MIA Focus: demand unabated in China for NZ red meat

Sirma Karapeeva
Sirma Karapeeva arrives at the China, International Import Expo.

A Meat Industry Association (MIA)-led delegation recently returned from the massive and busy inaugural China International Import Expo (CIIE) in Shanghai. They found – eight years after signing a free trade agreement with the North Asian market – China’s demand for New Zealand sheepmeat and beef products is unabated. Exports of sheepmeat, beef and co-products topped $2.2 billion at the end of September.

MIA trade and economic manager Sirma Karapeeva was part of the group of 12 meat processing leaders and led by MIA chairman John Loughlin, at CIIE which ran from 5-11 November and attracted over 400,000 trade visitors.

It was an important visit for the sector to continue strengthening relationships with China’s trade and government representatives, she reports.

“It was a whole of industry representation at a very senior level,” says Karapeeva. Advanced Marketing, AFFCO, Alliance Group, ANZCO Foods, Greenlea Premier Meats, Ovation Meats and Auckland Meat Processors were among the group. Silver Fern Farms also sent its own a significant senior level delegation to Shanghai.

CIIE, Shanghai, November 2018
The New Zealand stand at CIIE.

New Zealand was one of 172 countries, regions and international organisations participating in the event, designed by Chinese President Xi Jinping as one of his four main deliverables for 2018 and part of the country’s Belt and Road initiative. The Expo, opened by President Xi Jinping, was a major opening-up policy for China and sends a clear signal that the country is open for business with the rest of the world.

New Zealand’s country pavilion and separate trade stand were organised by New Zealand Trade & Enterprise (NZTE). MIA member companies were amongst the 93 firms exhibiting in the trade pavilion. In addition, Silver Fern Farms had its own “impressive stand”, cooking demonstrations and on-stage presentations, says Karapeeva.

“Generally, it all went well, there was lots of interest and New Zealand got very good coverage in the Shanghai media. For a small country, New Zealand certainly made in impact.”

To dovetail with the CIIE activity, the MIA hosted a cocktail networking function in Shanghai for 100 trade and government guests at NZ Central – a newly redesigned event and co-working space accessible to New Zealand businesses entering or operating in China. NZTE regional director for Great China Fiona Acheson, New Zealand special agricultural trade envoy Mike Petersen and MIA chairman John Loughlin addressed the guests.

“We also visited two modern, high-end retail stores in Shanghai which gave the delegation the chance to better understand Chinese consumer demand and to experience different retail models.”

One of the retailers visited was Hema Fresh, an off-shoot of the Alibaba empire, which has a focus on fresh produce. One of its more recent initiatives is to guarantee delivery of an online retail order within 30 minutes of it being placed. Another store was City Super which carries some New Zealand meat products.

China top for sheepmeat and offal exports

China has grown to become New Zealand’s single largest market for red meat and co-products, taking exports worth $2.2 billion in the 12 months to the end of September 2018. This was $345 million more than the second largest market, the United States.

For the past five years, China has been New Zealand’s largest sheepmeat market in value and volume. Exports to China progressed well in the past year with shipments of sheepmeat increasing 64 percent in value to $1.1 billion and 35 percent in volume to 180,114 tonnes. The vast majority of this was frozen cuts with only a small tonnage of chilled product.

The market is also the second most valuable for New Zealand’s beef exports, which increased in value by 38 percent to $710 million and 34 percent in volume to 105,183 tonnes compared to the previous September year. Again, the majority was frozen product.

However, chilled beef exports grew markedly over the year, following the commencement of the chilled export trial in the middle of last year. For the 12 months through to the end of September, China was New Zealand’s third largest market for chilled beef by volume, taking 2,589 tonnes, and fifth largest by value, with exports worth $22.4 million.

China also ranks number one on New Zealand’s co-products export table for the same period – they lifted in value by 22 percent to $388.5 million, with the major categories being hides and pelts ($138 million) and casings and tripe ($118 million).

Chilled work progressing well

The growth for chilled meat is a result of work that has been underway in the market by the government and red meat processors and exporters, Karapeeva explains.

“The successful chilled meat trial for 10 plants finished in December 2017,” she says.

MIA is working hard, and closely, with the Ministry of Primary Industries and Chinese authorities to ensure all New Zealand’s China eligible plants are able to export chilled meat to the market. However, decisions have been delayed, following a recent Chinese government restructure, which means the Chinese agencies are settling into new roles, she says.

“We anticipate to see some progress in the near future as the system kicks into action.”

In the meantime, and since the end of the trial, the MIA worked with NZTE on market research mapping out cold chain logistics for chilled products.

“We found, for those companies working with existing customers, the cold chain is reasonably robust and well managed,” she says. “This gives companies some confidence as they seek to grow their chilled meat business into China.”

More potential and change

Overall, Karapeeva believes there is plenty of potential for growth in the market and predicts more change coming, “but in a positive way for New Zealand,” she says.

“The middle class is still growing in numbers and their relative affluence is driving demand, particularly for high quality imports. Despite China being the fourth largest beef producer, domestic production is unable to keep up with demand and Chinese beef imports have risen sharply. African Swine Fever is also driving consumption away from pork at the moment and people are looking other protein options to fill demand.

“High-end beef, which is where New Zealand will compete, is a luxury product to which those middle-class customers aspire.”

The only unknown for the market relates to current trade tensions between China and US. But it would have been hard to miss the massive US delegation at CIIE, which Karapeeva noted was the third largest.

“It’s still not clear what all of the direct, and many indirect, implications are of the China/US trade tension,” says Karapeeva, who will be keeping a close eye on the situation.

This article appeared in Food NZ magazine (December/January 2018) and is reproduced here with permission.

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