Irish farms roll out the red carpet for Chinese

The Chinese prime minister was in Ireland this week and for our agri-food industry it was an important visit.

Alongside Li Keqiang was a senior group of ministers representing China’s political elite. These are busy people, representing a population of 1.35bn compared to 4m in Ireland.

That they chose to stop off here on a journey to Brazil tells us a lot about the ongoing development of links between China and Ireland.

It is well known that business success with China is dependent on long-term planning, consistent engagement, and the commitment of political leaders.

It is worthwhile reminding ourselves of the numbers at play. Over the past 30 years alone the number of urban dwellers in China has mushroomed from 170m to 700m.

The current urbanisation rate, at 50%, is still significantly below the 80% found in most developed countries so the potential for more urban growth is crystal clear.

McKinsey calculates that consumption will account for 43% of China’s economic growth until 2020. This contrasts with a 33% share in 2010. Within that, growth sectors of importance to Ireland display very strong expansion trends.

China is expected to overtake the US as the largest dairy market in the world by 2017. It will double in size, to €55bn, by 2019 as demand for milk, cheese, and yoghurt grows. The baby food market in China has expanded by 29% over the past six years alone.

In the beef sector, Rabobank forecasts that Chinese beef imports will have to grow 15%-20% each year for at least the next five years to keep up with demand.

These eye-popping growth rates help explain why Irish ministers, supported by a phalanx of civil servants and various state agencies, are giving China maximum priority in policymaking.

Shaping relationships with their counter parties in China, forging links with distributors and retailers inside the Chinese economy, and building strong foundations in Ireland around food quality and safety are essential elements in creating a bridge between Ireland and Chinese consumers.

Why should Ireland dare to believe it can evolve as a strategically important supplier to China? A number of factors come to mind.

Food is a huge geopolitical topic in all countries but especially in China, where a devastating famine in 1958-62 left an indelible mark on the psychology of its people.

Sourcing food from countries that have no risk of using it as a political weapon is an important factor in building strategic relationships.

China has also endured a number of food scandals in recent decades that have made food efficacy and safety a key priority for the leaders of the current generation.

Ireland, as an island on the edge of the Atlantic, with a strong commitment to natural grass-based feed systems, ticks a number of important boxes for Chinese policymakers.

The third reason is that Ireland is home to a cluster of successful international food companies that have the capability and ambition to develop valuable manufacturing, sourcing, and distribution assets supporting the Chinese food industry.

Linking those companies to Chinese corporations will help build the infrastructure needed to service this marketplace of limitless possibilities.

Putting all these pieces together is a multi-year challenge for Ireland, particularly when other countries covet a relationship with the Chinese economy.

Diligent and detailed work at every level from farm to factory, as well as in the retail and web-based distribution systems needed to service the Chinese consumer, is a strategically important objective. Part of that is achieved by a series of trade visits to China. And part of it is delivered by rolling out the red carpet on a dairy farm in Mayo.

Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.


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