Threats to NZ's meat exports
No-one knows exactly how much New Zealand meat and produce is smuggled into China, but a recent crackdown on the "grey channel", as it's called, and the seizure of a US$10 million frozen meat cargo highlight not just a trade mystery, but potential threats to our meat exports.
On June 12, Chinese authorities descended on an inbound ship, seizing more than 1800 metric tons of frozen goods. Five crew members were put in detention by Shenzhen Customs.
The 60-container cargo was described as including beef, chicken wings and pork from the United States, Brazil, Australia and New Zealand.
Beef and Lamb New Zealand's general manager of market development Craig Finch said it was impossible to know how much NZ meat was involved or indeed how much finds its way into China each year through illicit channels. However, the overall trade is big.
Meat and Livestock Australia's South-East Asia and China analyst Aaron Iori, last month told the Australian rural website farmonline.com.au that he estimated at least 500,000 tonnes of smuggled meat entered China through Hong Kong and Shenzhen and also through Vietnam each year.
Our free trade deal, under which meat is tarriffed at 5.3 per cent compared with 12 per cent for meat from other producers, would make smuggling less profitable, Finch said, though only the smugglers would know whether it remains worthwhile.
"The greatest demand would be for US beef, which is banned in China but you don't have to look too far to get it," he said.
US beef has been banned since the outbreak of bovine spongiform encephalopathy (BSE), more commonly known as mad cow disease, in 2003.
Legal New Zealand beef is prominent at the retail level, where US beef is not, but the US product can be bought in local wet markets.
Finch said, however, that grey channel operators would be filling their containers with whatever they can source.
"They'll be stacking in as much as they can," he said.
The danger for New Zealand in the trade is that the goods are perishable and to ship properly requires effective cool chain procedures. If those are not in place, food can spoil and health issues can ensue, and that would "not be a good look" for New Zealand produce, he said.
"The potential for downside exposure is if the product is not looked after," he said.
That appears to have been a concern for Chinese authorities. Customs officials said the goods posed a danger because they had not been inspected and quarantined, and that poor transportation conditions presented food safety concerns.
However, others suspect the seizure is part of broader crackdown – and coverup – since the death of British corporate investigator Neil Heywood which in turn led to the downfall of rising political force Bo Xilai.
Business and corporate records that were once public are being classified as state secrets by the Ministry of State Security while corporate researchers have been threatened and arrested.
Chinese analysts said this was both retribution against the researchers, who have exposed accounting frauds by Chinese companies seeking to float in the United States, and a product of Central Committee infighting that has exposed the wealth and corruption of members of China's elite.
The grey channel has been around since the days Britain ruled Hong Kong.
"Even then smuggling was rife. Nothing's really changed," Finch said. "People know about it but have turned a blind eye to it."
Iori said it was easy for Australian product to get caught up in smuggling operations."Often, the exporter at home has no idea where their product is going to once they sign it over to the buyer," he said.
- © Fairfax NZ News