Chinese Taipei: one year on

From 1 January 2015, New Zealand beef will enjoy tariff-free entry to Chinese Taipei (Taiwan), joining New Zealand venison, sheepmeat and goat carcases and other co-products, thanks to the ANZTEC trade agreement between the two countries. Beef and venison volumes have both lifted in the past year to the island state of 23 million.

On 1 December, Primary Industries Minister Nathan Guy and Trade Minister Tim Groser welcomed the first birthday of the Economic Cooperation Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC).

Tim GroserSince the signing of the agreement on 1 December 2013, New Zealand’s total exports to Chinese Taipei have increased over 20 percent compared with the same period the previous year, a $150 million increase, according to Groser.

“Over 69 percent of New Zealand’s exports to Chinese Taipei are now tariff-free, representing savings of around $78.4 million to date,” he says.

The agreement will see complete removal of tariffs on New Zealand’s current exports to Chinese Taipei, with 99 percent eliminated in four years.

“Tariffs on virtually all dairy products were removed from day one, along with apples, cherries and wine. This has been a boost to all these industries, especially apple exports which have tripled from $13 million to $39 million,” says Guy.

Sheepmeat and goat carcases, venison, edible offals and some co-products such as meat and bone meal, deer penises and tendons have all been tariff-free since the agreement came into force on 1 January 2014.

The lifting of beef tariffs on 1 January will be followed two years later by tariff-removal on the majority of chilled and frozen sheepmeat cuts. These are currently attracting a levy of NT$11.3/kg ($0.47/kg) or 15 percent (whichever is higher), which are due to be removed in year four after entry-into-force, from 1 January 2017.

NZ beef sales lift 17 percent

However, it is beef that is the predominant meat product heading into Chinese Taipei, New Zealand’s fourth most valuable beef market.

In the year ending 30 September 2014, New Zealand’s beef exports to Taiwan had lifted in volume by 17 percent to 20,235 tonnes and in value by 12 percent to $137.7 million (year ending September 2014), according to Meat Industry Association (MIA) statistics, derived from Statistics New Zealand export merchandise data. The tariffs on beef, currently set at NT$10 (about $0.41) per kg will be lifted next year on 1 January 2015, two years after the agreement was signed.

According to the MIA’s trade and economic strategy manager Phil Houlding, there’s no question that ANZTEC’s a good deal.

“While the tariffs on beef were not too high, it all helps,” he says. Based on last year’s figures, the tariff removal could save the industry at least $8 million dollars over the next year.

“Another unsung benefit has been the 20 percent tariff on processed meats going to zero when the free trade agreement entered into force,” he explains.

Meat processor and exporter ANZCO Foods has had a presence in Taiwan for the past 20 years. The chief executive of its harvest division, Peter Conley, says now that Taiwan lines up with China on access, both markets are starting to align in terms of price and products.

The majority of New Zealand beef, predominantly frozen, heads to foodservice customers, though some is sold at retail, explains Conley, who adds that New Zealand’s  main competitors are the US and Australia – alongside other proteins.

He notes that New Zealand is in a ‘phasing period’ with preferred access for the time being. For now, Conley says there are many positives for New Zealand around the Taiwanese market. “Taiwan continues to be a steady market for us and demand continues to be strong,” he says.

The current high US beef prices are lifting all beef prices and ANZCO is anticipating Australian beef supply to slow over the coming year, which could help to maintain the scenario for New Zealand beef.

“However, the big question will be around consumer demand and their response to higher beef prices. Will they trade down within the category, buying cheaper cuts, or switch to a less costly protein?” he asks. “That’s the question beef suppliers are asking globally.”

There has been talk of resistance from Taiwanese buyers to the high prices but, even so, product is still selling.

Chefs preparing for a tasting at a B+LNZ promotional event in Taiwan. Photo B+LNZ.Promoting grass-fed beef

The farmer-funded body, Beef + Lamb NZ (B+LNZ) supports New Zealand meat exporters with a range of generic promotional activities to lift awareness of the attributes of grass-fed New Zealand beef, boosting sales, and it also carries out market research in Taiwan.

Recent B+LNZ consumer research shows that Taiwan’s beef consumption amongst its population of 23.3 million is around 4.3kg a head, with 31 percent of consumers eating beef two to three times a week (compared to 44 percent for chicken, 36 percent for pork and 33 percent for fish). When buying beef, the most important factors the Taiwanese consumers take into account are food safety (70 percent), country of origin (64 percent) and good taste (43 percent).

The research shows the attributes that consumers most associate with New Zealand grass-fed beef:that it is delicious (46 percent); healthy (33 percent); has food security (32 percent); and is high quality (30%).

Promotional activity has involved a range of restaurant, fast-food and retail promotions, including sponsorship over the past two years of a Noble Family Steakhouse TV commercial and most recently support for two new beef products – a smoked beef burger and smoked beef sandwich in the MOS Burger chain. Sponsorship of two episodes of “Kitchen Cook-off”, a TV programme aired on the Discovery Channel in Asian-specific regions, in the near future, will see a focus on BBQ food and steak dishes. There is also a Taiwanese B+LNZ ‘Pasture Perfect’ Facebook page.

Venison exports to Taiwan expected to grow

Deer Industry New Zealand (DINZ) also supports ANZTEC, particularly as the New Zealand velvet industry is an example where the two countries and cultures have a close relationship with a mutual desire to lift consumption of velvet and improve stakeholder returns. The deer industry board believes the Economic Cooperation Agreement (ECA) between the two countries will help both deer industries grow, according to DINZ venison marketing manager Innes Moffat.

He explains that venison marketing companies have been looking at developing the trade in venison into Taiwan in recent years too, particularly as the 15 percent ad valorem import tariff was reduced to zero when ANZTEC came into force.

The volume of venison exported to Taiwan increased by 123 percent from 124 tonnes in 2013 to 277 tonnes in 2014, he says.

“There is no doubt removing the 15 percent additional cost to import venison into Taiwan has been a benefit to the trade which, at the moment, is mostly lower priced venison items destined for the manufacturing sector,” he says, adding that while only three tonnes of high value chilled venison was exported to Taiwan in the past 12 months, this might grow.

DINZ currently has no plans to implement any promotional activities in Taiwan, says Moffat, but it will support individual New Zealand exporting companies if they wish to pursue opportunities in the market.

In the year ending September 2014, Chinese Taipei was New Zealand’s seventh largest goods export market, worth over $1 billion.

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