Supplying Asian markets
Looking further afield for growth
A booming middle class in Asia could present a longer-term opportunity for British farmers and growers.
While economic uncertainty in the UK continues to affect British farmers, the market for agricultural produce has never been more global. And some of the fastest-growing markets are in Asia1.
The UK’s exports of food and drink rose £1.8bn to £22bn during 2017, the most recent year that government statistics are available, with Asia accounting for an increasing share of sales2.
China is the UK’s eighth most important export market for food and drink, buying £560m of our produce in 20171. Chinese demand for many products has soared in recent years, with exports as a whole up four-fold over the past decade, according to the Food and Drink Federation (FDF), led by dairy products, pork and cereals3.
But China isn’t the only Asian importer of British produce that’s buying more. Sales to Singapore (up 42%), India (27%), Hong Kong (26%) and Taiwan (9%) all increased dramatically between 2016 and 20184.
Moreover, Asian customers are buying a growing variety of British goods. Pork is a particularly strong seller, but sales of beef, where a ban on UK produce in China was lifted last year, are also growing, while India is in the process of opening up to imports of UK sheep meat. Earlier this year, Japan removed barriers to British lamb and beef5.
Exports of dairy products are also increasing – the Philippines bought 27% more British cheese6 in 2017 alone, for example. Trade tensions in some parts of the world are also prompting much greater Asian interest in British wheat and barley.
There is expected to be a significant increase in global demand for British produce over the next seven years, according to forecasts from the Agriculture and Horticulture Development Board (AHDB), ranging from meat to milk powder. It says Asia will account for more than two-thirds of this7.
The world will be home to 4 billion middle class consumers by the end of 20208, according to the World Economic Forum (WEF), rising to 5.3 billion by 2030. By then, around two-thirds of the world’s booming middle class population will live in Asia, compared to less than half in 2015, according to separate research by the Brookings Institution, a US research group9.
“These trends may continue, as economic growth in Asia underpins an increase in the continent’s middle-class populations, with the appetite and financial means to buy more imported goods,” says Oliver McEntyre, National Agriculture Strategy Director at Barclays UK. “For UK farmers able to tap into that opportunity, the potential is enormous.”
Opportunities to supply new markets
Identifying gaps in the market or areas ripe for expansion might require agility as local conditions change. For example, the African Swine Fever epidemic in China may provide an opportunity for UK pork exporters to increase sales in the country.
“China accounts for a large proportion of the global pig herd but livestock volumes have been devastated,” says Oliver. “UK pig meat may be able to fill some of the devastating losses in China.”
Livestock producers could also monetise what are currently waste products. Jane Jordan, an agriculture specialist, says: “Some farm businesses and meat processors are having particular success with ‘fifth quarter’ products, such as chicken feet and beaks, while others have found a market for, ears, tails, hooves and horns.”
Finding the right showcase for produce is another potentially important stepping stone to success. Food and drink trade shows, whether held in the UK for international buyers or in local markets, offer farmers and food producers a means with which to meet potential customers and begin developing relationships.
Trade missions, including those organised by the Department for International Trade (DIT), the government agency that promotes British exports, enable both local market research and customer network development.
The bottom line, says Barclays’ Oliver McEntyre, is that Asia is a more accessible marketplace than many farmers realise, particularly if they seek support. “This is too valuable a market to ignore,” he says. “And given that the quality of British produce is held in such high regard across the world, our farmers could be well placed to succeed.”
There will be a number of challenges and logistical hurdles to overcome, from exporting regulations to the lengthy distances over which produce must be transported. The unknowns can be daunting, particularly for independent farmers working in isolation.
Many co-ops, distributors and processors, which farmers use to sell their produce, are working hard to increase export sales – and will be an important point of contact. They may have existing customer relationships in Asia which mean they already need to source certain produce for export – or have ambitions to develop new ones.
“For the individual farmer looking to diversify and thinking about how to tap into demand from global markets, the first step is to talk to your processor,” says Oliver.
For further help and information, there are a number of industry bodies and government-funded organisations that can provide advice, such as the DIT, along with Barclays’ own specialist trade team.
“The key is to identify the right opportunity for your particular business,” says Oliver. “Asia is a huge market but it’s also extremely diverse, and understanding which country or product segment is the most natural fit for your produce is fundamental, as is working with processors and people who can help access the markets.”
Your Barclays Agricultural Manager is a vital partner when you’re seeking to develop your export strategies, potentially offering practical support, including funding, as well as access to global networks of advisers and experts with in-depth market knowledge.
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