Issue 142 may 2014 ChInese regulatIons CAN plaCe … · ChInese regulatIons plaCe Infant formula Industry at rIsk Issue 141 april 2014 ... ‘disaster’ compared to ... bottling,

sustainability Forum makes bold predictions

chinese regulations place inFant Formula industry at risk

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Issue 142 may 2014

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ChInese regulatIons plaCe Infant formula Industry at rIsk


Australian infant formula suppliers are seeking to secure their share of an annual $76 million export of product to China, in the wake of a Chinese-imposed product quality certification deadline that the majority of Australian suppliers have failed to meet.

an estimated 80 per cent of current or potential suppliers are seeking clarification from the australian department of agriculture to understand and meet stringent new audit regulations imposed by the cnca, china’s certification and accreditation administration.

the australian infant formula industry has been working from the beginning of 2014 to interpret and work towards meeting

the cnca’s licencing deadline of may 1, 2014.

so far, only two companies have cleared the cnca-imposed hurdle: murray goulburn and australian dairy park.

at least one supplier, who preferred not to be named, regards compliance as “a government-to-government issue” and said the market has slowed in response to the cnca audit.

delays in achieving compliance, post-deadline, threaten to seriously disrupt local suppliers and at worst could cause a shut-out of the majority of australian distribution.

chinese authorities are using the audit to cull a voluminous list of global

infant formula importers currently estimated at more than 3000 companies and to stamp out practices such as counterfeiting and passing-off.

under cnca rules foreign suppliers will be limited to 41 manufacturers from 13 countries.

new Zealand exporters have fared better than australia in meeting the cnca’s may one deadline.

new Zealand’s minister for primary industries nathan guy said the country has successfully negotiated cnca terms for the majority of its suppliers. “new Zealand officials have been working closely with manufacturers and chinese officials to

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address corrective actions, allowing eight manufacturers to be registered.”

top-level bureaucrats led by new Zealand primary industries deputy director general roger smith visited china to work with officials to place more new Zealand companies on the register.

the new Zealand experience provides hope for australian suppliers who feared the cnca may first deadline as irrevocable.

it now appears china will continue to register suppliers as long as they comply with overseas market access requirements. exact terms remain unclear.

australian government agriculture officials, in response to questions

for this article, issued a non-attributable statement saying: “the department is working with manufacturers and chinese authorities to gain registration for infant formula establishments.”

no indication was given when further registrations might occur.

Victorian premier denis napthine said china is currently Victoria’s fourth-largest and fastest-growing dairy market.

“the market for infant formula in Victoria is expected to double over a five-year period from 2012 to 2017,” the premier said.

australian and new Zealand manufacturers have a genuinely good reputation in china, but they are not immune from the

complex global audit called by the cnca in February 2013 which has seen many countries and their regulatory authorities caught short.

britain so far has failed to have one supplier comply. in contrast, ireland has had all 33 of its infant formula companies accepted.

australian dairy industry observers and infant nutrition organisations with memberships made up of affected companies view the issue as “sensitive”, however in recognition of the value of the chinese market stopped short of criticism. chief executive of the infant nutrition council, Jan carey, said there is a need for better understanding of the new regulations, which in some instances have been loosely

defined. “the cnca wants to ensure it has a strong and reliable supply chain so it can trace product from the cow to the can. it hasn’t yet worked out exactly what the regulations mean for australian suppliers within a time-frame that has enabled them all to comply,” said ms carey.

Joanne bills, formerly with dairy australia and now director of consultancy Fresh agenda, said many australian companies are already disadvantaged by the new regulations.

“smaller outfits will struggle (to meet the new rules). it will stop trade for them,” she said. “larger companies able to demonstrate and verify what’s in the can will have far fewer problems,” ms bills said.

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mark pearce, spokesperson for dairy australia, agrees. “the chinese are seeking a clear line-of-sight for production in response to past issues they have had with baby formula,” he said. “this is not a comment on australian quality. the regulations are world-wide.”

new Zealand’s compliance rate, hailed as a success by primary industries minister nathan guy, has been reported by the european media as a ‘disaster’ compared to the irish experience – leaving one searching for a word to describe the australian response.

“china wants to diversify away from new Zealand.

ireland is looking for a slice of that,” the uk’s Sunday Independent newspaper quoted mr guy as saying. “it’s a coup for the (irish) department of agriculture which has been on a 10-month charm offensive with beijing to get irish companies on the list, dealing deftly with a situation with chinese government authorities described as highly political.

“in just the last three years, irish dairy exports to china trebled to €170 million and exponential growth is expected in the next five years,” the paper said.

australian authorities either deny or decline to comment on the

speed of reaction to the chinese audit. “i’ve not heard that we are slow off the mark,” dairy australia’s mark pearce said. “compared to other countries i’d say we’ve not been slow at all.”

a senior industry spokesperson who declined to be named and quoted said new Zealand’s comparative success was most likely in proportion to the size of its market.

“the dairy industry in new Zealand is gigantic and prioritised as such,” the spokesperson said. “in australia the priority is perhaps not so well understood.”

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Only two Australian companies met the 1 May CNCA-imposed product quality certification deadline, leaving the majority of local suppliers facing disruption to Chinese exports

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LoCAL news

Predictions were tabled and a cornerstone was crystallised at the Australian Aerosol Association’s flagship Industry Forum event held recently in sydney.

an impressive mix of local veterans and international

heavyweights addressed and debated concerns under the theme of industry sustainability and future innovation.

in this issue we conclude our Forum coverage of the presentation highlights.

ardagh groupArdagh group managing director – metal – Australia & new Zealand, John Bigley, who is also the Aerosol Association of Australia president, said that proliferating population growth has driven economic growth, the side-affects of which have impacted negatively on the environment – citing particularly the impact of packaging material such as plastic in our oceans.

mr bigley said the aerosol industry needs to continue to reduce its environmental impact by conducting more sustainable business practices. he said ardagh group bases such practices around economic, social and environmental pillars, and (citing the uk’s bruntland commission)

apaC forum flags sustaInabIlIty ImportanCe, makes bold predICtIons


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The recent Forum presented and debated concerns around themes of industry sustainability and innovation

Ardagh Group managing director – Metal – Australia & New Zealand and Aerosol Association of Australia president, John Bigley, emphasised the importance of sustainable business practice in the aerosol industry


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that the pursuit of a single pillar should not be at the expense of another. he raised ardagh group’s taree plant, which manufactures around 100 million aerosol cans per annum, as an example. it partnered with local businesses and government with shared interest in reducing carbon footprint, and embarked on a program to reduce spoilage and energy consumption, and improve water quality. the benefits were not only environmental but also created economic savings, which were confirmed in part by an independent energy audit.

mr bigley said a green agenda affects sales and that its influence will increase as society becomes more conscious of environmental issues and voters drive political urgency

to address them. he said that most retailers seek to be ‘seen as green’ but not all are able to substantiate it.

he argued the producers of some plastic water bottles, for example, claim to be carbon-neutral to carbon-negative, but contrarily was able to demonstrate remarkably high co2 emissions for bottled water once packaging materials, manufacturing, bottling, freight and distribution were factored in.

steel and aluminium, on the other hand, have high recyclability – steel being the highest and aluminium the third-highest behind glass. he pointed out that aluminium does not wear out or run out in a recycling loop and that steel, although 100 per cent recyclable, degrades to its natural ferrite state if not recycled.


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apaC forum flags sustaInabIlIty ImportanCe, makes bold predICtIons Cont.

ardagh group taree – sustainability advantage program: achievements-to-date• SpoilageReductionProgram •AnnualProduction:100millioncans •Spoilagereduction2009–2013:12%-7.8% •Approximatesavingof400,000cans,or$100,000 •Communication,improvementteams,engineeringupgrades

• EnergyReduction–CombinedGas&Electricitycosts>$2millp.a. – energy usage - units per 1000 cans •Electricity2008/09through2012/13:31%, •Gas(LPG)2008/09through2012/13:22%, •Operationaleffectiveness,shut-downprocedures •Air&Gasleaks,burnertuning •Investigatedheatrecoverywashsystems(unviable)

•Water • Canwashsystemscontrollerupgrades –Reducedchemical&townwaterusage • ImprovedMCW(MidCoastWater)compliance

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european aerosol federation (fea)germany-based President of the european Aerosol Federation, Dr rolf Bayersdoerfer, offered a european perspective on global environmental imperatives.

dr bayersdoerfer echoed mr bigley’s earlier link between population growth and environmental degradation. he said human population growth by 2050 is forecast to reach a maximum of 10 billion, with the lowest forecast figure being eight billion.

these increases are likely to have corresponding effects on global warming, water scarcity and environmental pollution due to increased consumption.

he conceded that sustainability is often perceived as merely a “fashion trend” but believes that it is crucial to environmental preservation.

he said europe strives to close the gap between ambition and reality when it comes to sustainability matters. consumers’ health due to air quality (indoor and outdoor) plays an important

role in these action plans. central to the european focus on resource efficiency is the idea of ‘doing more with less’.

dr bayersdoerfer said the Fea’s objective is to support its aerosol industry to achieve sustainable economic growth and that in practice that means developing life cycle assessment (lca) guidelines, briefings and tools, promoting aerosol can

recycling and conducting public education programs such as in primary schools.

he cited several innovations that improved aerosol product sustainability referred to as “sustainovations”, including dry shampoo, multi-use hair colouration products and compact aerosols.

he also touched on “disruptive” product

innovations and referred to a hair-styling powder which not only saves largely on carbon footprint but also changes consumer behaviour.

dr bayersdoerfer concluded that can-makers, raw material suppliers, retailers and marketers must join forces to enact sustainable economic growth because a single perspective will not achieve it.


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systematic Innovationsystematic Innovation Ceo Darrell mann posed the intriguing question: what will replace the aerosol can?

he said the answer will be driven by disruptive innovation, by the application of an innovation that comes from a ‘step change’ – usually applied from a different industry and not through optimising existing methods.Whenseekingsuch

answers his researchers look for evolutionary patterns that ultimately end in “field changes” and that the ultimate field change is non-physical – whether it be magnetic, electrical, or electromagnetic-radiation. he cited the emerging change from material paint systems to using led lighting for

decoration. “customers don’t care about delivery, they look for outcomes,” he said.

he pointed to several other devices that have transformed delivery from solidtofield.Well-knownexamples include hand-saws that eventually became plasma-cutters and rulers that became laser measures.

more recent evolutions include waterless dishwashing

machines and ultrasonic toothbrushes. a patent has been issued for a needless diabetes ‘injection’ that uses an electrical field to instruct a body to produce insulin.

mr mann talked about the ‘Voice of the system’ and the likely future progression of various parts of aerosol systems: “the can evolving to use less-dense materials and achieving increased

flexibility. liquid propellants ‘want’ to be gas and gas in turn ‘wants’ to be a field.”

in conclusion, mr mann predicted that while aerosols will eventually succumb to ‘field’-based delivery solutions, he said there is untapped potential in today’s aerosol design solutions. “lots of systems haven’t evolved to the aerosol stage. any solution that is currently

a ‘monolithic liquid’ is a likely candidate for being supplanted by an aerosol.

“there’s also vast potential for improvement of current aerosol deficiencies – such as lack of accuracy, safety and cost – by exploiting considerable untapped potential in current designs – making use of pulsation, resonance and harmonics, for example.


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Documents

Issue 142 may 2014 ChInese regulatIons CAN plaCe … · ChInese regulatIons plaCe Infant formula Industry at rIsk Issue 141 april 2014 ... ‘disaster’ compared to ... bottling,