Make it 1000%!
OPINION: The appendage swinging contest between the US and China continues, with China hitting back with a new rate of 125% on the US, up from the 84% announced earlier.
That's how Director General of the Ministry for Primary Industries (MPI) Ray Smith sees the situation, despite the fact that the Chinese market has been sluggish this past year with NZ red meat products in particular struggling to maintain earlier gains there. China is NZ's second largest market for lamb and beef just behind the EU and the USA respectively.
But in its latest report on the outlook for the primary sector, MPI is somewhat upbeat about the future. According to Smith, the stimulus packages being rolled out by the Chinese government will boost their economy. He also believes that lamb prices will rise as Australian supply to that market drops off in 2025.
"I am always optimistic about China but there is more competitive there than in the past and we have to have a very good market presence to differentiate our product," he says. "Why buy a NZ product as opposed to a South American one? is what people ask. That is why the MIA (Meat Industry Association) and MPI launched a programme there late last year to focus on grass-fed product," he says.
Smith says it's difficult when you are trading in commodities, competing against growth out of Argentina and Australia. He says NZ has to find niches in the market and get the best prices it can. He notes that in the past year, a lot of NZ product has been moved away from China and into the USA.
Also positive about the Chinese market is Trade Minister Todd McClay. He says the annual growth rate in China is around 5%, which he says means their growth is twice the size of the entire NZ economy.
"If I said to you there is a country out there that you can have a free trade deal with without restriction and it's twice the size of NZ, we'd be jumping for joy and chomping at the bit. So, the opportunity in China there is half a billion younger consumers that will spend more on food that has a good story behind it, is safe and high quality," he says.
McClay says despite the fact the Chinese economy is still soft, there remains a lot of opportunities for NZ.
Trade Role
MPI tends to play a backroom role when it comes to new and ongoing trade deals.
Of particular interest to NZ is what are called non-tariff trade measures (NTMs), which are technical rules and complex regulations that even a country with a free trade agreement with NZ may impose and which can interfere with the free flow of trade. Such measures are frustrating for NZ exporters and MPI Director General Ray Smith says one of his tasks this year is to try and unravel some of these impediments to trade.
He says he was recently in Malaysia trying hard to sort out one such problem, which has seen some meat exporters lose access to that market.
"The only way to resolve such matters is by investing time and energy into personal relationships with our colleagues in international markets. It's a matter of building that trust and confidence and opening a pathway for our technical people to get around the table and overcome the obstacles," he says.
