The food trade now important for both China and New Zealand as it reaches world-scale. Venison's woes deepen. A2 milk's advantages build impressively, analysts raise farmgate milk payout estimates as season peak passes positively

The food trade now important for both China and New Zealand as it reaches world-scale. Venison's woes deepen. A2 milk's advantages build impressively, analysts raise farmgate milk payout estimates as season peak passes positively

An interesting bit of information came out of China this week with news of the New Zealand Roundtable in China (NZBRiC), and the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products (CFNA), signing a strategic cooperation agreement.

The agreement aims to build a China-New Zealand Food and Agricultural Product Trade Service Platform, no doubt building upon the recent success of the RCEP.

The New Zealand BRiC is made up of several notable food exporting companies including Fonterra, Silver Fern Farms, Zespri and Primary Collaboration NZ. This is a Chinese based company with New Zealand shareholders who are currently Sealord, Silver Fern Farms, Synlait Milk, Villa Maria Estate and Pacific Pace.

The advantages to the NZBRiC are fairly obvious with China being our largest trade partner and any partnerships which can improve trade and smooth the pathway of consultation and trade resolutions being welcomed. The benefits to China on the surface are less obvious but we need to remember that New Zealand is among the top five largest food suppliers into China and so value of this trade can not be underestimated.

Last year (2018) New Zealand jumped from third to first in food supply to China with 8.76% of the trade while Australia are second with 8.72% and the US third at 7.6%.

The internal protein supply issues created by the African Swine Fever exacerbated by the US/China trade war have created a perfect scenario for New Zealand producers and processors.

Making sure we can hold onto these gains will be key to how successful this period is seen in the future. At the moment, all of New Zealand red meat and dairy producers are reaping benefits from China’s protein deficiency with seemingly one exception.

Venison has not only not been lifting in price it has actually been going backwards. It is now within a stone's throw of being caught by lamb as the most valuable red meat. Given the heady heights venison achieved last season, (1147.cents per kgs at the start of October was the national average peak whereas it is now at 901c/kg and no sign of lifting with the traditional high point of the season behind us), the slump this season is a little surprising. The US pet food industry was in part responsible for the lifts last season, with $1 of the schedule being attributed to it. However, this market won’t have vanished totally. Another reason given is that sales have been subdued following poor sales of frozen product as a result of the high prices. If this is the case, then it looks as though there may have been some less than ideal management of the marketplace and the supply of venison into it. The venison industry grew up on boom-bust cycles; let's hope it doesn’t sink back into them.

Logs and wool have experienced the downsides of China’s slowing economy and while they have both firmed recently, are not anywhere near achieving the heights of the past.

A2 Milk is taking an optimistic and aggressive approach to its US and Chinese markets and is planning on spending “a couple of $100 million on promotion. Despite the growth emerging for domestically produced a2 milk the company believes there are plenty of export upsides to be had yet, and the rapid growth of the domestic produced milk is symptomatic of this.

Despite the recent rises in the GDT, Westpac are still picking the seasons Fonterra farm gate milk price to be $7.10 this year and $7.30 for the following. Most other commentators have been closer to $7.50 for this season and while the higher the better for the rural economy Westpac normally have a good eye for these things. Counting against them is the impact climate extremes may have in reducing world production, and that is anyone’s guess. Overall Westpac are picking that the New Zealand economy is coming out of the doldrums and the internal economy should start to perk up.

AP Stag

Select chart tabs »

The 'NZ average' chart will be drawn here.
Loading...
cents/kg
The 'NI average' chart will be drawn here.
Loading...
cents/kg
The 'SI average' chart will be drawn here.
Loading...
cents/kg

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

40 Comments

Comment Filter

Highlight new comments in the last hr(s).

Unlike Australia, most political and business leaders take far more pragmatic approach when it comes building and maintaining relationship with China.

Keep it that way and there are far more ahead.

Hows the China - Massey University Auckland relationship going?

Business relationships not to be confused with corruption.
https://www.youtube.com/watch?v=BzCqQKnF9Oo

nice way of saying our politicians are willing to take it up the for the money

I think you missed a word out?

15
up

Any sensible business person will tell you not to put all your eggs in one basket; and this extends to geographical. AMI found out the hard way.

I personally never allowed one customer to represent more than 10% of my business; especially if they are larger than you. Any more than this, they start to dictate the terms of the arrangement.

Its time to start developing more business elsewhere (other parts of Asia), unless we want to become an outpost for China.

It's great that China respects us and prefers to do business with us to feed all the hard working people over in China. If they keep on our good side and lessen their corruption, the world will be a better place.
http://worldpopulationreview.com/countries/least-corrupt-countries/

I agree we definately not should put all our eggs in one basket!! Diversify.. widen the pillars to hold up the roof.

Diversity is our strength!

Diversity is dumb
Bowling alone: RD Putnam

Concentrated Diversity covers all bases . .. let's do this...

As everyone above is saying - diversification is key. The more we rely on China as an export destination, the more influence the CCP has here, either now or later.. China wouldn't be letting us 'win' without greater intentions.

Keeping the hungry China Population pacified may be an rising issue in China - Pork Prices throught the roof and inflation spiking. Imports will work for a while but long term?

BEIJING—A doubling of pork prices last month sent Chinese consumer inflation to its highest level in nearly eight years, constraining Beijing’s ability to stimulate the economy as growth continues to slow.
China’s Consumer Inflation Soars to Highest Level in Years
Consumer-price index rose 3.8% in October, fueled by surge in hog prices

NZ pig farmers should rejoice if Chinese demand pushes up prices .... and they pull our pork ....

NZ meat and dairy production needs to be stopped in order to prevent climate extremes from the climate emergency crisis. You can't be publishing that climate extremes will increase dairy prices, that's robbing children of their childhood.
I'm off for a much needed tropical break, where I wont be eating meat or dairy, have a good weekend!

Enjoy your break - glad to see another who has worked out consuming meat & dairy is a choice and not vital for health (rather the opposite)

I can only assume that with your concern for climate extremes you're not flying anywhere for your tropical break skuldiv?

I'm reading Ian Wisharts " Con Air " .... OMG ... we have right royally been conned ... absolute must read .. thru most of earth's habited history CO2 levels were 3 to 18 times more concentrated than they are today .... and life thrived... absolutely bloomed and blossomed...

Slightly morbid, but as I'm knocking on a bit, I went to check out the dispatch process at a local funeral home. During the crematorium visit, the funeral director pointed out the rate of growth in the Japanese garden adjacent to the crematorium - the miniature plants were thriving, apparently because of the CO2 emitted by the furnace!

they could be burying a portion of clients in the back yard, that would also certainly explain it...great place for veges Id imagine...

I've noticed most rice crackers in our supermarkets are made in China.

It won't be long before all our food is made there. Most probably around 2025.

if it says 'made from imported and local ingredients', it's mostly made in China. With bacon the local product is the brine.

I know form first hand personal involvement that at least for one major producer this is categorically false. Their import pork from Canada and Norway. Their premium is pork bought from NZ farms. The whole processing happens in NZ (which is a very simple process really). Not sure what you mean that Bacon is not a local produc

Talked to someone in bio security, they told me we import a lot of pork from China, you don't see product of China on much meat for sale here.If it's from Canada or Norway it probably tells you on the packet.

"Last year (2018) NZ jumped from third to first in food supply to China with 8.76% of the trade..."
Wow, who would have thought it. Little Aotearoa.
Guy, could you point me in the direction of this statistic. I can only find 2017 statistics with, as you say, NZ in third place. And how is 2019 shaping up?

Beware of high prices - its natural economics that once a price gets to high it will be substituted or supply increases - remember what happened last time the milk price went beyond $8. Nothing changes in some things so be careful and take the cash while you can but be ready for the fall. If meat burgers get to expensive in the USA watch the meatless patties arrive in force - price rules. I would expect to see a lot of chicken farms appear in China soon.

Meatless Patties? You mean Plant based and - and yes they are going gang busters!
To satisfy high demand for meatless meat, Impossible Foods hired these employees—and they aren’t in the food industry
https://www.cnbc.com/2019/11/04/impossible-foods-hired-mobile-phone-exec...

I wonder what products Impossible Foods is replacing? It certainly isn't NZ red meat, yet anyway ... volumes and prices are up strongly. It is possible that IF is just replacing other vegetarian/vegan offerings with these buyers itching for meat-like options ? (These are just guesses by me, but I would love to know real facts.)

... cows are vegetarians ... as are sheep ... and rabbits , snails ... look at the evolutionary path that has led them down ...

Good point - it will be interesting to watch this space. It could be supply as to replace a lot of meat is a lot of plants. The main risk is as the price goes up it just encourages alternatives. We should watch carefully to work out the trigger point at which it suddenly drops demand and when alternatives can step up. The best cure for high prices is high prices unfortunately.

A quick peruse of Beef and Lambs stats makes IFs stats look average. The value of NZ red meat exports increased 16/17-17/18 by multiples of IFs total earnings. Even as a percentage it was not far behind. And red meat is profitable IF not so much.

Due to the pork issues consumers are looking for substitutes, I recommend greasy mutton to satiate the pork fat starved millions...venison in this country is reared too lean to be able to deliver such satisfaction....fatten those hinds!

Goats ! .... ate alot of goat meat in Australia , and in the Philippines ... a cheap , versatile , and tasty cut ... yummy , Gummy ...

I agree, I lived for a while in Harlesdon in NW London many years ago which has a strong afro carribean contingent and got introduced to curry goat among other goat focussed dishes...couldn't get enough of it! I swear my hair got thicker and darker and my voice deeper as a result!

with solid export to china well and truly in place and with other food export prices/volumes on their way up, Kiwi $ will be up in no time to lessen the burden of import prices. yay.

I thought the round table had a name change to NZinitiative,have the knights saddled up and gone on a quest to china.they would have a better idea on how to profit from trade with china and would know not to piss them off or they will cut you off.

Diversification - it sounds so easy. Except of course that international trade is tough and getting tougher. I would bet that trying to reduce our reliance on China would involve a direct cut to overseas income and a multiplying downside to the NZ economy. Might help to reduce house prices and the falling NZD might give inflation a nudge. The electorate might not thank whoever tried it when standards of living decrease though.

I have wondered if the US-China tariff tiffs might help NZ agri exports to China and actually be good for our economy. Seems obvious that if US stuff becomes more expensive they'll look elsewhere. Is there a flaw in that reasoning?

yes.... if the US and China come to trade agreements in agriculture, which they're working on...outcome?.. who knows...I mean the trade tiffs right now are not even a year old so cant really expect long term strategies to be hashed out under flip flopping trumponomics.