“It would be good to have a more gradual way of achieving what they want, something less dramatic than this."
Japan virtually overnight increased tariffs on frozen beef imports from New Zealand from 38.5% to 50% effective for eight months from August 1, even though this country wasn’t the cause of the change or the main target of it.
NZ was a very small player in the Japanese beef market, in which Australia and the United States between them had about 93% of total volumes, with the US increasing market share steadily, according to Australian data.
Australia had an Economic Partnership Agreement (EPA) with Japan, giving it preferential and significantly lower tariff treatment, not affected by the latest Japanese government action.
The US and NZ did not so the tariff hike applied to both countries.
Egan, managing director of Greenlea Premier Meats and a Meat Industry Association director, said having the US imports affected could be helpful in a way in how the overall situation was managed in what had historically been a very good beef market.
“It’s a disappointing development and puts us at a disadvantage to Australia and makes it hard to be viable in that market."
Japan was trying to divert imports away as a means of protecting its own beef farmers.
The issue showed the trade agreements needed a reset, which would involve trade negotiations and diplomacy, he said.
“We need to get back on an even-keel with Australia."
NZ exporters would be trying to achieve price rises in the market to offset the tariff rise and if that could not be done then they would be working out a balance with supply to other markets.
The pricing arrangements would take time to work through.
“They’ll be talking to customers, as they do want to keep them."
Greenlea’s focus was more on China and southeast Asia than on Japan and Egan said the overall world market was dynamic, though there was volatility in the US grinding-beef market.
The opening up of the Chinese market for chilled exports from NZ was a big opportunity that companies were trialling now.
An Australian report shown to Farmers Weekly showed that last year Australia had just over 54% of the Japanese market and the US just over 38% but this year the US had lifted to 42% at Australia’s expense.
It appeared to be the US volumes that spurred the Japanese action.
The US had increased the volumes of middle cuts – ribeye, striploins and tenderloins – as well as a main forequarter cut.
The tariff changes were expected to partly reverse the market trend as the US became less competitive though that would be offset somewhat by recent falls in the US dollar value.
The report quoted Japan Agriculture and Livestock Industries Corporation (ALIC) figures showing demand growth for meat (chicken, pork and beef) last year was the fastest in five years and continued a 10-year growth trend. ALIC estimated 70% of beef was being eaten in Japanese restaurants, especially barbecue restaurants.
It was the demand for barbecue beef that had tilted the middle cut demand towards the US supply and away from Australia.
