New Zealand to lead the herd Myanmar’s in dairy industry

New Zealand to lead the herd Myanmar’s in dairy industry

By Victoria Bruce
Senior Reporter
M-ZINE+

The distant South Pacific island nation of New Zealand is making its mark on Myanmar soil and looking to transfer its agricultural prowess in milk production and dairy manufacturing to farmers in the Southeast Asian country.

Enter the cows... NZ set to help boost Myanmar's dairy industry

New Zealand’s Prime Minister Mr John Key recently toured Myanmar’s key cities of Yangon and Naypyitaw and pledged NZ$6 million in development funding for a model dairy farm, the first of its kind in Myanmar.
Mr Key, the first ever New Zealand prime minister to visit Myanmar, met with key officials including President Thein Sein and Opposition Leader Aung San Suu Kyi as well as members of the New Zealand expatriate community during his three day visit in November, 2012.
However, Mr Key (who is also the Minister for Tourism)’s visit wasn’t complete without a visit to Yangon’s iconic Shwedagon Pagoda.
His entourage included New Zealand’s Ambassador to Myanmar, Thailand, Lao PDR and Cambodia, HE Tony Lynch and Trade Commissioner Karen Campbell.
M-ZINE+ Senior Reporter Victoria Bruce sat down with Ambassador Lynch and Ms Campbell in their Bangkok headquarters to discuss the commercial significance of New Zealand’s re-engagement with Myanmar and how New Zealand aims to step up its role in assisting Myanmar’s economic development.

Opposition leader Aung San Suu Kyi with NZ PM John Key. Photo PM's office

 While New Zealand’s aid contribution to Myanmar is modest compared to major donors such as the United Kingdom and Australia, Ambassador Lynch says his island nation will make their mark by sticking to what they do best – exporting their dairy and agribusiness expertise to assist local farmers improve production.
Enter the cows…
Dairy farming is New Zealand’s largest export earner, with dairy products accounting for a solid 21 per cent of merchandise in 2009, surpassing wool exports. The country's largest company, Fonterra, controls almost one-third of the international dairy trade and recently appointed a permanent country manager for Myanmar.
Popular New Zealand dairy brands such as Fonterra’s flagship Anchor brand of butter line the shelves of Yangon’s supermarkets and as the purchasing power of Myanmar’s consumer market increases, New Zealand can expect demand for its high quality calcium-rich dairy products to grow.

NZ Trade Commissioner Karen Campbell

Ms Campbell said New Zealand, also known as the land of the Long White Cloud or Aotearoa in the Maori language of its indigenous inhabitants, excelled in agribusiness and education services.
“We want to focus on what we know we do well, which has been sought after by the Myanmar side,” she told M-ZINE+.
Their flagship project will be the model dairy farm, which aims to engage 20 – 25 local farmers, each with around ten dairy cows, in a small-scale cooperative farming basis where New Zealand dairy experts will assist with quality control, feedstock, milk processing and development and general expertise and guidance on the cattle’s upkeep.
“A study completed last year identified that dairy was the area where we should concentrate on in Myanmar,” Ms Campbell said.
“The feedback from Myanmar side is they want help on improving the quality of the livestock and gaining better understanding on feeding programs, such as different types of grass and fertilizers and the collection and processing and development of milk products,” she said.
The project is aimed at benefiting small farmers and Myanmar participants will be invited to visit New Zealand and observe its booming dairy industry in action.
Right now, a private consultancy is undertaking a feasibility study and over the next 12 month will be involved in community engagement to connect with Myanmar farmers, in conjunction with the Ministry of Livestock.
“We had a very positive reaction from the President and minister and it’s quite clear that from the government perspective they are looking to support rural livelihoods and development in the rural sector,” Ms Campbell said.
While the initial pilot project will focus on empowering grass roots farmers, Ambassador Lynch says if the dairy project proves popular and economically viable then there’s scope for the private sector to take up the cause.

“We’ll take it one step at a time, so if this works well and there’s lessons learnt and knowledge gained, this could develop an internal momentum of its own,” he told M-ZINE+.
Ms Campbell said the commercial sector could become involved in funding the expansion of Myanmar’s dairy industry.
“One of the largest New Zealand dairy companies, Fonterra, recently announced the appointment of a country manager to Myanmar and currently they’re exporting a lot of dairy products from New Zealand,” she said.

Ambassador Tony Lynch

“If there’s significant progress seen and good traction with New Zealand brands then you would expect the commercial sector to show more interest in the sector,” Ms Campbell said.
As well as the dairy project, New Zealand aid money will continue to channel into its English-language training for officials scheme and providing tertiary education scholarships.
Its “practical and pragmatic” officials training program, which connects Myanmar officials with their relevant New Zealand equivalents in various government departments, has been running for more than a decade.
“As there are a vast array of donors and clearly issues around aid coordination, our view, which was reinforced during the Prime Minister’s visit, is that we should concentrate on a couple of areas which we know will be valued and will be helpful by the Myanmar side,” Ambassador Lynch told M-ZINE+.
Discussions with the Myanmar side highlighted a need for dairy expertise and education, two niche markets where New Zealand excels.
Since President Thein Sein’s reformist government came to power in 2011, Ambassador Lynch says New Zealand has gone from a low intensity relationship to renewed engagement with post-regime controlled Myanmar, pointing to the significant ramping up of its aid budget which has more than tripled from around NZ$5.8 million between 1997 and 2012 to a projected NZ$6 million of the next five years.
“This reflects a commercial interest, a political interest and it reflects the expectations around the level of engagement with the Myanmar government, its people and the business sector,” Ambassador Lynch said.
Notable New Zealand companies active in Myanmar include construction and design firm Becker, which has manned its Yangon office for around 17 years and mobile telephony company Oceanic which has a portfolio of work in less developed nations such as the Caribbean, and lately, dairy giant Fonterra.
“There’s a number of people nibbling at the doors and looking at various sectors,” Ms Campbell said.

Anchor dairy products

 New Zealand companies that already have a Southeast Asian presence are best placed to make the first move in Myanmar, says director of the New Zealand Thai Chamber of Commerce, Justin Barnett.
“Personally I believe Myanmar offers a unique investment and trade opportunity for New Zealand companies both within the region and even from New Zealand itself,” Mr Barnett, a New Zealander who has worked and lived in Thailand for 12 years, told M-ZINE+ in an email.
And while the greater New Zealand business community is joining the flow of global investors visiting post-sanction Myanmar, the island nation of some four million people is unlikely to be fronting any significant investment to Myanmar.
 “Broadly in terms of outward investment, New Zealand is a capital-deficit country,” Ambassador Lynch said.
“There’s more investment coming into New Zealand than coming out,” he said.
So for now, New Zealand will focus on keeping its projects small and simple – focusing on the niche sectors where global experience has shown it performs best.
Trade versus investment…
The general trend with new or emerging markets is to cultivate trade relations before committing to investment, and Ambassador Lynch says it’s likely the same will happen with New Zealand and Myanmar commercial engagement.
“Often you’ll have a pattern of developing trade and investment will follow that,” Ambassador Lynch said.
Ms Campbell, who is Trade Commissioner for Myanmar, Thailand, Cambodia and Laos, says that while more Made-in-New Zealand products are popping up in Myanmar’s supermarkets, current trade relations between the South-western Pacific Ocean country and the Southeast Asian nation are remote.
“There may be NZ product coming into the market through places like Singapore but the New Zealand manufacturers are not necessarily managing that - it’s more likely through distributers in Singapore who have those relationships with the Myanmar market,” Ms Campbell says.
With Myanmar being part of ASEAN, trade engagement between the two countries is facilitated under the framework of the Australian and New Zealand Free Trade Agreement, which ensures 90 per cent of products are duty free, although quotas and tariffs remain on certain products.
And while there’s been some interest from the Myanmar side in New Zealand products such as dairy and fruit, it hasn’t peaked to a “heavy pounding on the door,” Ms Campbell says.
Some of the key challenges inhibiting New Zealand exporters include lack of clarity over import regulations and restrictions on the Myanmar side, such as import/export licenses only being available to Myanmar companies.
“It’s something that’s still a distant unknown,” Ms Campbell said.
“New Zealand companies find themselves needing to locate people on the ground to facilitate and that’s certainly been a huge certainly a huge challenge for New Zealand companies looking to enter the Thai market,”
“Right now we don’t have a great deal of depth of knowledge on how complicated those processes are within the Myanmar market, but one would expect, as with any emerging market, that they’re not necessarily easy of straightforward.”
She anticipates the regulatory framework will become clearer over the coming months once the by-laws of the Myanmar Foreign Investment Law (FIL) are promulgated.
However, despite the lures of post-sanction Myanmar’s untapped consumer market and investment opportunities, the New Zealander’s aren’t about to let anyone pull the wool over their eyes.
“If businesses rush into Myanmar, they’re going to find it very difficult,” Ambassador Lynch says, highlighting the need for measured investment approach to one of the world’s last frontier markets, isolated for decades under military rule.
 “It’s quite clear that people have to go in with their eyes open,” he says.

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For a full feature story on New Zealand/Myanmar economic ties, please read M-ZINE+ (issue 7) which is due to be published on February 14, 2013.

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M-ZINE+ is a business weekly available in print in Yangon through Innwa Bookstore and through online subscription at www.Mzineplus.com.