Coles and Woolworths have faced a backlash from angry parents unable to buy their preferred brand of infant formula, while prices have surged based on overseas demand. A small business in Preston, which sends infant formula to China, says Australian supermarket receipts are a "certificate of authenticity". Bellamy's raised its prices recently by up to 30 per cent. Woolworths introduced a four-tin limit on infant formula sales, while rival Coles halved its quota to two tins. Coles has introduced new technology at checkouts, which stops customers exceeding their limit. Not enforcing quota

A senior Woolworths executive told Fairfax Media the beleaguered supermarket chain was doing little to enforce its quota, saying "sales are worth way too much for us". "We put up the signs on the shelves about can limits and give lip service to enforcing it," the executive said. "Sales are worth way too much for us. Look at Coles. They fought a small price rise on Tim Tams and waived through a 30 per cent hike on Bellamy's. That tells a story . . . we know more than half the sales are grey market and turn a blind eye." While sales of formula have almost doubled, the number of Australian babies has declined since 2012, from 310,000 to 300,000. There has been no significant fall in breastfeeding rates for Australian mothers over the same period. China is home to 20 million babies, of which just 25 per cent are breastfed.

Scares over contaminated formula have created a multibillion-dollar black market for Australian and American infant formula in China, where consumers pay two to three times the price for popular local brands. Sold out almost constantly Such is the demand that some of Australia's most popular brands, including Bellamy's Organic, a2 Platinum and Karicare, are sold out almost constantly, angering Australian parents. In November the federal government opened talks with the big retailers about resolving the increasing baby formula shortage. Assistant Trade Minister Richard Colbeck said the government was reluctant to intervene because it was concerned it could undermine the prices Australian farmers were paid for their milk.

"The problem is you intervene in the market, like they did in New Zealand – it had a very detrimental effect on the producers of infant formula – and it's actually flowed back to farmgate in lower prices to dairy farmers," Senator Colbeck said. "That's one of the reasons why I have been so reluctant to see government intervention in that space. I'd prefer to see the supermarkets put limitations on purchases and have direct engagement with customers . . . so they can meet their customer needs." Grey market sales to China show no sign of slowing. A shipping company based in Preston said new supermarket limits were working in their favour, because the receipt worked like a "certificate of authenticity" in China. "When we sell two cans, we sell [it] with a receipt from Woolworths," a staff member said. Certificate of authenticity

"Then they trust the formula was bought here in Australia. It's like a certificate of authenticity and we charge more." Fairfax Media has obtained the past three years of supermarket scan data from IRI Aztec, which collates point-of-sale information from Coles, Woolworths and Metcash supermarkets. That data shows sales have surged by $200 million since 2012, providing a windfall for supermarkets and suppliers. The data showed a2 Platinum, which is doubling its production, has surged past Bellamy's to be the No. 1 premium brand of infant formula sold in Australia, and No. 2 in overall sales behind Danone's Nutricia.

Bellamy's will increase production in 2016 after it signed a manufacturing deal with the world's biggest dairy exporter, Fonterra, to complement a similar arrangement with Bega Cheese. A2 chief executive Peter Nathan conceded that a large amount of his product sold in Australia ended up with Chinese consumers. "The data doesn't break out who the ultimate consumer is, but we know that a large amount of our domestic sales ends up overseas. I don't think that demand is going to abate any time soon. "Chinese consumers are driven by fear of their own domestic produce, especially for infant formula. And the one-child policy has gone. Demand for Australian formula is only going to increase." A spokesman for Woolworths said the supermarket "works hard to ensure there is sufficient infant formula available for all our customers".