New Zealand beef exports to China soared to 8168 tonnes in October, from 1320 tonnes in October last year, according to Statistics NZ data compiled by the Meat Industry Association. That’s ahead of the 5268 tonnes exported to the US, half the amount that was shipped in September and about a third lower than October last year, according to the figures.
By value, New Zealand’s beef exports to China were worth $45.5 million in October, up from just $5.9 million in October last year. That surpassed the country’s beef exports to the US, which totalled just $41.2 million in October, the lowest monthly value since November 2013.
New Zealand exported about 191,000 tonnes of beef to the US in the 10 months through October, suggesting it could reach its US annual quota of 213,402 tonnes for the first time since 2004. New Zealand beef volumes have increased as dairy farmers cull more cows following a slump in returns for dairy products, and as cattle farmers increase stock weights to benefit from higher prices.
Should New Zealand hit the quota limit, its US tariff on beef would rise to 26.4% of the export value, from the current rate of 4.4 US cents per kilogram. That’s prompting exporters to divert beef to other markets, including China, Canada, Taiwan and Indonesia.
“We are probably getting close to reaching the US quota so companies have been diverting exports to other markets,” Meat Industry Association analyst Matt Conway said. “It looks like they are managing their exports to the US to make sure that they don’t go over their quota allocations. They will just lose money.”
China’s emerging middle class has helped boost New Zealand exports after the nation gained favourable access to the world’s second-largest economy following the 2008 Free Trade Agreement. Rising beef exports helped China return to its position as New Zealand’s top annual export market in October, having slid behind Australia the previous seven months.
Separately, the ratification of Korea’s free-trade agreement with New Zealand this week should help local beef exporters compete in that market with the US, which has had an agreement since 2012, and Australia, which inked its agreement last year.
“Beef exports to Korea have been steadily dropping over the past couple of years,” Conway said. “We have been losing competitiveness but hopefully that will stabilise now.”
The agreement will see Korea’s 40% tariff on beef removed in 15 years.
