Imagine you own a business. Would you be happy selling 46 per cent of your top product to just one buyer? That is how New Zealand sells its milk powder to China.
Exports of milk powder doubled last year, driving overall exports to China up 45 per cent to $10 billion. Meat, log, fish and wine exports rose, but milk powder alone made up 40 per cent of all our exports to China. The share of exports going to China has risen from 3 per cent to 21 per cent in less than a decade.
Feel familiar? In the late 1960s and early 1970s, New Zealand worried about relying so heavily on one buyer. Back then we mostly sold sheep meat and butter to Britain.
We fought two wars to preserve that trade, but Britain's entry into the European Common Market in 1973 blew away that complacency. The next three decades were spent hunting for other markets to diversify in. Our success in finding other markets was extraordinary, particularly the Middle East, Southeast Asia and Latin America.
Even by 1992, Britain still bought 14.5 per cent of our dairy exports and China bought just 0.5 per cent. But by last year, Britain's share had dropped to 0.3 per cent and China's was more than 25 per cent.
New Zealand is not as dependent on milk powder exports to China as it was on exports of butter to Britain, but at the current pace of growth we'll soon get close. Many farmers say we should make hay while the sun shines, but there's also the problem of having too many eggs in one basket.
New Zealand had a preview of the risks caused by such reliance when, last August, it appeared China would ban all New Zealand milk powder imports after Fonterra's botulism scare.
We have a lot of catching up to do, and perhaps a little spreading around as well.