US Launches Lamb Safeguard Probe, NZ Exports at Risk
As expected, the US has launched a safeguard investigation into lamb imports, a move that could impact New Zealand sheepmeat returns.
The red meat sector is bracing for a decision from the US administration on whether investigations should be launched into so-called unfair trade practices, to reintroduce tariffs deemed illegal by the US Supreme Court.
US Remains New Zealand's Highest-Value Sheepmeat Market
Meat Industry Association chair Nathan Guy says the US is New Zealand's most lucrative market for sheepmeat, fetching on average $21/kg over the last 12 months. NZ sold more than $600m worth of sheepmeat to the US last year.
Guy is ultimately worried about any potential tariff or quota causing displacement of exports away from the US and pushing prices down.
The EU buys about 70,000 tonnes per year at an average price of $20/kg and the UK pays an average price of $15/kg.
China is a high-volume market buying 156,000 tonnes and paying on average $7/kg.
China can take almost the whole of the carcass, so it's still a very strategic market for processors.
Industry Rejects Claims of Market Distortion
Guy, who recently visited the US and met with Government officials and farmer groups, says there has been talk of a sheepmeat investigation, but the final decision rests with President Donald Trump.
His message along with Beef+Lamb chair Kate Acland, to US farmer groups was that NZ sheepmeat imports into the US aren't causing any injury or price distortion.
There are only 5 million sheep farmed in the US.
"We're counter seasonal and grass fed so we have a real point of difference," he told Rural News.
Guy points out that the American population consumes a tiny amount - about 90 grams of sheepmeat per year on average - and consumption demand is growing.
"It's clear to me our imported lamb will help lift a rising tide that ultimately floats all boats," he says.
"If there's an investigation process kicked off, I hope that sunlight will be the ultimate disinfectant.
"Any potential investigation should be focused on driving consumption of lamb in the US market.
"We know there's common ground around promoting a World Lamb Day and both countries are grappling with parasite drench resistance."
Political Relationships May Be Critical
Guy says, like everyone else, he doesn't know when and if any investigation would start.
New Zealand is banking on the warm relations between Trade and Agriculture Minister Todd McClay and US Trade Representative Jamieson Greer.
Guy believes having a direct political contact will be important if indeed an investigation kicks off.
"There's a lot of lobbying going on for and against in Washington right now. Only time will tell," says Guy.
Main Markets
According to the Meat Industry Association, last year China took $156,000 metric tonnes of New Zealand lamb, valued at over $1.1 billion of $7.11/kg.
The EU bought just under 70,000MT valued around $1.4b or $19.92/kg.
The UK took 36,000MT, valued at $526m or about $14.50/kg.
The US imported 32,500MT, valued at $685m or $21/kg.
Total exports to these markets reached 370,000MT valued over $4.6b or on average $12.62/kg.
