UK's problem is opportunity for Irish exports to China

Dairy ban opens door to exporters

China is a magnet for foreign milk powder makers
China is a magnet for foreign milk powder makers

Roisin Burke

A BAN slapped on British dairy products by the Chinese government opens up a major multi-billion euro opportunity for Irish dairy companies exporting there.

Britain last week failed an inspection by Chinese government authorities, resulting in its imports being blocked under new food safety laws.

Food safety scandals, including one where contaminated infant formula caused deaths, mean foods like dairy products sell at a premium in China, with baby formula costing five times more there than in Ireland.

Chinese government inspectors visited Ireland in April and audited several dairy producers as well as visiting farms here, the Department of Agriculture confirmed.

At midnight last Thursday the Chinese government published a list of companies approved to sell dairy products in China. Thirty-three Irish firms got on it, while no British dairy-makers made it. Ireland was one of the few countries that managed to get 100 per cent of its companies over the line for this critical approval.

It's a coup for the Department of Agriculture, which has been on a 10-month charm offensive with Beijing to get Irish companies on the list, dealing deftly with a situation described as "highly political" with Chinese government authorities.

In a move considered disastrous for its China trade, New Zealand, which has an €8bn dairy produce export business in China, has also hit serious problems, as only six of its 13 infant formula-making companies were approved to sell products there under new regulations.

The approval, coupled with the end of milk quotas, means that Ireland is also well placed to steal a slice of New Zealand's trade and head for a €1bn-plus dairy export trade with China in coming years, a department insider told the Sunday Independent.

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"China wants to diversify away from New Zealand and Ireland is looking for a slice of that," she said.

In just the last three years Irish dairy exports to China trebled to €170m and "expediential" growth is expected in the next five years, the source said.

Three of the world's top baby formula makers are based in Ireland and that market alone to China could be worth over €120m. Ten per cent of the world's baby formula comes from Ireland through companies based here such as Danone, Abbott and Kerry Group.

China is in the process of relaxing its notorious 'one child' policy where families were discouraged from having bigger families and demand for formula is expected to grow.

The Chinese ban on British dairy products may still affect Irish producers however, as products produced here such as cheese made for the retail multiples are in some cases packaged in Britain.

The clampdown by China is driven in part by efforts to restore the local dairy industry's share of the baby formula market lost following a massive scandal.

In 2008 contaminated milk caused the deaths of six children and hundreds of thousands more became ill after drinking tainted formula, which caused consumers to increasingly opt for foreign brands.

Sunday Indo Business