Courier dad refuses to ship baby formula to China, losing $10,000 a month

A Woolworths shelf emptied of popular Australian brands. It has imposed an eight-tin limit. Photo: Supplied
A Woolworths shelf emptied of popular Australian brands. It has imposed an eight-tin limit. Photo: Supplied

An Australian father and courier business owner has taken a stand against baby formula profiteers, refusing to ship the tins they have stripped from shop shelves to flog overseas.

His stand will cost him about $10,000 a month.

It comes as a trade law expert described the shortage as a "crisis", which may soon require the government intervene.

Rasad Merchant, father to 18-month-old Aira and owner of Couriers to India, said there was a sharp increase in the number of inquiries about whether he could ship baby formula – especially Bellamy's Organic and A2 Platinum – to China in the past month.

Angry that he had not been able to find and buy a tin of A2 Platinum for two months because of a national shortage, partially caused by opportunists reselling the product in China for profit, Mr Merchant decided to ban shipments of baby formula.

"I could be making roughly $10,000 a month, but it's just not the right thing to do," the Melbourne businessman said.

"I thought, do I really want to do it? And if exports have to be managed, it cannot be in the black market format. We cannot allow this black market to happen."

But his efforts are unlikely to cause a ripple in the mass flow of formula to China, which in 2008 was rocked by a melamine contamination that killed six babies and triggered widespread distrust in Chinese brands.

Multiple courier companies have since sprung up in areas such as Melbourne's Boxhill and Springvale, specialising in shipping baby formula, allocated to the Australian market, to China.

Fairfax Media has seen a price list for hard-to-find formula issued by a Melbourne-based courier company that is selling directly to the lucrative Chinese market.

It shows a six-tin carton of Bellamy's Organic stage three formula is priced at $265, including postage. A tin at Coles is priced under $20.

Baby formula is not a restricted or prohibited good under the Customs Act and the Australian Border Force does not control its import or export, a spokesman said.

New Zealand and Hong Kong, which have both battled baby formula shortages, have introduced or begun enforcing laws to crack down on parallel exports. Hong Kong has a two-tin policy.

Mr Merchant said he did not understand why the Australian government had not imposed similar restrictions to combat the national shortfall, saying formula should be a restricted item.

"It wouldn't be hard. We move drugs, that is pharmaceuticals, back and forth between countries, and can track them. We comply with restrictions and regulations from carriers. We can do the same for baby formula," he said.

University of New South Wales trade and commercial law lecturer Weihuan Zhou said the baby formula shortage was a crisis, with not only tourists and enterprising international students involved in the mass buy-up, but local merchants.

"Australia's export controls focus on food standards and safety when it comes to milk and milk products. At the moment, there are no export restrictions on baby formula such as those introduced by Hong Kong in 2013," he said.

"It would be better to deal with this using domestic measures instead of border instruments such as export restrictions. However, I am also not sure whether the government is willing to intervene as market competition is favoured. In the end, it probably has to rely on the private sectors themselves," he said.

"That said, as this crisis escalates into a real threat to public interest, the government may step in."

Professor Gail Pearson, from Sydney University's Business School, said under World Trade Organisation rules, if the buying up of baby milk powder created a "critical shortage", then, as the exporting country, Australia could impose restrictions.

Fairfax Media's request for an interview with Agriculture Minister Barnaby Joyce was declined.

This story Courier dad refuses to ship baby formula to China, losing $10,000 a month first appeared on The Sydney Morning Herald.