China: strong demand for New Zealand meat

Strong demand from China saw about $400 million worth of New Zealand’s sheepmeat and beef exported there last year, leading to the UK being knocked off the leading sheepmeat market pedestal for the first time. While showing the genuine advantage to New Zealand’s meat exporters of the Free Trade Agreement (FTA) signed with China in 2008 it appears there are still some frustrations when dealing with one of the most populous markets on earth.

Dan Coup, MIA.Five years after New Zealand signed the Free Trade Agreement (FTA) with the People’s Republic of China in April 2008, the country is now a major market for New Zealand meat. There is a genuine advantage for New Zealand meat exporters, which can now send most meat products at just four or five percent tariff to the billion plus consumer market, says the Meat Industry Association (MIA)’s economic and trade strategy manager Dan Coup.

“It’s going in a very positive direction” he says.

Apart from some bureaucratic wrangling, that is. Three quarters of New Zealand’s sheepmeat plants and three-fifths of the beef plants have been officially listed by China as approved facilities for export to the market. This leaves a quarter of sheepmeat plants and two-fifths of beef plants unlisted, for bureaucratic reasons that the industry is at a loss to understand.

While Ministry of Primary Industries’ officials and the Minister of Trade Tim Groser have raised the issue with their Chinese counterparts, the lack of progress leaves the unlisted exporters frustrated at the perceived competitive advantage afforded to other meat exporters, for no apparent reason, and the missed opportunities for trade, explains Coup.

China: number one sheepmeat market for New Zealand

In terms of sheepmeat, China started off as a market for the lower value cuts, such as lamb flaps which are boned, rolled and used in traditional Chinese ‘hotpot’ dishes. However, customers are reportedly moving up the price scale and are starting to buy the high value cuts, says Coup. It is also a good market for New Zealand offal, co-products like fats, oils and casings and there is also a longstanding trade in hides and skins for further manufacturing.

China is now the largest volume customer for New Zealand’s sheepmeat, Statistics New Zealand figures show. It received 77,610 tonnes (product weight) of lamb and mutton worth $344 million FOB in the year to December 2012 – accounting for 22 percent of total exports. This is an increase of 77 percent in volume and 78 percent in value over the previous year.

Meanwhile, exports to the UK were 65,020 tonnes, an eight percent increase on a year earlier and accounting for 18.7 percent of value. At $532 million, the UK remains the largest market by value, but this fell by 8.9 percent over the 2012 year to December. The UK, and the wider European Union, remain important markets for high-value frozen and chilled lamb cuts.

Beef : setting off on same trajectory

Despite the bureaucratic wrangling, particularly for the unlisted beef plants, gains are being made and the future looks promising for New Zealand beef in the market. According to Coup, the China beef trade seems to be “setting off on the same trajectory as sheepmeat.”

In the year to end December 2012, exports of New Zealand beef nearly tripled on the previous year to 10,491 tonnes, accounting for about three percent of total exports and placing China at number seven on the export volume table. These exports were worth $51 million FOB – a 322 percent increase on a year earlier.

Meat companies have been involved in a range of promotions in a number of centres. In addition, Beef + Lamb NZ Ltd has organised a number of promotions in China, raising awareness and demand for the product in the hotel and restaurant sector. There is a Chinese language website and promotional material and educational seminars are held for food industry professionals in various centres.

Meanwhile, Australia – which does not have an FTA with China as yet but is in negotiations – is  reporting a surge in interest in beef from China and is  expecting to exceed its  35,500 tonne forecast for this year. Australian exports of lamb also increased this year and are thought to be sitting on 3,600 tonnes. However, currently, these Australian exports will be paying full tariff, says Coup.

It pays to remember that competition is never far behind, nipping at the heels!

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