Article written by Andrew Kempson, General Manager Global Climate Policy
China is a country that, traditionally, hasn’t been renowned for its environmental focus or sustainable actions. But this is something its government is rapidly working on changing and it has implications for our sector.
China is the largest importer of milk in the world with $2.1B imported in 2021. New Zealand imports make up the lion’s share of this ($1.15B), followed by Germany ($350M), France ($165M), Australia ($134M), and Poland ($87.3M).1
In the past the key dynamics driving China’s food imports was volume, food safety and quality. Now we’re starting to see more green shoots from the country, which stems from a remit from its government.
Government-led change
While the Chinese government agenda of decarbonisation is largely still focused on energy transition (aiming to achieve carbon neutrality before 2060), it has also created lofty goals for its agricultural sector. These include plans to promote the green transformation of agriculture, strengthening environmental protection of agricultural production areas, and water conservation, researching applied agricultural technologies that can increase carbon sequestration and enhance soil organic carbon content, and controlling the use of chemical fertilizers, pesticides and agricultural plastic sheeting.
Domestically, the country is also moving towards strengthening and validating its animal welfare practices and promoting shared prosperity (poverty mitigation) measures for rural revitalisation.
China now has an emissions trading scheme and in late 2021, its government issued a series of stringent standards and mandates around environmental, social and corporate governance reporting for climate emissions and environmental targets. These measures all feed into its imports and food business with Scope 3 emissions (those produced up and down the value chain) becoming a growing focus.
Over time, companies that import products to China will likely need to demonstrate their sustainability practices, much like they’ve had to prove their food safety management practices.
For New Zealand, this remit is a massive opportunity. We have a far better sustainability story to tell compared to some of the other markets exporting agricultural products to China. Europe and the US have more of a housed system that doesn’t have the same sustainability or provenance story that we have. In essence, our biggest market wants to prioritise the things we are really good at!
Data central to our story
A big part of our success is through the information our Co-op farmers provide each year in their dairy records.
Beyond the Farm Source Insights reports, farmers don’t often see what the information they provide is used for. From an export perspective, however, it is of massive commercial value providing us with an incredible amount of data to demonstrate to customers what great work is happening on farm.
Our biggest global customers have told us it is “gold standard”. From the on farm data, we’re able to extrapolate and validate the great provenance and attributes of our dairy products, which provide a really good selling point for our farmers benefit.
There will always be a place for higher quality and sustainable imports into China and we have great relationships with our customers in this market. We’re doing what we can to leverage the amazing product that farmers give us and convert it into value.
1The Observatory of Economic Complexity: https://oec.world/en/profile/bilateral-product/milk/ reporter/chn.