Beef exports to China “turbo-charged” in Q1, notes MIA

Matt Conway, MIA
Matt Conway, MIA.

Exports of New Zealand beef to China really turbo-charged in the first quarter of this year (Q1), to end March 2019.

The latest Meat Industry Association (MIA) analysis of Statistics NZ overseas merchandise trade data, show New Zealand’s beef exports to the market surged in Q1.

New Zealand exported 48,707 tonnes of beef to China worth $347 million during the quarter, an increase of 79 percent by volume and 87 percent by value compared to Q1 2018. China was the largest beef market for the quarter, knocking the US into the second-ranked position for the first time.

The growth in beef exports has continued into April with China taking 40 percent of New Zealand’s beef exports during the month, just over 18,000 tonnes worth $129 million, compared to 34 percent going to the US.

“This ongoing growth highlights the demand for protein in China. The significant increase in exports in recent months may also be due to the impact of African Swine Fever on the availability of pork, China’s major protein source,” says MIA policy analyst Matt Conway.

Monthly beef exports to selected markets by volume (tonnes)
Monthly beef exports to selected markets by volume (tonnes) showing exports to the US and China started to move in concert. Source MIA from Statistics NZ overseas merchandise data.

For the first time, he says, New Zealand’s beef exports to both the US and China seem to be moving in concert (see graph) and exports to China are moving closer to volumes to the US on an annual basis.

In the first quarter, China was also the top market for both New Zealand sheepmeat and co-products, bringing the total for beef, sheepmeat and co-products to nearly $1 billion in value ($952.3 million) for a single quarter – 47 percent higher than the same period last year.

The statistics also reveal the early effect of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) coming into force at the end of last year, with New Zealand’s beef exports to Japan lifting by 39 percent in value to $45.7 million and 53 percent in volume to just over 5,000 tonnes for the period, compared to the same quarter last year. Japan is New Zealand’s top market for high-value chilled beef, with exports worth $21.5 million during the quarter.

Prior to the CPTPP entering into force, New Zealand had been losing market share in Japan to Australia which had signed a bilateral free trade agreement (FTA) with Japan in 2015, providing its beef exports with a tariff advantage in the market.

“The second round of tariff cuts took place on 1 April and will help to further ensure that New Zealand exports are competitive in the market,” says Conway.

While the major benefit of the CPTPP for the red meat sector was the reduction of tariffs into Japan, the sector is benefiting from tariff reductions and eliminations into a number of other countries, notes Conway. For example, while New Zealand red meat exports to Malaysia already enjoy tariff-free access under the ASEAN Australia New Zealand FTA (AANZFTA) there were a few tariff lines, particularly for prepared meats trading over a 15 percent tariff, which were not eliminated. The CPTPP will eliminate the few outstanding lines thereby further opening up the Malaysian market for the sector’s exports, he says.

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