China FTA benefits New Zealand sheep, beef farmers

by Bryan Salvage
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WELLINGTON, NZ – Beef + Lamb New Zealand (B+LNZ) says the China free-trade agreement is delivering annual tariff savings of nearly $25 million (US$21 million) a year to New Zealand sheep and beef farmers and this amount is set to increase as tariffs continue to reduce and export volumes grow.

New Zealand’s trade with China in 2010 included nearly $700 million (US$574 million) worth of sheep and beef products, said Scott Champion, Ph.D., B+LNZ chief executive officer.

“Those volumes are trending upwards as China continues to develop rapidly, with a growing middle class population looking to increase protein consumption, and that includes our beef and lamb,” he added. “The number of consumers considered to be wealthy from a global perspective is growing significantly and this is driving increased consumption of imported food products.”

China is New Zealand’s second-largest sheepmeat market by volume, importing 29,800 tonnes. New Zealand’s total sheepmeat exports are 355,000 tonnes with 72,600 tonnes going to the UK and 25,100 tonnes going to the US.

“Crucially, the Chinese market is looking for quite a different product mix compared to our traditional sheepmeat markets such as the UK and US, which take the higher value cuts like lamb legs and French racks,” Scott said.

China is a key market for sheep flaps, which are used in traditional Chinese ‘hotpot’ dishes. It’s also a key market for co-products like fats and oils and animal casings. This trade was worth $170 million (US$139 million) last year and the China FTA provided estimated tariff savings of almost $12 million (US$9.8 million) on co-products alone. It underlies the importance of co-products and their contribution to the value of annual exports.

The FTA also provides for a country-specific tariff quota of 27,563 tonnes of clean wool to be imported from New Zealand in 2011 and this will increase by 5 percent each year until 2017 creating an eventual country-specific tariff quota of almost 37,000 tonnes.

It’s likely the China FTA will deliver another $21 million (US$17 million) by the time the tariffs are fully eliminated in 2016, Scott concluded.
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