The “Grey Channels,” as they are popularly known, came into focus in June when Chinese regulators seized a frozen cargo of 1800 tonnes of beef, chicken wings and pork from the United States, Brazil, Australia and New Zealand, worth US$10m.
Craig Finch, general manager in market development at ‘beef + lamb New Zealand’ – a farmer-owned industry association – told FoodNavigator-Asia the problem went beyond meat to, “horticultural products and a raft of other products. It has been going on for centuries and is not something that has recently evolved.”
He said any health concerns were limited to non-frozen meats.
“Once that cool chain discipline is finished and the product is resold and thawed that is when serious health issues could erupt once thawed if refrigeration is adhered to.”
FTA head scratch
New Zealand exports 300t of beef into China compared with 44,000t of sheep meat, volumes that have been rising because of the New Zealand-China Free Trade Agreement (FTA).
Flying in the face of logic, New Zealand’s frozen beef tariff is less than half that of other countries entering China under the treaty.
“New Zealand enjoys a tariff of 5.3% compared to the rest at 12%,” said Finch. “So there would appear to be far more incentive to smuggle product from Brazil and or the US which is banned altogether, than tamper with New Zealand beef that already has such a low tariff.”
“Perhaps they simply needed to top the containers up and grabbed New Zealand product, if indeed it is New Zealand product. That has yet to be verified.”
In March this year, Taiwan’s Department of Health (DOH) found two samples of Australian beef and two samples of New Zealandbeef that tested positive for ractopamine, something only permitted in US beef. Mislabelled US meat was deemed the culprit.
“A lot of the samples taken came from already opened cartons and therefore we remain convinced that beef products from other origins are being misidentified as being from New Zealand,” he said.
“There is definitely a possibility that New Zealand beef can or could get mixed up in grey channels with US product.”
“But over time the diminishing tariffs create a disincentive to smuggle simply because the economies of doing so are just not there. With New Zealand frozen beef at 5.3% there is no margin in this to warrant the risk.”