Pig catastrophe in China opens opportunities for NZ meat exporters

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.