Chinese free trade agreement boon for NZ meat manufacturers

By Ankush Chibber

- Last updated on GMT

Related tags: New zealand, International trade

Chinese free trade agreement boon for NZ meat manufacturers
A trade agreement with China has resulted in a windfall for manufacturers of beef and lamb products in New Zealand with huge savings made on tariffs.

New Zealand and China signed a bilateral free trade agreement (FTA) back in April 2008 and was the first such agreement China signed with any developed country. The agreement has helped the beef and lamb industry in NZ hugely since then, with tariff savings under the FTA on sheep and beef sector products amounting to NZ$24.8 million on NZ$687m of trade in 2010, according to data from Beef + Lamb New Zealand.

According to Jan Keir-Smith, communications manager for Beef + Lamb, the FTA is directly benefiting Chinese consumers by reducing costs in the supply chain and increasing linkages between New Zealand exporters and Chinese importers.

“China continues to develop rapidly and has a growing middle class population looking to increase its consumption of meat protein, including beef and lamb. The number of consumers considered to be wealthy from a global perspective is increasing significantly, and this is driving increased consumption of imported food products,”​ said Keir-Smith.

She said that China is now New Zealand’s second largest sheepmeat market by volume importing 29,800 tonnes of sheepmeat in 2010.

“Crucially, the Chinese market demands a different product mix compared to New Zealand’s traditional sheepmeat markets. This complementary product demand allows exporters to maximise the value all products from each carcass which benefits New Zealand farmers,” ​added Keir-Smith.

China is also a key market for co-products such as fats and oils and animal casings, she noted. The red meat sector exported NZ$170.1 million of these products to China and tariff savings on these products are estimated at NZ$11.6 million.

Keir-Smith said that the NZ-China FTA provides for eventual duty free access for meat and co-products, which would mean that tariffs on meat, sheepskins and offal would be eliminated by 2016, and tariffs on animal fats will be phased out next year.

“Based on 2010 exports the red meat sector can expect to gain an additional annual saving of NZ$21.3m by the time tariffs are fully eliminated in 2016. When tariffs are fully eliminated total annual savings will amount to approximately NZ$46.1 million based on 2010 trade values,”​ she said.

New Zealand also has an FTA on the table with India, which is awaiting parliamentary approvals in both countries. According to Keir-Smith, this FTA would also bring a rise in the fortunes of makers of red meat products and the New Zealand meat industry supports the New Zealand and Indian governments’ shared goal of concluding the FTA soon.

“An affinity for sheepmeat, combined with the expected future growth in India’s population and average disposable incomes, and an increased demand for high quality protein, are all factors which make the Indian market a potentially attractive export destination for New Zealand meat products,”​ said Keir-Smith.

She said that India is already an important market for New Zealand wool and certain meat co-products, such as hides and skins, and animal fats and oils.

“However, due to Indian sanitary and phytosanitary requirements, there is no trade in sheepmeat, goatmeat or offal between New Zealand and India,”​ Keir-Smith added.

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