New China trade deal for UK processors explained

Published 24 August 18

A new dairy trade deal with China was announced by the government on 23 August. The deal aims to give processors increased flexibility on sourcing ingredients for their products.

Previously, UK dairy products exported to China could only be made with UK dairy ingredients. The new agreement allows the UK to export dairy products that have been made with dairy ingredients sourced from third countries. It is estimated to be worth £240 million over 5 years to the UK, as China has a fast-growing demand for dairy products.

How does the deal help the UK?

The deal has a couple of exclusions. It does not include raw milk imported from third countries, and it does not include infant milk formula.

Therefore, it will not help Northern Ireland processors who process raw milk from southern Ireland. However, the deal will allow UK processors who import ingredients such as pasteurised milk or cream, cheese or milk powders to use those in products destined for China.

Examples could be cheddar that is imported then matured and packed in the UK, cream that is imported and turned into butter or AMF, or milk powders that are imported, refined and blended into speciality powders (provided that is not for infant milk formula).

In summary, the agreement will remove complexity and segregation challenges for UK processors who are targeting China as an export destination, while importing some of their dairy ingredients.