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EU agriculture Commissioner Phil Hogan returned with his business delegation from an eight-day visit to Hong Kong, Vietnam and concluding in Indonesia on Thursday evening. In what he describes as his diplomatic offensive, he was joined by EU businesses that between them account for €170bn of turnover, more than some EU countries.
Irish participation was confined to the dairy businesses of Arrabawn and Ornua, formerly the Irish dairy board. Both companies have significant business interests in the area and it is clear there is potential for more.
Hong Kong was the first leg of the visit where the Commissioner got off to a winning start by getting agreement to accept EU-origin beef rather than it having to be from one specific country. Hong Kong is the largest market for beef from the island of Ireland outside the EU, and is particularly active at present. It is one of the key ports in the region and product landed in Hong Kong supplies surrounding areas of southeast Asia as well.
Middle class
Vietnam is a developing economy of 90m people that, while in the shadow of China, also has a growing middle class with a growing demand for a western diet. It presents huge opportunities for the dairy industry as even though production has expanded dramatically over the past 15 years, it still only satisfies between a quarter and a third of demand.
Australia and New Zealand are key suppliers but the EU, and no doubt Ireland, will be extremely competitive in this market when the Free Trade Agreement, concluded at the end of last year, takes effect early in 2018. Ireland already exports almost a fifth of its dairy production to Asian markets, according to Bord Bia estimates for 2015.
Indonesia has similarities with Vietnam although it has a much bigger population of 250m people and is less well developed with poor infrastructure making landing, storing and distribution of product difficult.
Again dairy is where the huge potential is with domestic production only satisfying between a fifth and a quarter of demand, despite consumption lagging behind neighbouring countries on per-capita basis. Main suppliers currently are Australia, New Zealand and the USA, with powder being the main form of import.
Negotiations
Discussions on a free trade agreement with Indonesia were launched in July 2016, so have quite a distance to go before conclusion if the normal pattern of negotiations is followed. However, there is an advantage in that there is less controversy with the products each side is looking to trade with the other, unlike Mercosur or TTIP. Indonesia is a huge net importer of agricultural produce and therefore any deal only presents opportunity to farmers, not a threat.
Commissioner Hogan has one other travel ambition for 2016, a visit to Turkey with particular focus on live cattle exports from the EU to Turkey. This market has been active this year in spite of political instability in Turkey and two boats are currently operating between Turkey and Ireland, which provides a badly needed live export opportunity for Irish cattle given the difficulties with other live export destinations this year.
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