The ability to export to a wide range of markets has been and will continue to be, important to our success. We match products with consumers in the 110 markets our companies export to, maximising the value of each animal and the returns to farmers and rural communities.
Not only does having options allow companies to maximise value, but it is also important to the resilience of our companies in a volatile and unpredictable global market.
Successive New Zealand governments have negotiated an impressive network of high-quality free trade agreements (FTAs), which have served the industry well. With nearly 73 per cent of our exports covered by preferential trade deals, our products are more competitive and our companies have been more able to invest in strong customer relationships across the world. Some of these trade agreements have led to unprecedented growth and opportunities in emerging markets.
China is a prime example. In 2008, the New Zealand/China trade agreement secured us tariff-free access into a huge market with growing demand for protein at very high prices.
At the time, New Zealand was the first developed country to sign a deal with China and that allowed our companies a head start. It is no wonder that a large percentage of our meat exports are China-bound.
Our exports to China have grown significantly and today China accounts for 440,000 tonnes by volume and $4.1b by value. It is and will continue to be, an important market.
It is true that the sector's exports to China are significant, but diversification remains a priority and cornerstone of the sector's export strategy. Companies have strong commercial relationships in 110 markets around the world and are always seeking out new markets, particularly markets with consumers who are demanding quality premium products and are willing to pay premium prices — markets such as the US, UK and EU.
Our exports to the US remain strong and are starting to diversify. Traditionally a beef market, we are now seeing an increasing demand for sheepmeat.
Sheepmeat exports to the US grew 18 per cent by volume in 2021/22 to 32,475 tonnes and 62 per cent by value to $601 million. This was a record volume and value of exports to that market.
Lamb is a high-end product in the US, and this was reflected in the average FoB value of $18.52/kg for exports to the US the year, a 37 per cent increase from the previous year, and significantly higher than the average FoB value of $11.81 for overall sheepmeat exports during the year.
The UK will continue to be an important market for our value-add chilled lamb and the recently concluded FTA, once implemented, will enable companies to develop the beef market for our premium products.
The EU is a market of nearly 450 million consumers, many of which have strong preferences for products with verifiable claims such as hormone-free, grass-fed, raised without antibiotics, and carbon neutral/zero. When we talk about putting greater focus on volume to "value" and "values", the EU is a big opportunity and one that New Zealand is very well placed to meet.
It is for this reason the industry was disappointed with the poor outcome for our sector of the EU/NZ FTA. The FTA outcome for beef barely covers existing trade and as a consequence, it is a missed opportunity for our companies to be able to tap into a large and lucrative market that can provide some further optionality to strengthen the industry's agility to weather global disruptions.
Looking to the future, the challenge remains to open up new markets and develop and evolve products to respond to emerging consumer trends and customer needs.
• Sirma Karapeeva is CEO of the Meat Industry Association
