The origin is green — China is now Ireland’s second most important market for dairy exports

By Stephen Cadogan

Any doubts that Ireland is well placed to help feed Asia were dispelled last week when Wyeth Nutrition (China) signed a memorandum of understanding with representatives from the Irish dairy industry on imports estimated to be worth at least €2.5bn in the next three years.

It represented a commitment by Wyeth to source all of its dairy ingredients for its Illuma base brand exclusively from milk from Irish farms participating in Bord Bia‘s Sustainable Dairy Assurance Scheme under the Origin Green programme, Ireland‘s national food and drink sustainability programme, the only such programme in the world which operates on a national basis.

Members of the Irish trade mission on a market familiarisation visit to the Ranch Market supermarket chain in Jakarta Indonesia, with merchandising manager Hanoko Tjitrahadi, left.

Encouraged by this and earlier success in China, which is now Ireland’s second most important market for dairy exports, taking €666.4m of Irish dairy produce in 2017, Agriculture Minister Michael Creed led the recent week-long first Irish trade mission to Indonesia and Malaysia, to raise awareness of Ireland as a source of sustainable dairy for these countries.

Both are priority target food export markets for Ireland, with Indonesia’s big and growing population and changing consumer tastes putting heavy demands on their food industry to respond, and Ireland ideally placed to be a supplier, thanks to its growing output of high quality food and drink.

Hoped-for progress towards a free trade agreement between Indonesia and the EU is also encouraging for Indonesia-Ireland trading.

Both Indonesia and Malaysia have expanding middle classes generating demand for consumer foods made from quality ingredients, and they depend heavily on imported dairy.

Indonesia is less than 40% self-sufficient in dairy products. Malaysia is even more reliant on imports, with one of Asia’s highest liquid milk consumptions, and dairy self-sufficiency at just 5%.

Both countries have looked primarily to Australia, New Zealand and the US to meet their dairy requirements, but Ireland presents an alternative source, with a growing presence in Asia, backed up by Bord Bia opening a regional office in Singapore in 2016, and investing in research and insights teams to investigate market opportunities in Indonesia and Malaysia.

The McKinsey Global Institute predicts Indonesia will be the seventh largest economy in the world by 2030; it is already No 4 in population rankings.

Sarah Angelique, Senior Manager, Danone Indonesia, who took part in an expert market briefing for the first Irish trade mission to Indonesia and Malaysia, with Bord Bia’s Ciarán Gallagher, left, South East Asia manager and Padraig Brennan, director of markets

In 2017, Ireland sent €15m of dairy exports to this Asian giant,a tiny portion of its total dairy imports, of which New Zealand is the main supplier.

EU suppliers to Indonesia face only a 5% tariff, but there is tariff-free access for dairy imports Australia and New Zealand.

Australia and New Zealand account for over 90% of Malaysia’s annual dairy imports of about 280,000 tonnes.

Irish food and drink exports to Malaysia reached €37.3m in 2017.

How did the recent Irish trade mission go about raising awareness of Ireland as a source of sustainable dairy?

First came the homework, earlier this year, when Bord Bia researchers visited families and consumers in Jakarta and Kuala Lumpur to understand their attitudes to and consumption of dairy.

Next came briefings and cultural immersion visits for 20 representatives from Ireland’s dairy industry on the trade mission, to allow them experience at first-hand the manufacturing, retail and foodservice outlets, in Indonesia and Malaysia.

As is typical in Asia, government and industry are closely linked, and engaging with senior representatives from the Indonesian ministry of agriculture is a vital step.

This was led by Agriculture Minister Michael Creed and his Department of Agriculture team, highlighting how Ireland can provide safe, secure and sustainably produced food.

Mr Creed also met senior executives from Indo Foods, one of Indonesia’s leading food companies, a potentially important contact for Irish companies.

Meanwhile, Bord Bia organised dairy seminars in Indonesia and Malaysia. Here, 200 local food industry representatives learned that dairy is Ireland’s largest food export category, worth over €4 billion in 2017. Ireland is the world’s third largest exporter of butter, it is among the world’s top 10 cheese exporters, and supplies 10% of the global market in infant formula.

Olivia Leslie, Irish ambassador to Indonesia, with Agriculture Minister Michael Creed TD and Bord Bia CEO, Tara McCarthy, at the Irish embassy residence in Jakarta, the capital of Indonesia.

For the first time, Bord Bia arranged 150 business-to-business ‘speed networking’ meetings in Indonesia and Malaysia, that connected Irish companies to key importers and buyers. This vital part of the trade mission saw representatives of leading Irish dairy companies — Arrabawn, Carbery, Dairygold, Glanbia, Glenstal Foods, Ornua, and LacPatrick — talking business with importers in Indonesia and Malaysia.

The importers were interested in a range of Irish products such as casein, caseinates, cheese and skim.

Some were interested in reducing their over-dependence on established sources such as Fonterra in New Zealand.

Several of these Irish companies have already established dairy trading links with Indonesia and Malaysia.

It was notable that many of the Irish companies were represented by graduates of the Bord Bia marketing fellowship programme which offers 20 entrants per year an overseas learning opportunity.

Silver Hill Foods also took part in the trade mission. Also represented were Dairy Industry Ireland and Sustainable Food Systems Ireland.

On the other side of the table, the big attendance of importers confirmed the success of the trade mission in building awareness of Ireland.

But how soon might trading stem from the 150 business-to-business meetings?

Bord Bia will move the process along, by helping the Irish industry develop new products to address local taste preferences and demand for functionality around protein and calcium.

The other challenges in importing dairy material were touched on in a presentation by Sarah Angelique, Senior Manager, Danone Indonesia, a long established company.

She warned of a complex import licensing arrangement process which has to be gone through up to two months prior to importing.

Irish exporters will also have to observe strict halal certification rules, particularly in Indonesia, the world’s largest Muslim country, which has an 87% Muslim population.

The main halal requirement is absence of “un-halal materials” such as pork or alcohol.

Importers will have to watch out for Indonesia’s increasing protectionism, with a new tax of up to 10% imposed on imported consumer goods — but not on dairy products, because of the great dependence on imports.

The trade mission leaders were not deterred, with Minister Creed saying, “Our natural grass-based farming methods, our competitive and innovative dairy processing industry, together with our rigorous system of food safety controls, have allowed Ireland to develop a strong export- focused dairy sector.”

Tara McCarthy, chief executive of Bord Bia, was equally confident: “There is real potential to deliver a unique message for Ireland around our natural, sustainable dairy industry, which is already in line with their values.”

If Brexit goes bad, expect more of our dairy products to go south instead of east, on ships making the 38-day journey via the Suez Canal to Indonesia and Malaysia.


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