China's hunger for baby formula feeds an underground market in Australia

Sydney

DESPITE fully stocked shelves of baby formula made by Procter & Gamble, Nestle, Danone and others, supermarkets in the Coles chain sell only two cans to each customer at a time.

The rule is designed to frustrate a thriving underground market that ships Australian formula to Chinese cities, where only 16 per cent of new mothers breast-feed their children exclusively, according to China's National Health and Family Planning Commission.

Private profiteers can resell a roughly two-pound (0.9kg) can of formula in China for as much as three times the Australian price, said Michael Harvey, a dairy-industry analyst at Rabobank, a big agricultural financier…