The just-food interview: Owen Paterson, UK Secretary of State for Food
Paterson insists industry receives adequate governmental support
A drive to boost UK food exports was launched last week, when the country's largest ever trade delegation went to China in a bid to develop the UK's presence in the market. The mission was spearheaded by UK Secretary of State for the Environment, Food and Rural Affairs Owen Paterson. In this month's just-food interview, Katy Askew spoke to Paterson about the UK government's vision to grow overseas food sales.
The figures speak for themselves. The UK food industry can play a central role in the country's economic recovery. But it also lags its international rivals in exploiting export markets.
The food and farming sector is the UK's largest manufacturing industry, employing 3.5m people and generating a turnover of around GBP90bn (US$143.42bn) a year. The industry exports products to the value of approximately GBP18bn annually. Its scale - and scope for future growth - mean that it will be a "huge" driver fuelling the country's economic recovery, Secretary of State Owen Paterson tells just-food.
Paterson says the potential of the food industry is "absolutely enormous". In order to tap into opportunities for growth, the sector must look to expand overseas: exports will "absolutely" be a key driver moving the sector forward, Paterson insists.
However, on this front, much work remains to be done. The UK food industry exports more to Ireland than it does to all the BRIC markets combined. Paterson suggests that situation must change if the UK is to take full advantage of growing international markets, with more emphasis placed on high-growth economies like China.
Paterson headed-up a trade delegation to China last week, in a bid to kick-start the food trade between the two countries. Paterson accompanied 53 small and medium-sized British businesses that exhibited their products to 30,000 importers at the Food and Hotel China exhibition. While in China, he looked to promote British products by meeting with food companies, trade associations, industry experts and retailers in Shanghai.
The move comes in the context of an increased emphasis from the UK government on the importance of developing exports. Earlier this week, UK Prime Minister David Cameron told the Confederation of British Industry UK companies must turn their attention to export markets, and that these opportunities must "spread... right down to small and medium-sized businesses".
To this end, Paterson says Cameron struck an agreement with Chinese Premier Wen Jiabao that establishes the target of increasing total exports from the UK to China to GBP30bn by 2015.
If this target is to be met, there is some way to go. According to data from HM Revenue and Customs, total UK exports to China amounted to GBP8.77bn in 2011. "Currently our food exports to China are GBP105m and our whiskey exports are about GBP66m," Paterson says.
His trip to Shanghai cemented a belief the untapped potential of the Chinese food sector for UK exporters is huge - and growing.
"Taking the largest delegation ever of food producers to China's largest food fair was a thoroughly worthwhile exercise. What we established is there is real interest in China's rapidly growing prosperous classes," Paterson reveals.
Because imported foods are primarily purchased by affluent Chinese consumers, the slowdown in the Chinese economy has not had a great impact on demand and, with GDP growth still standing at around 7%, there remain plenty of opportunities for the UK food industry to grow in China.
Demand for imported foods is increasing as Chinese consumption patterns evolve and more Western-style diets are adopted, Paterson says.
Paterson adds one of the largest opportunities for UK manufacturers lies in the dairy sector as consumption of Western-style milk, cheese, and yoghurt is on the rise in the country. According to Department of the Environment, Food and Rural Affairs, UK dairy manufacturers should take the most of a "window of opportunity" that is presented by the fact that domestic dairy production is struggling to meet growing demand.
Other areas for growth include meat, confectionery and desserts, Paterson says.
Patterson claims UK food products, from ingredients through to finished goods, have a competitive advantage in China, thanks to the industry's high-quality and food safety standards. "We sell the three main points, which are the top quality raw materials, the rigorous production systems and the reliability of our traceability," he says.
In particular, Paterson suggests UK manufacturers are well-placed to respond to Chinese concerns over food safety.
"We have got to respect the problems the Chinese have had with some horrendous food scares and turn it to our advantage," he emphasises. "What we need to do is convince them that our products are thoroughly produced. And we have to respect the Chinese authorities concerns about food regulation and work with them."
To this end, the UK government hopes to strengthen its relationship with Chinese regulators in the coming months.
"We would like to get them over here, get them into some of our food producing plants, get our guys on the ground - we have very good UKTI [UK Trade & Investment] people in the consulate - to work closely with the customers and the authorities there. There is a lot of work to be done on that, which would help speed things up," Paterson says.
However, one of the largest challenges facing UK exporters looking to expand in China is overcoming the bureaucratic barriers to entry. It is here that support from the UK government will be crucial, Patterson says.
"I think what we need to do is limit the number of points of entry and really concentrate on working with the authorities there," Paterson reveals. "In the next few months we will work closely with the Chinese authorities. At a local level and hopefully here to see how we can work on the regulation and speed that up."
It is important the Government continues to support the sector. Following the Shanghai trip, Paterson reveals Defra will also host a meeting of UK companies that went on the trip to "prepare notes" and "see how we can move things further" and he is planning another trade trip to China in "about six months time".
While the UK government is stepping up the levels of support it offers UK food exporters, the financial assistance provided to SMEs still lags that provided by a number of countries, including Ireland, the US and even places like Chile, which has a comparatively low presence in the value-added end of the chain. For example, through various grants and subsidies both Chile and the US match the investment from SMEs in overseas marketing.
Paterson vigorously refutes the suggestion the UK government could do more to support the food industry and enable it to compete on an even international playing field.
"We don't need to [provide additional financial assistance for marketing]. I am confident that our products will sell themselves," he insists.
"Where the Government can help is to work closely with the Chinese authorities, helping speed up the regulation and to establish criteria for health standards. Obviously with some products - chicken meat or beef and lamb products - getting them into the country, that is what we will be doing. Those are our priorities."
According to Paterson, this level of government assistance is sufficient to allow UK food makers to prosper internationally.
"I can't do more in my position as Secretary of State for Food. To take the largest delegation ever to the largest food show ever, in China, the largest market in the world for food - that shows the level of our support. And the promise to go back in six months time. And to work closely with the Chinese government at every level over the next few months to help speed things up."
While the current priority for UK policy makers is to grow sales to China, Paterson adds that UK food exporters - and the government - should look beyond China to other export markets.
"Obviously we will be looking at a whole range of export markets because our aim is to work very closely with the agriculture, food and drink industries to increase exports."
- M&A Watch: Why Danone/Lifeway deal could be next
- Focus: The impact of Heinz's stevia ketchup
- Focus: Gen Mills turns to M&A to bolster US ops
- Shopper trends: Some confidence but promos popular
- Viewpoint: US health food in play - at a price
- Burton's "eyeing" United Biscuits merger
- Premier Foods revamp creates three divisions
- General Mills Q1 profits tumble
- Unilever to boost presence in Nigeria
- WhiteWave to buy dairy-free firm So Delicious