ANALYSIS - North Asia and in particular China are becoming a major focus for New Zealand beef and lamb exports.
However, production and exports across both sectors are falling as the beef herd and sheep flock decrease and the dairy herd numbers in New Zealand rise.
Dave Harrison Regional Manager – Europe for Beef and Lamb New Zealand told the AHDB Beef and Lamb annual conference in Warwickshire that New Zealand sheep numbers have fallen from 57.9 million in 1990 to 28.6 million over the last year.
Production had only slipped from 420,000 tonnes to 375,000 tonnes because of higher yields, carcase weights and more hoggets going onto the market.
In the beef sector, the herd has fallen by around 1 million in the same period.
However, New Zealand exports about 95 per cent of its production, which for mutton and lamb amounts to just under 400,000 tonnes.
“Most of the exports go to the EU, for historical reasons,” Mr Harrison said.
“We have long trading relations with the EU. But the big issue is the rise of north Asia, mostly into China. Much of it is low value cuts.”
He said that the Asian market is now starting to take the exports that had been sent to the Pacific Islands in the past but now the product could fetch three times the price in Asia.
In the EU, 48 per cent of the lamb goes to the UK with Germany the second largest market.
The exports to the EU have started to decline in recent years with a drop in chilled exports to the retail market and only the frozen product to the catering market maintaining its strength.
He said the forecast for the next year will be for exports to go down by 6.3 per cent to 293,000 tonnes although the average value will be up by 2.5 per cent to NZ$8,661 per tonne because of the weakness of the New Zealand dollar.
For beef, Mr Harrison said production is expected to fall by 8.5 per cent to 599,000 tonnes because in 2014/15 production was unusually high thanks to dry summer and high beef prices. Exports are likely to be down by 5.3 per cent.
Mr Harrison said the continued weakness of the New Zealand dollar against the US dollar is expected to be a key factor in the beef export market.
In China, demand growth for beef is expected to outstrip production growth, but there is uncertainty that now Brazil has a trade agreement with China, whether Brazilian direct imports will add to, or replace, grey channel imports that had been entering the country through Hong Kong.
An overall increase in exports is expected to affect prices, Mr Harrison said.
For sheep meat, Chinese domestic production is expected to rise by 2.5 per cent, but the product is expected to be affected by high prices and environmental factors
Chinese consumption of lamb is forecast to rise by 3.4 per cent but NZ exports are likely to be similar to 2015.