IT’S late afternoon and a frigid breeze is blowing off Bohai Bay in eastern China, as an Australian dairy cow is prepped for milking. A farm hand guides the distinctive black-and-white beast on to a raised circular platform before cleaning and priming the udder.
It's not "milking time" as such at farm Number Three on the barren coastal planes of Shandong province, as this operation never stops.
At the AustAsia Modern Dairy, 160 cows are milked every eight minutes in a process that runs for 20 hours each day – the other four hours are used for cleaning.
That means in just three rotations of its platforms, this farm produces more milk than the average Australian dairy farm would in a day. And that's before counting AustAsia's two nearby farms, which also run 10,000 cattle each.
"You would never dream of doing anything on this scale at home," says the company's Australian chief executive, Edgar Collins.
Yet AustAsia is only just getting started in China. Farm Number Four, at a cost of $US60 million ($63.4 million), is set to open early next year, while Number Five is in the design phase and will be completed at the end of 2014.
At that point, the pan-Asian diary group will have invested more than $US300 million in China and have around 55,000 cattle in its herd.
That will make it easily bigger than any Australian or New Zealand dairy farm, before even considering its Indonesian operation, which has a further 6500 cows and a regional fresh milk business.
Yet despite its size, the story of AustAsia and Collins is barely known outside the dairy industry. This is surely set to change, as there is no hotter global trend at present than the combination of China and dairy.
The battle for the Australian-listed Warrnambool Cheese and Butter (WCB) epitomises this mega trend, which is all about rising demand from China's increasingly wealthy consumers.
This fact alone has seen WCB's valuation double to $475 million since July as Canadian, Japanese and local players look to lock in supply on expectations of a big payday in China.
AustAsia headed for listing
It is these heightened expectations that have allowed Collins and his partners to expand so rapidly. But even when its two new farms come into production next year, the company will still only be halfway through its Chinese rollout.
With the backing of a US private equity firm and Indonesian agricultural tycoon Handojo Santosa, AustAsia plans to build a further five farms in China over the next five years at a cost of $US300 million. "We plan to be the leading supplier of fresh milk in Asia," Collins says.
Before its expansion is complete, Collins hopes to list the group on either the Singapore or Hong Kong Stock Exchange, with a valuation beyond $US1 billion.
"Dairy is a great industry in China," he says. "The government is very supportive of those building up the industry, yet at the same time it's very hard to copy what we do."
AustAsia's first dairy, near the old Dutch hill town of Malang in East Java, Indonesia, opened just weeks before the 1997 Asian financial crisis.
Its next move was driven by necessity rather than a grand strategic plan.
Unable to make any money out of selling raw milk in Indonesia, AustAsia went into processing and created the Greenfields retail brand.
It is now the market leader for fresh milk in Singapore, Malaysia, Indonesia, Brunei, Hong Kong and the Philippines.
"That business has grown on average 25 per cent to 30 per cent a year and has done so for the past five years," Collins says.
The Indonesian dairy and fresh milk business now turns over $US70 million annually and will soon be merged with the China business.
"We're really just farmers that got into another part of the business," Collins says.
In 2004, after the briefest of courtships, AustAsia built a dairy in Inner Mongolia with a local partner, but sold out four years later as there were too many investors and conflicts of interest.
The company began again in 2009 with just 300 milkers, just as consumption had begun to recover after the melamine scandal of the previous year.
The contamination, which killed six infants and affected 54,000 others, resulted in the closure of many small dairies as they could not guarantee quality.
This opened the way for big operators such as AustAsia, which entered the market with strong government support at a time when demand was far outstripping supply.
Growth predicted for three more years
In a report published in September, Rabobank said this trend would continue for at least two to three years, at which point import growth would slow.
The result is the highest raw milk prices in the world.
Rabobank estimates Chinese producers receive 40 per cent more for their milk than farmers in Australia.
Collins says his premium is more like 50 per cent. "In China, the real margin is in the farming," he says.
But with supply eventually set to catch up with demand, Collins says the company's next step is to launch its Greenfields fresh milk brand in China – most of the milk sold in China is UHT.
Once again, the price difference is staggering. At a downtown supermarket in Shanghai, a litre of fresh milk sells for $5, compared to as little as $1 in Australia.
"We'd never invest in dairy in Australia as it's been totally destroyed by the big retailers," Collins says.
With the opportunities in China, that shouldn't be necessary.