Dairy demand in China sees exports on the rise

Paul Shand, South West Regional Director for the DIT, discusses how this could benefit the dairy industry in the region.

China is quickly becoming the export destination of choice for South West dairy firms hungry for growth. Not only is the country one of the world’s most dominant economic powers but demand for dairy among its increasing middle-class population is growing at an unprecedented rate. In fact, it’s predicted that imports of dairy products will exceed 19million tonnes a year by 2026, from around 14million tonnes in 2017 (1).

Chinese consumers have only been eating dairy for the past 20 years, with its popularity only recently ballooning; China is now one of the world’s top importers of butter and cheese. Trade tariffs on a range of cheeses were recently cut from between 12-15% to 8% and in October 2017 the Chinese authorities lifted an import ban on several types of soft and mould-ripened cheeses, such as Stilton and Roquefort.

This should all be welcome news to dairy farmers in the South West who make up around a third of all England’s dairy producers (2). The region is also home to nearly half of England’s organic farm land (3).

As diversification becomes a key source of income for rural businesses in the UK, South West dairy farmers are well placed to tap in to the growing opportunities in China. Figures from the Farm Business Survey indicate that 64% of England’s farming businesses have diversified their operations, whether it’s making cheese from their dairy herd’s milk or clothes from their sheep’s wool (4). One example of this is Wellington-based company, Woolly Shepherd, who make products using natural fibres and British wool to treat noisy, reverberant rooms.

Over £2.4m worth of the South West’s dairy produce was exported to China in 2016. However, we know that some businesses still believe that doing business with this lucrative market can pose more challenges than others.

Specifically, the country is not one single market – there are different regional economies and economic hubs, which need to be taken into account and researched thoroughly. And, in China, personal relationships and building trust are essential.

When trading with any overseas market, businesses should run a credit check before agreeing to an international contract and take out appropriate insurance. Measures should also be put in place to protect intellectual property rights.

To help companies navigate these challenges of selling abroad, the Department for Environment, Food and Rural Affairs (Defra) and the Department for International Trade (DIT) offer support for food and drink producers looking to get their products to China and other key markets. The ‘Food is GREAT’ campaign aims to increase UK exports to China by £80 million.

Headquartered in Wellington, Somerset, Somerdale International is a great example of a local business now trading successfully with China following support provided by DIT. The company was looking to launch a variety of new cheeses and now intends to increase its exports to China by 50% in the next two years.

Other businesses across the South West can take advantage of the support and advice available to help them succeed in China like Somerdale.

DIT South West also has a dedicated food and drink programme designed to help businesses become part of the free international online food and drink directory which is presented to global buyers.

The Great British Food Programme is helps businesses gain exclusive access to meet the buyer events to get them selling overseas.

The demand for quality UK food and drink products overseas is on the rise, so this programme helps businesses tap into this world of opportunities.