Uncategorised

China-NZ agreement poses challenge to Australian meat producers

Following the new agreement between New Zealand and China which established a six-month trial program for exporting chilled beef and lamb to China, IBISWorld analysts have suggested the move will pose a challenge to Australian producers who have been able to enjoy exclusive access to the chilled meat market in China until now.

Previously, New Zealand only exported frozen meat due to the Chinese Government’s concerns regarding food safety. The trial will include ten yet to be determined meat processors who will export premium chilled meat to high-end Chinese restaurants, likely commencing in late 2017.

China is a key export market for Australian meat processors aided by the China-Australia Free Trade Agreement, which came into force on 20 December 2015. Australia’s FTA with China is gradually lowering the tariff on meat exports and therefore improving the competitiveness of Australian meat products. In addition, Australian beef and sheep meat (including lamb) exports to China have grown substantially over the past five years, as the Chinese middle class has expanded. IBISWorld forecasts that total Australian processed meat exports to China are expected to grow at an annualised 21.7% over the five years through 2016-17.

While most meat exports to China are frozen, these are typically lesser quality cuts sold at lower pricepoints. Chilled meat is sold at a premium and commands stronger profit margins. “Australia was previously the only country that exported chilled meat to China. New Zealand’s access to the Chinese chilled meat export market will therefore increase competition for Australian meat exporters, particularly for Australian lamb producers,” said Mr Sam Johnson, IBISWorld Senior Industry Analyst.

Australia’s meat processing industry recommenced exporting chilled meat to China in mid-2014, following a temporary ban resulting from food safety issues. At present, ten Australian meat processors export chilled meat to China, but this will rise to 36 after an agreement was reached between the Chinese and Australian governments.

“Greater access to the Chinese market represents an opportunity for more Australian premium chilled meats to be sold directly to high-end dining establishments in Shanghai, Beijing and other major Chinese cities,” said Johnson.

“While the increase in the number of Australian meat producers who can access the Chinese market is great news for farmers and processors here, the entry of New Zealand will intensify competition in China’s high-end chilled meat export market.”

Screen Shot 2017-05-18 at 10.24.03 AM

 

Send this to a friend