Opportunities afoot in emerging Asian markets?
When we talk about Asia, it is very easy, and understandable, to focus on China. There are however, a number of other countries in the region well worthy of consideration, aside from the more obvious Japan and South Korea. Interest in these countries becomes increasingly relevant as Brexit approaches, which is likely to compromise access to the EU market where over 60% of UK pork exports are currently destined.
The Philippines is an important and growing market for the UK. In 2016, the UK shipped over 3,100 tonnes of pork and over 4,000 tonnes of offal there. In the year to November 2017 the UK exported 3,800 tonnes of pork to the Philippines, a 29% increase over 2016, and offal exports increased by 54% over the same period, to more than 6,000 tonnes.
Consumption continues to outpace demand and is likely to continue to do so; the government reduced some tariffs on pork, to allow more imports in 2017 to counteract high domestic prices brought about by a tight supply situation. GIRA estimates suggest the Philippines imported around one sixth of its total pig meat consumption last year. High energy and feed costs will continue to pose a challenge for the domestic industry, although the country is investing in its own domestic production and processing facilities. As such, long-term export prospects look favourable for both UK pork and pig offal.
While the UK does not currently have market access, Vietnam could be another country of interest. With an economy probably in the place that China’s was a decade ago in, albeit on a smaller scale, it is outward looking and open to foreign investment. China’s decision in November of 2016 to ban live imports of pigs from the country and its ongoing struggle to be recognised as FMD free, together mean its domestic pork industry is facing some significant challenges. Pork prices have been falling and some producers have responded by exiting the market, suggesting that production will contract over the next few years.
A rising import demand means AHDB has identified Vietnam as a market with some modest potential for low value cuts and pig offal, if market access can be obtained. However, the EU-Vietnam FTA is expected to come into force in 2019 and will give European pork increased market access and reduced tariffs barriers. With the UK leaving the EU, this may make competing on this market challenging, even if access were to be obtained.
Read more about the UK’s non-EU export opportunities for pork in its Horizon series.
Duncan Wyatt, Lead Analyst
firstname.lastname@example.org 0247 647 8856