China’s potential for agriculture
Richard Halleron reflects on a successful trade mission to China and the prospects for reaching into its market.
The annual statistics relating to China’s dairy sector make for very interesting reading. For the record, they are as follows:
• consumption – 40 million tonnes;
• production – 38 million tonnes; and
• imports – 10 million tonnes.
“But these figures do not add up,” I hear you say. Well, in fact, they do given that almost 20 per cent of the milk produced in that country (8 million tonnes) is deemed not to be suitable for human consumption. And therein lies the opportunity for Ireland moving forward.
I recently spent a week in China, visiting dairy processing operations the length and breadth of the country as part of a Bord Bía trade mission, headed up by Irish Agriculture Minister Simon Coveney. To a man, each of the Chinese company executives I spoke to confirmed that their own consumers have major concerns regarding the quality of the milk produced by local farmers.
The most obvious example of this can be seen within the lucrative infant milk formula market. Product sourced from Ireland, for example, will sell for up to four times more than comparable milk powders made from locally sourced raw materials. The reality is that Chinese parents, quite rightly, view the nutrition of their children as being of paramount importance. And, increasingly, they are looking to Ireland as a source of dairy products which they regard as being safe to eat and of the quality they want.
And the same principle also holds where other foods are concerned, including pork and poultry. The good news is that the food traceability measures now operating in Ireland and the drive behind Origin Green in the Republic will provide Chinese consumers with the reassurances they need when it comes to the food they eat.
China is home to 1.3 billion people. Even the briefest of visits to places like Beijing and Shanghai will confirm the growing wealth of the middle classes in these cities. At the present time, the ‘in thing’ to do in all China’s major centres of population is to go out for the evening and enjoy a steak dinner. Wouldn’t it be great if even a small fraction of that meat could come from Ireland?
The closer relationships that have been secured between Irish food companies and their Chinese trade counterparts must be built on as a matter of priority, according to Minister Coveney. Speaking at a breakfast hosted by Bord Bía to officially close the trade delegation mission to China, he said that, in practical terms, this meant ensuring that similar initiatives must now be hosted on an annual basis. “China has the potential to become Ireland’s largest agri-food market,” Coveney added. “And the sooner this happens, the better. This week has been marked by a number of landmark developments, chief among them being the decision by the Chinese Government to push ahead with official veterinary inspections of Irish beef processing plants next month. But there has also been tremendous progress made by Irish dairy and pigmeat processing companies this week in forging closer ties with the Chinese market.
“But our growing political and business links with China must not be allowed to become a one-way process. The development of a relationship built on equality and trust represents the only way forward. And to this end, I have made it clear to the Chinese Government that it should consider making Ireland a hub in the context of its future investment plans for Europe.”
Doing business
Agri-businesses wanting to develop opportunities in China must have a presence on the ground, according to Alltech Director Mark Lyons. Speaking to agendaNi, the Alltech representative also pointed to the extremely fast moving pace at which the various business sectors within China are developing.
“We established a permanent presence in China two years ago,” he added. “China is now our third largest market, one which has delivered 60 per cent growth for Alltech since 2012. Our business strategy has been focussed on the principle of forging strong relationships with industry leaders and backing this up with a series of joint research and development ventures. We have also established a strong working relationship with China’s Agriculture University.”
Lyons remarked: “We have been very open in allowing our products to be trialled independently under commercial farming conditions in China. At one level, this comes with an inherent risk but the potential pay-off in taking this approach is more than considerable.” Mark Lyons also pointed to the tremendous potential for growth within China’s agri-production sector.
“The scale of the industry is breath-taking,” he commented. “The Chinese Government is committed to delivering higher levels of food security over the coming years. In practical terms, this means harnessing and utilising the latest thinking and technologies across the entire spectrum of animal breeding, husbandry and nutrition. And it is in this context that Irish agri-businesses can play a key role.
“But none of this can be achieved remotely from Ireland. The Chinese work on the basis of developing trust with the people and companies they do business with. Specifically, they respect the effort made by foreign companies in committing to the establishment of an on-the-ground presence in their country.”
The launch of the ‘Green Love Plus’ infant milk formula brand represents the start of a new and exciting business opportunity in China for the Kerry Group, according to the organisation’s CEO for Asia, Edmond Scanlon. ‘Green Love Plus’ will be sold by the Beingmate company, China’s foremost retailer of infant formula and associated nutritional products for children. The launch event was held in the Chinese city of Hang Zhoa.
“The unveiling of the new brand represents the culmination of a 12-year relationship with Beingmate and a €100 million investment programme on our part,” Scanlon continued. “The new product is the first infant milk formula to be wholly developed and manufactured by an Irish business. Our new plant at Charleville has a 15,000 tonne capacity and it is our intention to secure this level of throughout as quickly as possible.”
The Kerry representative also confirmed that the company has plans to develop similar products with a range of other retail consortia, all aimed at the infant nutrition market throughout Asia.
“This is phase one of an exciting project for the group as whole,” Scanlon continued. “We are also targeting markets in the Middle East and Africa.” Beingmate General Manager Huang Tao explained that Green Love Plus will be sold throughout China courtesy of the company’s 100-strong team of distributors.
“We have had a long relationship with Ireland. Chinese consumers recognise the quality of Irish dairy products. And, on that basis, I am confident that our new infant formula will be in strong demand,” he commented.
“We will be selling Green Love Plus as a premium product. It has been specifically formulated to meet the nutritional requirements of Chinese babies. This represents an additional selling point in the market.”
