For the past five years New Zealand has filled only half of its duty-free sheepmeat quota to the United Kingdom and European Union, until recently the country’s most valuable markets in both volume and value.
Last year NZ exported about 90,000t to the two markets, well below the 228,254t allowed by the quota.
Data supplied by the Ministry of Foreign Affairs and Trade shows the growing significance of China which, since 2013, has been NZ’s most significant market by volume.
The data shows that in the early 2000s the EU and UK represented 60% of the value of NZ’s sheepmeat export. Today it is about 30%.
In 2009, UK sheepmeat exports were valued at $723 million and the EU $1.06 billion. By 2022 the value into the UK had fallen to $407m, or 10% of total value, and it is now NZ’s fourth largest market. In the same year EU exports were worth $948m or 20% by value, ranking the market second.
They both remain high paying markets.
Last year the average free-on-board value of products sold in the UK/EU was $15.80/kg, double the $7.92/kg of China, but both were dwarfed by sales to the United States, which averaged $20.36/kg.
In 2021-22 the US took less than 30,000t.
Meat Industry Association chief executive Sirma Karapeeva said the UK and EU remain important markets.
“We know these markets well, they are well established, we have mature relationships and we understand how they operate,” she said.
“We can’t say they are no longer important.”
Since 1974 NZ has had preferential access to the UK and Europe, but that quota was split when the UK left the EU in January 2020: 125,769t to the EU and 102,620t to the UK.
Beef + Lamb NZ figures reveal that in the year to March 2023, the EU took 26% of NZ’s lamb and 7% of mutton, the UK 9% of our lamb and 1% of our mutton. China accounted for 31% of our lamb and 75% of our mutton.
Karapeeva said the UK and EU markets take premium cuts.
“We can’t discount those markets, they are still very important but different to the products that go to markets in China and Southeast Asia.”
For example, in 2021-22 the UK was NZ’s third largest destination for lamb, accounting for 13% and the EU 16%, due to lower demand from China, which was still in lockdown, and a revitalised UK and EU foodservice sector.
They are also significant chilled markets, but this has been impacted in recent years by global shipping delays.
China still has an insatiable appetite for sheepmeat, however.
In 2021-22 it accounted for more than 40% of NZ’s lamb exports and around 80% of mutton by volume, equating to 28% by value.
Karapeeva said while that appetite has been growing, so has the quality of meat it seeks – which poses a challenge for companies.
“It’s a commercial, economic rationale decision to place product in the markets which pay the most,” she said.
Some of those decisions are based on logistics, shipping times, access to ports and the volumes they can handle along with the speed of processing, which are features in China and make it appealing.
“Big ports can manage massive volumes.”
Despite NZ not filling its duty-free quota in recent years, the free trade agreements with the UK and EU are valuable.
“If the world changes, we’ve got it and if we need it, it will save $300m in tariffs to the EU alone,” said Karapeeva.