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More than 30 representatives from the Irish food and drink industry, from Kepak to ABP and Kerry Group have travelled with Minister for Agriculture Michael Creed and Bord Bia CEO Tara McCarthy to Japan and South Korea this week.
The high number of representatives travelling on the trip is testament to the intense interest in developing Irish interests in the Asian market.
We’re outside the door knocking so we have to be polite and respectful of their processes
Both Japan and South Korea are seen as two of the world’s most lucrative import markets, but Japan is widely recognised as a market influencer in Asia.
With the upcoming trade deal between the EU and Japan, which will substantially reduce tariffs on meat and dairy imports, the industry appetite for fresh trade has been whetted.
Listen to the explanation of the trade deal given by EU counsellor in Japan Mervi Kahlos in our podcast below:
Irish industry leaders also see an opportunity in the face of Brexit to diversify trade markets and develop stronger trade ties with Asia.Western-style foods continue to grow in popularity in Asia, and Irish businesses are hoping that they can sell more meat and dairy products to Japan and South Korea, and tie in with this trend for increased beef and cheese consumption.
Japan
Japan has the fourth largest economy in the world, with a population of 126m. It is a net importer, and relies on imports for 60% of its food consumption. According to the UN, Japan imported over €43bn worth of food and drink into the country in 2016. Irish food and drink exports to Japan totalled €56m in 2016. Pork is the most popular meat in Japan, and Irish exports were driven by pork. Japan produces 460,000t of beef a year but imports 730,000t a year. Australia accounts for 53% of the imported beef supplied to Japan.
South Korea
South Korea has demonstrated incredible economic growth over the last four decades and currently stands as the 14th largest economy in the world. The country has a population of over 51m, and food and drink imports are worth over €18bn a year. Exports from Ireland to South Korea are valued at €41m and have increased significantly since 2010. They are the fourth largest importer of pigmeat in the world and Irish exports to South Korea have been driven by pigmeat and seafood, particularly whelk. Korea imports over 200,000t of dairy products made up principally of cheese.
A new trade for cheddar?
Traditionally, Ireland has always been dependant on the UK to import most of its cheddar. But cheese exports to the UK dropped by 10% to 125,000t last year and, as Brexit approaches, industry leaders are hoping that Japan could provide a new market outlet for Irish cheddar.
Minister Creed and Bord Bia CEO Tara McCarthy, have also been stressing the importance of Irish cheddar gaining entry to the Asian market throughout the trade mission.
“Obviously one of our criteria for our dairy industry at the moment is looking for opportunities for cheddar cheese because traditionally 50%-60% of that product has been going to the UK,” McCarthy said.
“What we want to do is create a platform for here [Japan]. Can you say how many tonnes will transfer in? Well the stats at the moment show that between 4,000t to 5,000t have been reaching this market [from Ireland], and it’s on a huge upward growth of around 45%.”
Japan is unique among many Asian countries as the people have developed a palate for hard as well as soft cheese. Although the market is dominated by New Zealand and Australian imported cheddar, the rapid growth of the area may allow access for Irish cheddar processors.
McCarthy continued: “So you’d have to say that there is untapped potential here, also in so many of the meetings what’s come up is security of supply, because if you are only 15% self-sufficient you are going to look at your options and what countries can supply that need to you.”
Listen to the views of Irish Dairy Association director Conor Mulvihill in our podcast below:
Ireland has an uphill battle establishing trade links within two countries who enjoy a close trading and geographic relationship with Australia and New Zealand.
During a briefing with the Japanese press in Tokyo on Tuesday 14 November, a Japanese journalist asked Minister Creed how he thought a small island like Ireland could compete against Australia and New Zealand, who were much closer to Japan and already had a dominant market presence in the region.
Creed replied: “Competition is the spice of life ... ultimately the consumer will benefit from that competition.”
Despite the minister’s positive answer, Ireland’s profile remains incredibly low in Japan, with people often confusing Ireland and Iceland, assuming we’re part of the UK or simply not knowing we exist.
It was an issue that was recognised by Director of Dairy Industry Ireland Conor Mulvihill, who is taking part in the trade mission.
“We’re dealing with a very sophisticated and discerning market who don’t know where Ireland is and … we’re battling with the Kiwis and the Australians in their own back yard. It’s as if they were coming to the UK for us.”
“There’s enormous potential, but it’s going to take a lot of work. This is a toehold, I wouldn’t even call it a foothold, but it’s a start and it’s very welcome.”
Long-distance relationship
The rapid growth and continued trend for western diets gives Ireland a chance to edge into Asian markets, but ultimately we will always be further away than their nearest trading partners and establishing trade relationships in both countries will take a huge investment of time and money.
However, the market in Japan has already proved its worth to Ireland as we continue to export the bulk of our beef tongue to Japan for roughly €5.50/kg, and there is real potential to export Irish cheddar to the country as demand continues to grow.
South Korea also has huge potential as the sixth biggest global importer of beef, and the market for flank in the country is one of the highest priced markets in the world.
Although Ireland does not have access to the meat industry in South Korea yet, it has undergone two out of five inspections by South Korean officials.
Minister Creed told the Irish Farmers Journal in Tokyo that he intended to push the issue of approval when he arrived in South Korea later this week, “We’re outside the door knocking so we have to be polite and respectful of their processes, but we’re very confident that we can meet any market requirements. Our product is as good as anything that’s there.”
Establishing trade relationships in both South Korea and Japan takes a notoriously long time, but Ireland is already trading some volume of beef and cheese with Japan, and the groundwork has been laid to capitalise on reduced trade tariffs once the EU-Japan trade deal is ratified next year.
Ireland will never be able to compete in terms of beef or dairy volume with Australia, but if we can enter a niche market for meat or dairy products in Japan, similar to our sale of beef tongue to the market, it would pave the way for increased access to other countries in the region and put Ireland firmly on the Asian map.
In pictures: Tokyo Central Meat Market
Minister Creed on second leg of trade mission in Asia
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