MIA Matters: chilled NZ beef market opening wider in China

Matt Conway

China emerged as the fourth largest destination for New Zealand chilled beef exports in 2017/2018 – the 12 months to the end of June 2018 – and long-awaited protocols have been signed with the country – a sign that industry investment in market relationships are beginning to pay off.

A trial allowing exports of chilled meat to China from 10 specified New Zealand meat processing plants, which has been operating since last July is proving successful, explains Meat Industry Association (MIA) policy analyst Matt Conway. Most of the early shipments were smaller consignments sent by airfreight, as the companies involved in the trial wanted to ensure product integrity could be maintained.

“However, the meat companies are now confident of the cold chain and most of the later shipments have been significantly larger and have gone by sea.”

MIA analysis of Statistics NZ figures for 2017/18 shows a total of 1,896 tonnes of chilled New Zealand beef, accounting for seven percent of total chilled beef exports, and worth $16.2 million went to China during 2017/18.

In conjunction with the chilled meat trial, the meat industry and NZ Trade and Enterprise jointly funded a research project which focused on gaining a deeper understanding of China’s port clearance and in-market supply, distribution and cold chain capability for chilled meat. It helped to assess current supply chains and to identify risks that need to be managed to either minimise food safety and quality risks or capture new business opportunities, says Conway.

“Agmardt provided support for the project. Without this assistance, it would have been challenging to gather the information consistently so that the key findings can have relevance and applicability to the entire meat industry today and into the future,” he says.

Parallel to the trial, the long-awaited meat protocols for the export of New Zealand beef, sheepmeat and goat meat were signed by New Zealand and China in November.

“Finalising the protocols is a critical first step to opening the door for the export of chilled meat from all China eligible plants,” says Conway.

The next step in the process is for industry to complete the outstanding administrative processes which typically include an audit of premises against the protocols and updating of plant listing information – a process that could take some time according to Conway.

The Chinese government restructure earlier this year has caused more delays in completing the administrative process. The MIA is hopeful that once the various government agency functions have been settled, progress can resume in a timely manner.

Further MIA analysis of the 2017/18 figures show that higher volumes overall of both sheepmeat and beef were exported during the year compared to 2016/17– up six percent and five percent, respectively – he notes. “However, there was a much larger increase in the value of sheepmeat exports, which were up by 26 percent to $3.6 billion, compared to 2016/17.

The contributing factor was improvement in the global prices for sheepmeat, particularly in China where exports of the meat were up by 53 percent to $993 million, compared to the previous year, he says. In addition, while the volume of exports to New Zealand’s second largest market, the UK, were down by six percent, the value of those exports increased 15 percent to $476 million for the year.

The value of beef exports also increased, up by nine percent to $2.9 billion.  The US – still New Zealand’s largest export market for the product – saw a rise of eight percent to $1.3 billion, while second-ranked market China grew by 29 percent to $639 million.

The major exception, however, was Japan, where beef exports dropped by 22 percent by volume from 2016/17 to 14,221 tonnes. Conway explains this was largely a result of Japan’s imposition of additional tariffs in August on frozen beef imports from countries that Japan did not have an FTA with, including New Zealand, when an import volume trigger level was reached. This increased the tariff on New Zealand frozen beef imports to 50 percent, compared to tariffs of 27 percent being imposed on Australian beef exports by the market.

“This impact on our trade with Japan highlights the significance of the recent conclusion of the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) negotiations and the importance of the successful completion of the CPTPP. For the New Zealand meat industry, one of the most significant outcomes is that it levels the playing field with Australia for our beef exports into Japan,” says Conway.

 

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