Many New Zealanders may be unaware that China, home to half the world’s pigs, is suffering a catastrophic outbreak of African swine fever. According to one authoritative estimate, the disease may have wiped out one-third of the population of 500m pigs.
The London “Economist” says that for as long as it takes China’s pig industry to recover —which may be years—farmers elsewhere may have cause to celebrate. Yet foreign producers cannot make up the vast amount of production which will be lost —and American pig farmers have tariffs imposed on them as part of the ongoing trade war with China.
So, as Point of Order sees it, a big opportunity is opened for NZ food producers, particularly meat exporters, to be diverting as much of their product as they can to China.
And where’s Foreign Minister Winston Peters or Trade Minister David Parker in promoting meat sales to China?
Peters should be hammering away in Beijing, striving to get a new trade deal done, instead of attending functions in the Cook Islands or (as projected) leading a delegation of 70 to Vanuatu next month.
Seven rounds of negotiations since 2017 have taken place on updating the 2008 FTA, including securing easier access for key products — with no end in sight. Meanwhile NZ dairy products face tariffs once exports reach a certain “safeguard” level, with the trigger point for milk powder, the biggest export, at the beginning of the season.
Even without the improvements to the FTA which officials are seeking NZ exports to China have been rising. In April annual exports reached $15bn for the first time. They now account for about a quarter of NZ’s international sales.
Commentators have noted that the strong demand recently from the Chinese market for alternative protein sources, such as NZ beef and lamb, is partly due to African swine flu reducing pork production in China.
The value of beef exports to China nearly doubled in the year ended April.
Other food exports have also been rising. Milk powder was up $501m at $2.4bn.
In April alone, exports to China rose $327m, or 29%, to $1.4bn, led by milk powder, beef and lamb.
With the developing trade war between the US and China, NZ should be taking advantage of its so-called “independent” foreign policy to get the ear of influential Chinese leaders and lobby groups to ensure its trade keeps expanding at the rate it has done since the first FTA was signed in 2008.
Yet NZ First criticises, for example, the bid by Chinese company Yili for the Westland Milk Products. Regional Development Minister Shane Jones, accusing farmers of “catastrophising” a climate change programme that was manageable and of undermining NZ’s economic sovereignty, said: “It’s the farmers who are selling Westland Dairy to the Mongolians,”
According to ANZ Bank, Westland Milk Products farmers will bank – on average – $572,000 from the sale of their shares to Inner Mongolia Yili Industrial Group if the deal goes ahead.
If approved, Westland’s 429 shareholders will receive $3.41 a share for around 72m shares, representing a cash injection into the hands of farmers in the vicinity of $245m. It’s said even if a large share of these funds are used to repay debt, the multiplier effect of spending radiating through the local economy from the injection of funds from the sale of shares will positively impact the local economy to the tune of about $280m.
Hardly a catastrophe for the local economy, then.