China could one day bypass the United Kingdom as the largest market for New Zealand lamb.
ANZ agri chief economist Con Williams said China accounted for 30 to 50 per cent of export earnings at the farm gate - up from 10 per cent in 2008 - and was the second-largest market for New Zealand lamb after the UK.
"That is massive," Williams said. China was New Zealand's 10th-largest market in 2005-06 but, with 1.4 billion mouths to feed, it had steadily climbed the ranks to second place.
"The rise of China is a ‘big thing' for sheep and beef farmers," he said.
Williams spoke to about 120 farmers and industry representatives at a red meat forum, hosted by the ANZ bank in Invercargill, yesterday.
Williams described lamb as a niche specialty meat, and that while consumers were used to paying high prices for it, there would be a tipping point.
"Lamb is seen as more of a special occasion meat.
"There is particularly strong demand at Christmas and Easter."
ANZ Southland regional manager Grant Dermody said the aim of the forum was to promote red meat and share the positive things that were happening in the sheep industry.
"It's about helping farmers understand there is a bright future in the sheep industry," Dermody said.
Williams said when it came to food, Asian consumers viewed health first and nutrition second, which was the opposite to New Zealanders.
Lamb was facing tough competition in the marketplace from cheaper and more convenient proteins such as chicken and pork, he said.
The challenge was to maintain a premium price point for lamb in overseas markets and push it even higher. He predicted the New Zealand lamb kill would fall from 25 million to about 20 million this season because of the increase in the number of dairy conversions.
"We're expecting 120 to 130 new conversions in the South Island this year."
Williams said this boded well for lamb prices but he expected there would be tension among meat companies to fill orders this coming season.
Alliance Group general manager marketing Murray Brown cautioned against over-exposure of the Chinese market for New Zealand lamb.
"We're looking at a wider spread of markets. China is important but there are also significant growth opportunities in India, and we shouldn't dismiss Brazil or Russia, where opportunities are opening up," Brown said.
- The Southland Times