Deer Industry NZ (DINZ) Asia market manager Rhys Griffiths said despite the nervous start to the season, export volumes for this season had now reached similar levels to recent years.
He said uncertainty about access to China for velvet appeared to have been resolved for the time being.
Late last year it became clear that some major regulatory changes made by China to improve the safety of its food and traditional pharmaceutical supply chains would affect the way velvet was to be imported and distributed in China.
Chinese customers had previously imported NZ velvet as an agricultural by-product but the changes meant they had to very rapidly adjust to being pharmaceutical importers.
“This meant the only ones who could buy in the first few months of the season were those who had unused import allocations from the previous season,” Griffiths said.
“These were enough to keep the market active until the end of 2016, but there was doubt about what would happen when they ran out as many importers needed more time to upgrade their operations to pharmaceutical standards.”
But the Chinese government had now provided a solution to reduce disruption to trade while the new measures were worked through, he said.
The solution required importers to demonstrate they had a commercial relationship with a company that held a pharmaceutical processing or pharmaceutical trader’s license before they could apply for a velvet import permit.
“This appears to have happened with new import permits being issued and velvet exports now seeming to be flowing normally.
“This should remove any remaining obstacles for this season,” Griffiths said.
It wasn’t clear whether the import solution was a one-off or whether it would be available next season.
“But either way, China’s government is putting the pressure on importers and processors to meet pharmaceutical standards as quickly as possible,” Griffiths said.
The impact of changes to the Chinese import regulations had added to the difficult start to the 2016-17 season, with major differences of opinion over pricing.
Prices for premium grades had reached $90-$100/kg, albeit back $25/kg on last year’s returns, and less than exporters had hoped for.
“They had expected some easing to reflect currency changes since the previous season but with strong underlying demand and only a small increase in production, prices were not expected to fall as much as they did,” Griffiths said.
PGG Wrightson velvet manager Tony Cochrane said prices had remained stable over the past month with a mix of new and established buyers showing more interest.
But the market was very price focused and PGW was continually trying to lift prices, especially on remaining Korean grades where some potential existed if the NZ dollar continued to ease and the realisation set in that NZ volumes traded so far were level with last year to the end of January.
Cochrane said PGW had just sent its first container direct to China following the new Traditional Chinese Medicine classification of NZ velvet and requirements for handling and storage of velvet next season were being discussed.
PGW velvet, with assistance from DINZ, had helped promote NZ velvet to a famous Korean oriental medical doctor who had now chosen to change supply from locally sourced to NZ velvet advertised on TV home shopping, Cochrane said.
Meanwhile, new rules designed to ensure that velvet was protected from contamination, stored in an efficient freezer and was traceable back to the farm would go into effect in time for next velveting season.
The rules, driven by the Ministry for Primary Industries, follow a visit from auditors from China’s General Administration of Quality Supervision, Inspection and Quarantine late last year.
The auditors were generally happy with what they saw.
But Griffiths said a few areas had been identified for improvement and these were consistent with where the industry was heading with its increased focus on treating velvet as a high-value food and pharmaceutical ingredient.
“MPI is developing a regulatory control scheme that will set outcome-based standards that will meet the new Chinese requirements.
“The National Velveting Standards Body will then translate these into practical rules that will be relatively easy for farmers to apply,” he said.
Details were expected to be made available soon.
