Friday, March 29, 2024

US holding export trump card?

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New trade agreements point to the United States being a stronger competitor for New Zealand for dairy and beef exports to China.
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Regulatory requirements for the resumption of beef exports, after a decade-long ban, may deter many US milk producers so that this threat at least may be blunted, marketing expert professor Bill Bailey said in an ASB Bank report.

An expansion of dairy exports will also take time because of regulatory requirements such as approvals for dairy processing plants and products, but once that issue is resolved shipments from the US, including possible fluid milk, are expected to be significant because Chinese consumers are positive about the safety and quality of US food products, Bailey said. 

This is an issue for NZ because of our reliance on the China market.

Overall, the effect of US-China trade deals on NZ exports could be significant, though implementation of the agreements could be slowed down in any fallout from President Trump’s criticism of China over its North Korea policy.

As well as encouraging US exports of dairy and beef, the agreements also open the door for China-cooked poultry exports to the US, with Bailey noting a trade-off link relying on the US accepting food safety considerations on that product.

A question to be answered was if US consumers don’t buy Chinese chicken, would China respond by limiting US beef sales in China, he said.

The former long-time head of Massey University’s agribusiness school is now back in the US heading up a marketing consultancy group.

The US is already a major dairy exporter to China, although there have been restrictions on new processing plant approvals for some years. Lactose and butter exports have been flat, though whey exports have increased strongly.

What has pushed the US into seeking new trade agreements were a 27% fall in skim milk powder exports since 2014, and a 37% fall in whole milk powder volumes, Bailey said.

The “myriad of rules, regulations and inspections” meant it would take time for the agreements to lead to a real effect on dairy exports.

Beef shipments to China were banned after a mad-cow disease outbreak in the US 14 years ago. With the new agreement, the Chinese will insist on source and age verification of US beef, replacing what until now has been a voluntary system.

“Would US producers make the record-keeping efforts to benefit from the reopened market, or would they put that in the too-hard pile and continue their focus on US consumers?” Bailey asked.

If the US did chase after the China market for beef sales, that could open up the US market further for beef sales from this country. It is already the biggest market for NZ.

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