High prices, tight supply good for NZ meat trade

GERARD HUTCHING
Last updated 05:00 11/08/2014

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The New Zealand meat industry could look forward to "very positive" overseas markets, with "rock solid" growth in China, according to a United Kingdom analyst.

Richard Brown of farming research company Gira, is also a sheep and beef farmer. He told the Red Meat Sector conference that tight global meat supply and high prices spelled good news for farmers.

In 2013, New Zealand sent 36 per cent of all sheepmeat exports and 10 per cent of beef to China. Total red meat industry exports to China were worth almost $1.3 billion.

China accounted for 28 per cent of the value of all sheepmeat exports, compared with the next most important, the UK, at 21 per cent.

The latest ANZ Commodity Price Index shows world prices for beef were up 11.3 per cent in July, driven by a shortage of domestic manufacturing beef in the United States during a period of peak demand over the northern summer.

Demand from the US food service sector had also bounced back with better economic growth, ANZ said.

Overall, meat prices are up 21 per cent on a year ago.

Brown said the Chinese were paying much more for sheepmeat and beef than they were for pork and chicken. Although New Zealand was exporting a lot of sheepmeat as lower-value carcasses, it would be difficult to change that trend in the short term.

"Chinese middle-class demand will continue to rise. You have to concentrate on what customers want and your exporters have been doing that. They have developed best practices, whereas it's a new mentality for United States exporters, although they are getting better at it," Brown said.

Brown said the European market was slowly recovering and exporters were battling for shelf space in retail outlets. By contrast, for New Zealand beef exporters, the United States had been an "exceptional" market.

Another speaker at the conference, Shanghai-based economist Mary Boyd, said New Zealand was well-positioned with its access to China through the Free Trade Agreement signed in 2008.

Boyd, who works for the Intelligence Unit of The Economist and has lived in China for more than 20 years, said New Zealand could do more to leverage off its "clean and green" brand.

She said marketers should focus on the special attributes of its meat, such as the country's grass-fed, free range environment and its modern food processing.

New Zealand companies could also do more to market top-quality products to Chinese consumers, such as premium wines, cheese and honey.

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- BusinessDay

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