-term, that’s why it does take longer (to meet demand).’’

Although international demand is high, only a handful of manufacturers and blenders are approved to supply infant formula products from Australia directly into the Chinese retail distribution market, according to Mr Fink’s article.

By Country News on December 15, 2015

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