Firms based in high-milk producing countries engaging in international trade of their milk and dairy products have tended to focus on the enormous (and rapidly expanding) Chinese market. Though not a traditional market for dairy, rising individual per capita incomes and the popularity of diets and lifestyles perceived as “Western” have seen demand for dairy in China grow on average 12% a year since the early 2000s. Milk consumption rising across many international markets, including India, Brazil and Mexico. Moreover, increasing demand for organic and ‘clean’ food products, rising whey protein consumption, and a trend towards customers preparing and eating food at home is driving demand for relatively premium and niche products in the major dairy consuming economies, with imported dairy products helping to meet these changing consumer demands.

Dairy farms can struggle to access finance to invest in these ventures because of the large capital requirements required by retail banks, which place undue stress on their often low-margin, asset-dense businesses. Moreover, equity financing is only accessible to the largest agri-business conglomerates, starving the industry of another key source of business financing. However, dairy producers are increasingly turning to trade financiers to help them manage their cashflow by financing larger orders or one-off international transactions using trade finance products. By offering drastically reduced capital requirements on their lending, trade financiers can provide firms with the finance they need to invest in profitable ventures and pay suppliers promptly without disrupting their day to day business, whilst flexible repayment terms give them time to repay the loans from the profits of their investment.