Meat exports thrive in China market
Meat processor and exporter Silver Fern Farms (SFF) says it is reaping the rewards of 15 years of trading with China.
The farmer-owned co-operative, with a $2 billion turnover, sold $170 million of meat and other products to China in the year ending last September. Meat and carcass product sales have risen 10 per cent yearly over the past few years.
Sales were made in 12 product categories including skins, offal and meat casings, as well as meat from sheep, deer and cattle. Beef and lamb cuts ranged from diaphragms, tendons and testicles to high-end lamb racks.
Chief executive Keith Cooper said the sales range showed the extent of Chinese demand.
He said Chinese customers had been identifying new products and trialling them on a large scale.
"In most people's minds they would trial a couple of cartons, but they will trial multiple container loads. When the trial is successful, and they generally are, our supplies are the limiting factor, not their demand."
Chinese demand for some items was surpassing New Zealand supplies.
China has become the largest buyer of New Zealand sheepmeat by volume and is second in value behind the United Kingdom.
"It would only be a couple of years ago they would have been number five, six, seven on that [value] list and now they are two. Even in beef they are seven and six respectively."
Cooper said China's importance could not be under-estimated in meat trading.
"They have been important to us over the years and they have identified products that may have been rendered or downgraded, and now these items have been upgraded."
New sales have maximised the value of the sheep carcass.
SFF says China was moving into mainstream cuts such as lamb legs and that was providing added competition to other markets and diversity for meat trading. New Zealand was less reliant on meat cuts that would have been sold to commodity-price markets, said Cooper.
"It's a shot in the arm for us relying on the UK for lamb legs. At the moment the industry has 40 per cent of legs sold in the UK and that is a concentration of risk in one market."
He said the risk that New Zealand was becoming over-reliant on Chinese trade, was reduced by the diversified product lines going to the market.
Meat cuts such as legs and shoulders were beginning to look like the "dinosaur" part of the carcass, compared to previously less valued carcass products.
The SFF gameplan was to focus on lamb legs and break them down into the four muscle groups, he said.
SFF has the technology to make finer cuts and is working on generating new markets.
The co-operative supplies 12 main customers in China, chiefly outside of the main centres of Beijing and Shanghai and largely in the north.
Other parts of Asia have a history of eating sheep meat and are expected to grow when complex supply chains and market access are solved.