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NZ TO TAKE A BITE AT AUS-CHINA EXPORTS

Shan Goodwin
02-Jun-2017 8:00pm

NEW Zealand’s persistence to “upgrade” its Free Trade Agreement with China is set to chew a slice from Australia’s export agreement with the Asian powerhouse.

A six-month trial has been struck recently between the two countries which will enable NZ to export chilled beef, goat and sheepmeat to China for the first time, and is expected to commence late this year.

Export restrictions meant only frozen meat was exported due to the Chinese Governments concerns regarding foot safety.

Analysts suggest the move will pose a challenge for Australia with NZ being the country’s fierce export rival.

“It is worth keeping an eye on,” Mecardo market analyst Matt Dalgleish said.

“Despite the fact they’re going through a general decline in sheep numbers in favour of an increasing dairy herd, they’re big enough force to make a difference,” Mr Dalgleish said.

“There has been a definite decline in sheep numbers so that is positive from a supply perspective because we are in a rebuilding phase - in saying that, any kind of competition in that sector would be a huge concern.”

China is a major export market for Australian meat processors abetted by the China-Australia Free Trade Agreement which came into force in 2015.

Stimulated by the expansion of China’s middle class, Australian beef and sheep meat exports to China have grown substantially over the past five years.

While Australia has experienced a surge in demand for frozen lamb from Chinese buyers, chilled meat exports have been nominal.

In the past four months Mr Dalgleish said 6331 tonnes of shipped mutton has been exported and 16,665t of lamb.

He said China’s appetite for sheepmeat was changing, with a lift in demand for lamb being offset by a drop in mutton exports.

Mr Dalgleish said the drop in mutton volume this year was closely aligned with the increase in lamb consignments, which were 49 per cent higher than the seasonal five year average this quarter.

Earlier this year, Meat and Livestock Australia reported lamb shipments to China were up 21 per cent for the year-to-date, to 31,326t swt, while mutton exports to China fell 25pc year-on-year, to 16,498 tonnes swt.

“The story for sheep exports to China tell a completely different tale with the total volume exported over the first quarter of 2017 nearly half of that two years ago,” he said.

“Is China’s appetite for sheepmeat changing or are relative price differentials between lamb and sheep encouraging the shift?

“Chinese consumers have always had a strong affinity to lamb, however, it’s likely that the demand will only continue to rise with the changing demographic.”

He said growing middle-class income and open food culture of the younger generation was prompting a shift in taste towards “premium” import meats.

“Where historically cheap proteins for the hot pot were in high demand, the ‘foodie factor’ is taking over, with consumers in China willing to pay a premium for quality and a sense of superiority on their fork.”

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