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Vol 18 No 41, October 21, 2019
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BAL0291_Whenua Farmers Weekly Front Page Lug 56x75 v1.indd11/10/19 1 5:01 P
China trade warning Neal Wallace
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neal.wallace@globalhq.co.nz
DOLLAR out every $3 earned from primary products exports comes from China, a scenario that concerns Otago University marketing expert Dr Robert Hamlin. Treasury has also warned about over-reliance on China, particularly for dairy. Hamlin says as a rule of thumb no more than 20% of revenue should be earned from one source to ensure a buffer against changes in terms of trade. According to the 2018-19 Ministry for Primary Industries’ Situation and Outlook report, primary sector exports to China for the year to June 2019 were $14.4 billion out of total sales of $46.3b. Add in the value of all exports of goods and services and annual sales to China earlier this year breached $15b for the first time. There is a gaping chasm back to New Zealand’s next largest primary produce market, Australia, which is worth $4.5b followed by the United States at $4.2b, European Union $3.1b and Japan $2.6b. Hamlin says China’s dominance comes with risk. “The major thing to be concerned about is if you look at NZ exports generally, the share of products going to China is rising and the share of products going everywhere else is falling. “Essentially, China is crowding out other markets.”
THEY LIKE US HERE: China’s increasingly affluent and metropolitan population knows we produce a lot of what they want to buy.
Essentially, China is crowding out other markets. Dr Robert Hamlin Otago University China is taking a long-term approach to secure food supplies for its growing population by also buying NZ processing companies, giving it control of the supply chain. In 2017 China was the top
export destination, accounting for 24% of primary sector exports by value, buying 25% of dairy, 43% of forestry, 31% of seafood and 21% of red meat. Since the devastation of China’s pig population by African swine fever last year it has taken 31% of all primary sector exports and is the leading buyer of dairy at 31% of exports, forestry at 52% and meat and wool 33%. By volume China’s influence is even greater. In the year to the end of September China bought 45%, or 891,400 tonnes, of NZ beef, lamb and mutton, a dominance AgriHQ
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analyst Nicola Dennis describes as unprecedented and with little sign of easing despite dwindling supplies of lamb. China’s influence is also boosting prices and demand for previously low-value cuts such as lamb flaps. It is paying $13 a kilogram for a product previously sold to Pacific markets for $2 a kilo. Queues of Chinese traders were lined up outside NZ booths at the Anuga Food Fair in Germany trying the source supplies of NZ lamb, a sign that lamb’s new dynamics of growing global demand and steady to
falling supply is not widely acknowledged, she said. Trade Minister David Parker says the China-NZ trade relationship is one of our most important. For the year ended June 2019 two-way trade accounted for 19% of overall two-way trade while Australia accounted for 16% and the European Union 14%. But individual exporters decide where they export to, Parker says. “It is up to individual firms to judge where they export but the Government also works hard to ensure that exporters have a
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