Changing landscape for New Zealand exports

New Zealand is a truly global exporter and supplies meat products to around 90 countries worldwide. As the world’s second-largest producer of sheep, New Zealand’s most important meat export is lamb, and the majority of lamb products are shipped to the EU.

According to data from Beef and Lamb New Zealand (B+LNZ) Economic Service’s New Season Outlook for 2011-12, EU shipments accounted for 49% of lamb export volumes and 58% of lamb export value in the year ended June 2011, which is fairly static on the previous year’s figures. The majority of lamb shipped to the EU is frozen, with frozen product accounting for 62% of shipments for the 2011 June year, and chilled product making up the remaining 28%. However, the EU is still New Zealand’s biggest chilled lamb market, and accounted for 72% of chilled lamb shipments last year.

Within the EU, the UK is the biggest single market for lamb exports, taking 21% of shipments. It is also the biggest market for chilled lamb exports, taking 40% of New Zealand’s chilled lamb shipments, with the other 32% shared among other EU countries, in the year ending June 2011.

However, B+LNZ is working hard to increase lamb consumption in New Zealand’s second-biggest sheepmeat market in the EU, Germany. “Germany consumes around 80,000t of sheepmeat annually, with approximately 65% of that imported, mainly from New Zealand,”​ says Nick Beeby, emerging markets and strategic projects manager at B+LNZ. “Even though sheepmeat is a niche meat, with consumption at less than 1kg per person annually, it remains an important and valuable export market for New Zealand.”​

B+LNZ has been running a New Zealand Lamb promotional campaign in Germany for the past six years. The programme is based around promotions at the point of purchase and includes an in-store tasting (IST) programme, targeting consumers when they are out shopping. “Market research and results from the programme to date show that German consumer perceptions and sales of New Zealand Lamb can be positively influenced when awareness of the product is raised and consumers are given the opportunity to taste it,”​ explains Beeby.

During the past year, over 550 tasting events have been run in German stores, with well over 220,000 Gerans sampling NZ lamb. In addition to engagement at point of purchase, B+LNZ has been running a social media campaign through its website www.neuseelandlamm.de and NZ lamb Facebook page. “The internet is now an important port of call for information and is becoming a preferred information source for food and cooking topics,”​ says Beeby. “The website, in particular, has been designed to be interactive, with educational cooking videos and blogs from NZ farmers, and showcases regular new, lamb recipes.”​ A public relations campaign is also being run to target high-quality media.

Emerging markets​

Although Europe remains the most significant region for New Zealand lamb exports, Beeby points out that its share of total lamb exports is decreasing. “Over the past 10 years there has been a gradual shift away from some of the more established lamb export markets to emerging markets for New Zealand exporters,”​ he says. “While the EU remains the most significant market region for NZ lamb exports, receiving 48% of all lamb exports in the 2010-11 season (or 128,763t product weight) this figure has decreased from 52% of all exports 10 years previously (in the 2001-02 season).”​

Emerging markets have also taken lamb export volume from the North American market, which used to be similar in volume terms to North Asia but reduced its share of total lamb exports to 12% in the year ended June 2011. This reduction has been attributed to the US debt crisis and high level of unemployment in the US, which is currently at around 9%.

The biggest reduction in the North America region was shipments to Mexico, which decreased by 55% from 8,043t to 3,609t. B+LNZ Economic Service’s New Season Outlook for 2011-12 says this decline is “largely due to lower tourist numbers, who normally consume lamb on holiday”​. Shipments to the US declined by 7% last year, but the export value increased by 24%, reflecting the sharp increase in lamb prices experienced globally.

 
Of the emerging markets, Asia has seen the biggest increase in share of New Zealand exports, says Beeby. “As the importance of the EU has slightly declined, markets in Asia have grown in importance. In 2001-02, 12% of total lamb exports went to North Asian markets, but by 2010-11, New Zealand was exporting 20% of total exports to North Asia (53,000t product weight).”​

Within Asia, China is the most important market, accounting for 70% of lamb shipments to the region last year. Lamb exports to China increased by 38% last year, reflecting the growth in this market. Looking at total sheepmeat exports, China is New Zealand’s second-largest market by volume, importing 355,000t, compared to 72,600t going to the UK and 25,100t going to the US. Importantly, China looks for a different product mix to traditional sheepmeat markets, which can help with carcase balance. For example, it is a key market for sheep flaps, which are used in traditional hotpot dishes, and for co-products such as fats, oils and animal casings. This product mix is reflected in the value of China’s lamb market, with the price per tonne of lamb shipped to China around half of the overall export price. Indeed, the whole of North Asia is a lower-value market, with chilled lamb making up only 3% of total shipments to the region.

With a traditionally high lamb consumption, the Middle East is another important emerging market for New Zealand. However, it is a price-sensitive market, and high global prices last year meant that total shipments to this region decreased by 29% compared with the previous year.

Beef exports​

Of course, New Zealand red meat production is not just confined to lamb, and North Asia is also an important region for New Zealand beef exports, taking 26% of total beef exports in the year ending 30 June 2011. Within North Asia, the most important markets were South Korea (10%), Japan (9%), Taiwan (6%) and Hong Kong (1%), which accounted for 27% of total beef export receipts. There is a greater percentage of high-value product shipped to North Asia than North America, which accounted for 49% of beef exports, but only 45% of export receipts last year, due to its high intake of processed beef.

Beef exports to Japan could be boosted by the country’s decision last November to join the Trans-Pacific Partnership (TTP). Nine countries — Australia, Brunei, Chile Malaysia, New Zealand Peru, Singapore, the US and Vietnam — currently make up the partnership and have committed to negotiating a trade agreement, with a focus on improved access and tariff elimination. New Zealand paid NZ$80.5m on beef exports to Japan in 2010, so an elimination of tariffs would be welcome for exporters.

B+LNZ and the Meat Industry Association (MIA) are also investigating a closer trade partnership with Taiwan, which took exports of NZ$115.8m of chilled and frozen beef for the year ended December 2010, and is also a key sheepmeat market. Tariffs are currently quite high and New Zealand paid around NZ$19m of tariffs on red meat and wool exports to Taiwan in the year ended December 2010, roughly split between beef and sheepmeat products. Speaking last November, B+LNZ chairman Mike Petersen said: “Elimination of these tariffs would be of significant benefit to sheep and beef farmers and this is why B+LNZ put a lot of effort into supporting the government’s market access activities, by providing background information and analysis that negotiators need when they deal with agricultural matters.”​

South Asia is another important market for New Zealand beef, although exports decreased by 15.3% to 42,902t shipped weight in the year ending 30 June 2011. This decrease was driven by a -23.4% decrease in exports to Indonesia, which is planning to curb imports and increase domestic production. However, the recent approval of 14 New Zealand establishments for exports of beef to Malaysia could boost the region’s intake. New Zealand trade to Malaysia was severely curtailed in 2005, because of new halal requirements, but New Zealand’s Ministry of Agriculture and Forestry (MAF) has been working closely with the Malaysian authorities to put the appropriate systems in place to resume trade.

Last December, Malaysia and New Zealand signed an agreement on halal certification and 14 plants have now been approved for export. Announcing this, MIA chief executive Tim Ritchie said the industry was fully committed to ensuring that meat exported to Malaysia met agreed expectations. ”The relationships and understanding that have developed during our negotiations have built a strong Malaysia/New Zealand partnership and we are looking forward to developing and further enhancing trading opportunities,”​ he said.

Halal approval for beef exports could provide a big boost for New Zealand’s beef sector. The International Halal Integrity Alliance estimates that, in 2009, the global halal food market was worth more than US$630bn annually, which is approximately 16% of the entire food industry.