New Zealand red meat sector continues to face volatility in global markets

Red meat exports were worth $730 million in August 2023, a 16 per cent drop on the same month last year.

The main decline was in exports to China, which were down 44 per cent to $213m. In contrast, exports to the US were up 26 per cent to $188m, and exports to Canada were up 136 per cent to $40m.

Sirma Karapeeva, chief executive of MIA , said the decline in overall exports partly reflects the fact last year was a record for exports in August, however New Zealand is also facing growing competition in China.

“Meat competition has increased significantly in China and there are now 42 countries exporting meat to the country -- 30 for beef alone.

“The volume of Brazilian and other South American beef on the China market is significant and it is driving down the price overall. Likewise, Australian producers are exporting significant volumes of mutton to China at a low price. Conservative consumer spending is also driving down pricing.

“In the United Kingdom, we are now seeing the benefits of the UK-NZ Free Trade Agreement for beef exporters with an increase in volume and value compared to the same period last year.

“In North America, the United States is emerging from a drought and entering a herd rebuilding phase, which suggests a positive outlook for beef in that market for the future.”

Sheepmeat

Compared to last August, the volume of overall sheepmeat exports increased by six per cent to 25,162 tonnes but the value decreased by 13 per cent to $236m.

The decline in value was mainly due to a decline in the value of exports to China, which were down 25 per cent to $73m, compared to last August.

The average Free-on-Board value of exports to China was $5.79/kg in August, the lowest that it has been since March 2018.

Sheepmeat exports to the other two major markets, the US and UK, increased compared to last August, with the US up 22 per cent to $41m and the UK up 20 per cent to $19m.

Beef

The volume of overall beef exports increased by four per cent to 41,466 tonnes but the value decreased by 17 per cent to $340m.

The main decline was in exports to China, which were down 37 per cent by volume to 14,691 tonnes and 56 per cent by value to $101m.

While this was a large drop, it was from a near record export volume and value to China last August.

Exports to the US continue to recover from low levels last year as the US drought eases and US domestic beef production drops. Compared to last August, exports to the US were up 118 per cent by volume to 13,650 tonnes and 82 per cent by value to $117m.

There was good demand in Canada, with the volume up 284 per cent to 3,192 tonnes and the value up 230 per cent to $25m.

While beef exports to the UK are much smaller, New Zealand continues to benefit from the new beef quota under the UK Free Trade Agreement.

Over the first three months of the FTA (June-August), NZ has exported 653 tonnes of beef, worth $8.1 million to the UK. This was an increase of 95 per cent by volume and  117 per cent by value compared to the same period last year.

Before the FTA, these beef exports would have been subject to a tariff rate of at least 20 per cent, so the sector has already seen tariff savings of around $1.6 million in the first three months of the FTA.

New Zealand has a 12,000 tonne quota for the first year of the FTA, and the export volume in the first three months accounts for just over five per cent of that quota, While exports are growing, the use of the quota remains modest.

Fifth quarter

Similar to last month the was a decline in the value of fifth quarter exports in August compared to last year, down 18 per cent to $154m.

There was a drop in the value of nearly all of the product categories compared to last year, apart from edible offals (up four per cent to $28m) and blood products and glands (up 15 per cent to $21m).

ENDS