The New Zealand slaughter number for 2012 is forecast at 3.9 million head, virtually unchanged from the 2011 estimate, and about 2 percent lower than the 2010 slaughter estimate. Total beef production in 2012 is forecast at 612,000 tons (CWE), up marginally from the estimated 610,000 tons produced in 2011, and down about 5 percent from the estimated 643,000 tons produced in 2010.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF
AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY
Required Report - public distribution
GAIN Report Number: NZ1112
Livestock and Products Annual
Joseph Carroll, Agricultural Counselor
David Lee-Jones, Agricultural Specialist
The New Zealand slaughter number for 2012 is forecast at 3.9 million head, virtually unchanged from the 2011
estimate, and about 2 percent lower than the 2010 slaughter estimate. Total beef production in 2012 is
forecast at 612,000 tons (CWE), up marginally from the estimated 610,000 tons produced in 2011, and down
about 5 percent from the estimated 643,000 tons produced in 2010. Beef exports are forecast at 504,000 tons,
compared to an estimated 501,000 tons exported in 2011, and the estimated 530,000 tons exported in 2010.
Beef exports to the United States are forecast at 215,000 tons in 2012, up about 2 percent from the estimated
210,000 tons exported in 2011, but (3 percent) lower than the estimated 222,000 tons exported to the United
States in 2010.
Total slaughter numbers in 2012 are forecast at 3.9 million head, virtually unchanged from the 2011 slaughter
estimate. The combination of good export market prices and good weather conditions during the first half of
MY2011, supported higher cattle slaughter than previously expected. Consequently, Post?s estimate for
MY2011 total slaughter was increased to 3.9 million head, which is about 4 percent higher than Post?s earlier
estimate, but still lower (2 percent) than the 2010 estimate of nearly 4.0 million head. All categories of cattle
contributed to the higher than previously expected 2011 slaughter number.
Despite better average carcass weights for other adult cattle, total beef production is only expected to increase
marginally in 2012, and is forecast at 612,000 tons (CWE). Post?s estimate for 2011 total beef production was
increased (4 percent) to 610,000 tons, which is still about 5 percent lower than the 2010 production estimate of
In line with the expected (albeit) small production increase in 2012, beef exports are projected to increase
marginally and are forecast at 504,000 tons. Post?s estimate of 2011 beef exports was increased (5 percent) to
501,000 tons, which is about 5 percent lower than the estimated 530,000 tons exported in 2010. In U.S. dollar
terms, the first six months of 2011 saw total export revenues increase by 20 percent even though volume was
down 7 percent. Farmers were disappointed that despite the strong appreciation of the New Zealand (NZ)
dollar, a larger proportion of the export revenue gains was not realized by them. All the same, sheep and beef
farm profits for 2011 are likely to reach NZ$100,000, a level not earned since the strong run of profits between
2001 to 2003.
Beef exports to the US are forecast at 215,000 tons in 2012, comprising nearly 43 percent of total exports. Beef
exports to Indonesia declined by 60 percent in the first half of 2011 as a result of uncertainty surrounding the
issuance of import government permits.
Co-products, which include hides, leather, and edible offals and other products now contribute significantly to
exporter and processor incomes and the value of these products has been growing faster than beef exports.
No major changes with Government policy meant overall sector performance in 2011 is not likely to be effected
by this factor. Nor is it expected to play a significant part in the dynamics in 2012.
Animal Numbers, Cattle
Meat, Beef and Veal
Cattle Production & Slaughter
Total slaughter in 2012 is forecast at 3.9 million head, virtually unchanged from the 2011 estimate. The 2012
forecast assumes an increase of between 100,000 to 150,000 head in the national dairy herd, and a reduced
number of adult animals available for slaughter due to the ongoing slide in beef-cow herd numbers and fewer
bull cows retained from the dairy herd.
Based on cow-herd age structures and loss rates; the expected increase in dairy herd numbers; and the above
assumption that dairy herd numbers will continue to increase, it is expected that the cow kill in 2012 will be
similar to that of 2011 at 820,000 head. If the dairy cow herd numbers were to stabilize at the present levels
the cow kill could well be above 900,000 head.
Calf reproduction & calf kill
The increase in total cow numbers suggests that the 2012 calf drop will be up approximately 1 per cent to 4.76
million head. Virtually all the increase will come from the dairy herd. Calf kill is forecast to be up 2 percent to
1.61 million head.
Other Adult Cattle kill
Other adult cattle slaughter, which is the driver of beef production, is likely to fall 3 percent to 1.47 million
head. While the downward trend in the beef herd is generally thought to have bottomed out, it is not likely
there will be any increase in slaughter numbers just yet. Slaughter rates may be influenced slightly by a
resurgence in the export of live dairy heifer, which is providing a more lucrative outlet for surplus dairy heifers.
Live Export of Cattle
During the first half of 2011, there were 2,000 head more exports than during the same period the previous
year. Exports are forecast at 28,000 head for 2011 (vs. 27,000 in 2010) and 30,000 head in 2012.
The total ending inventory is expected to increase to 10.22 million head. Again the dairy industry will be the
recipient of all the increase in numbers which amounts to 170,000 head (up 2 percent). There are indications
that there will be in excess of 100 farm conversions to dairy production in 2012.
Total cattle slaughter is estimated at 3.9 million head, up 4 percent from Post?s previous (March 2011) estimate,
and 2 percent lower than the 2010 slaughter rate. The other adult cattle slaughter category is still forecast to
be down but by less than originally expected. Cow kill is likely to be well up on the previous forecast.
Weather conditions over nearly all the country have been benign through from mid-Autumn until late winter
(Q2 & Q3, 2011). Pasture levels and growth rates are at satisfactory to high levels and stock conditions are
good. This should support higher per head liveweight production to Q3 and Q4. With cattle at higher
liveweights going into 2012 this should contribute to higher average per head carcass weights in 2012.
As a result of favorable weather conditions it is expected that the calving for both the dairy and beef herds will
yield an appreciable increase in calf numbers. Post now forecasts 4.71 million head compared with 4.56 million
in 2010. Post?s new forecast is 3 percent higher than the previous estimate for 2011. Anecdotally, it has been
reported that there was a higher than average number of dairy cows that failed in to get in calf in some regions.
This may limit the extent to which the calf numbers can increase.
The increase in calf numbers produced will come exclusively from the dairy herd and will flow through to:
increased calf slaughter numbers at 1.57 million head up from 1.56 million in 2010 (+1%); and extra retained
young stock in the dairy herd.
Historically high prices for beef prompted a higher slaughter rate than generally expected during the first half of
the year. The number of cows slaughtered was 1,700 head greater than for the same period in 2010. The
slaughter rate was bolstered by relatively high numbers of older dairy cows, which had been previously retained
to increase herd numbers, finally needing to be culled from dairy herds.
Based on the average cow kill during the second half of the last three years, the forecast has been revised
upward by 15 percent and, at 822,000 head, is just 5 percent lower than the drought induced kill of 2010.
Other adult cattle kill
The slaughter rather for other adult cattle (heifers, steers, bulls) is likely to be 4 percent relative to Post?s earlier
estimate, and about 3 percent below the 2010 total. There has been a gradual decline in the beef cow herd
over the last eight years along with a decrease in the number of beef calves retained out of the dairy cow calf
production. This trend is now manifesting itself in lower numbers of other adult cattle coming forward for
Due to increase in the dairy herd, the total ending inventory is now estimated at 10.05 million head, which is
about 1 percent (143,000 head) higher than the 2010 estimate. Estimates put the number of new dairy farms
coming into operation in 2011 at approximately 100.
Longer Term Outlook
Generally speaking, there is a more positive outlook for livestock farmers at present, but industry reports
indicate that farmers are not preparing to increase their beef herds. If the present level of farmgate pricing is
maintained (NZD$4 to $4.50/kg CW) without extreme volatility for several seasons, then farmers will likely make
the commitment to bolster beef production. However several factors may work against this:
NZ Dollar appreciating too quickly against other currencies especially the USD. This is happening at
present and is eroding returns to farmers
Livestock farmers have substituted the good and consistent cashflow from grazing cows and heifers
from the dairy sector for trading cattle and beef production.
A general lack of fertilizer evidenced in much of the hill country during the last five years will limit rapid
expansion of herd numbers. Although low fertilizer use has turned around in the last six months (a
major fertilizer coop reports increased tonnages of 19% above last year), it will be difficult to make up
for the last five years of reduced use.
Sheep profitability has significantly increased over the last 12 months and the outlook for the next
couple of seasons is positive. Comparative profitability would favour sheep so many farmers will
probably increase sheep numbers if they can.
The likelihood of continued growth of the dairy sector will be main driver for increases in beef
production either from increased cow kill or increased bulls being reared from retentions from dairy calf
Source: GTA, Reserve Bank NZ, Market Insight
Source: GTA, Market Insight
Source: Beef+Lamb NZ, Note: Data on a June year.
Sheep and beef farmers are in line to realize their highest profit margins since the 2001 to 2003 stretch where
profits hovered around the NZ$100,000 per farm before taxes. For the 2010/2011 June year, Beef + Lamb NZ
Economic Service is forecasting profits to again reach about NZ$100,000 per farm. This is a welcomed
development for the majority of farmers who have endured very poor market returns, and climate induced
production difficulties over the last seven years. Many farmers have increased debt just to keep trading, and
this year?s result will give them the opportunity to reduce debt and catch up on overdue maintenance. It hasn?t
just been one commodity, farm-gate prices for both beef and sheep have had improved (for e.g. in 2007-08
lamb prices at farm gate were $50/head and in 2010-11 they will be over $100/head). In addition, wool prices
have increased by about 40 percent and grain prices have been strong.
Beef & Lamb NZ?s Economic Service reports that all signs suggest that lamb prices will remain strong for some
time, because of tight global supplies. The only cloud on the horizon is the currency exchange rates which has
seen the Kiwi dollar appreciate against virtually all main currencies, and in some cases to post float highs (NZ$1
buying US$0.88 end July 2011)
New Zealand Beef Production
Marketing 2010 2011 Estimates 2012 Forecasts
Est. Number Total CW Number Total Est. Number Total
CW Killed Tons kgs/hd Killed Tons CW Killed Tons
kgs/hd 1000?s Beef 1000?s Beef kgs/hd 1000?s Beef
Cow 198.0 868.2 171944 198.4 821.62 163022 200 820 164000
Calf 16.3 1,562 25543 16.3 1,572.4 25609 16.75 1,610 26968
Heifer 234.8 493 115632 231.3 488 112769 235 470 110450
Steer 309.1 632 195236 303.9 584 177333 312 575 179400
Bull 307.3 437 134174 298.5 438 130882 308 425 130688
Other 285.1 1,560.9 445041 278.9 1,509.5 420983 286.1 1,470 420538
Total 161.0 3,991.6 642,529 156 3,903.5 609,614 156.8 3,900 611505
Source: Post, Beef&LambNZ, StatiisticsNZ, MAF
Post expects total beef production to remain relatively flat, with 2012 production forecast at 612,000 tons
(CWE), up marginally (2,000 tons) from the estimated 2011 production level. Despite lowered steer, heifer, and
bull numbers, beef production will likely match 2011?s level as better average carcass weights (+7kg on
average) return to historical levels. Heavier CWs are expected to come from young cattle destined for slaughter
in 2012 wintering better in 2011 and thus arriving heavier at the start of the year. This, coupled with average
pasture growing conditions during 2012, should result in heavier carcass weights.
It is likely that the beef production from cows and calves will each be up by 1000 tons owing to slightly higher
average carcass weights and an increase in slaughter numbers respectively.
The anticipated drop in 2011 production is not as great as previously anticipated. Beef production in 2010 is
now estimated at 610,000 tons (CWE), which is 4 percent higher than Post?s previous estimate, and 5 percent
lower than the estimated production level in 2010. The most significant change from 2010 is in the ?other?
adult category, which will likely suffer a reduction of close to 25,000 tons (CWE). The drop reflects 50,000 fewer
head being slaughtered and lower average carcass weights (due to younger, climate affected cattle being killed
in 2010). The lower slaughter rate reflects an ongoing decline in the size of the base beef herd resulting from
drought conditions and relatively poor profitability.
The continued higher level of cow beef production is a bright spot in 2011. While it is likely to be 8,000 tons
(CWE) less than last year?s effort, Posts revised estimate is 21,000 tons (15%) ahead of initial forecasts for the
year. This is despite the average carcass weight (CW) being 4kg/head (-2%) less than anticipated. As discussed in
the cattle production section it is the result of the cow kill being revised upward
Merger of two genetics companies
In January 2011, two genetics companies, Rissington Breedline and Landcorp Genetics (part of the State-owned
corporate farm and the largest sheep and beef farming business in New Zealand), announced they will merge
creating New Zealand?s single largest genetic database. The two companies have purebred and composite
breeding programs which include Primera, Lamb Supreme, Highlander, LandMark, Romney and Texel sheep
breeds, as well Angus, Simmental and Stabiliser cattle breeds, and Wapiti and Red deer breeds.
Numbe 2010 2011 2012 rs,
Cattle M a r k e t Y ear Begin: Jan Market Year Begin: Jan Market Year Begin:
New Zealand 2 0 1 0 2011 Jan 2012
Off. P New ost Po Of
f. Post Of New f. Post
(1000hd Data Est. , %) D Data Es
ata D Data Es
Total Cattle Beg. 9,917 9,917 9,917 9,907 9,907 9,907 10,050
Dairy Cows Beg. 4,597 4,597 4,597 4,700 4,700 4,700 4,800
Beef Cows Beg. 1,096 1,096 1,096 1,114 1,114 1,114 1,100
Production (Calf 4,559 4,559 4,559 4,565 4,565 4,710 4,760
Intra-EU Imports 0 0 0 0 0 0
Other Imports 0 0 0 0 0 0
Total Imports 0 0 0 0 0 0 0 0 0
Total Supply 14,476 14,476 14,476 14,472 14,472 14,617 0 0 14,810
Intra EU Exports 0 0 0 0 0 0
Other Exports 27 26 27 30 30 28 30
Total Exports 27 26 27 30 30 28 0 0 30
Cow Slaughter 868 868 868 714 714 822 820
Calf Slaughter 1,562 1,562 1,562 1,590 1,590 1,572 1,610
Other Slaughter 1,561 1,561 1,561 1,458 1,458 1,510 1,470
Total Slaughter 3,991 3,991 3,991 3,762 3,762 3,904 0 0 3,900
Loss 551 552 551 625 625 635 660
Ending Inventories 9,907 9,907 9,907 10,055 10,055 10,050 10,220
Total Distribution 14,476 14,476 14,476 14,472 14,472 14,617 0 0 14,810
CY Imp. from U.S. 0 0 0 0
CY. Exp. to U.S. 0 0 0 0
Balance 0 0 0 0 0 (0) 0
Inventory Balance (10) (10) (10) 148 148 143 170
Inventory Change 2 2 2 0 0 0 1
Cow Change 4 0 4 3 0 0 0
Production Change 1 1 1 0 0 3 1
Production to Cows 80 80 80 79 79 81 81
Trade Balance 27 26 27 30 30 28 30
Slaughter to 40 40 40 38 38 39 39
TS=TD 0 (0) 0
Bee 2010 2011 2012 f &
New Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012
Of old New New f. Of New f. Post Off. Post
(1000hd,1000 st Post
ata E Post st.
CWE) E E
st. D Data ata D Data ata Data
Slaughter 3,991 3,991 3,991 3,762 3,762 3,904 3,900
Beginning 0 0 0 0 0 0 0
Production 643 643 643 587 587 610 612
Intra-EU 0 0 0 0 0
Other Imports 11 11 11 11 11 12 12
Total Imports 11 11 11 11 11 12 12
Total Supply 654 654 654 598 598 622 624
Intra EU 0 0 0 0 0 0 0
Other 530 530 530 478 478 501 504
Total Exports 530 530 530 478 478 501 504
Human Dom. 124 124 124 120 120 121 120
Other Use, 0 0 0 0 0 0 0
Total Dom. 124 124 124 120 120 121 120
Ending 0 0 0 0 0
Total 654 654 654 598 598 622 624
CY Imp. from 0 0 0 0 0
CY. Exp. to 235 222 222 221 205 210 215
Balance 0 0 0 0 0 0 0
Inventory 0 0 0 0 0 0 0
Weights 161 161 161 156 156 156 157
Production 3 3 3 (9) (9) (5) 0
Import 10 10 10 0 0 9 0
Export 3 3 3 (10) (10) (5) 1
Trade 519 519 519 467 467 489 492
Consumption 3 3 3 (3) (3) (2) (1)
Population 4 , 2 52,2 4,213,4 4,252,2 429034 421341 429034 4,290,3 4,388,0 4,388,0
77 18 77 7 8 7 47 00 00
Per Capita 29 29 29 28 28 28 28 27 27
TS=TD 0 0 0 0 0
Note. These are not official USDA forecasts.
Sources: Post, Global Trade Atlas, MAF, StatisticsNZ, Beef&LambNZ
Domestic consumption is forecast to remain relatively stable between 2011 and 2012 at just over 120,000 tons
(CWE). It has been estimated there will have be a 2% decrease in volume consumed between the 2010 year and
2011 in response to the rise in beef retail prices.
TRADE & EXPORTS
Beef exports in 2012 are forecast at 504,000T (CWE), up marginally from last year?s level. The increase is in
direct response to the forecast increase in production. Post expects exports to the U.S. to increase to 215,000
Post?s estimate of 2011 beef exports has been increased (5 percent) to 501,000 tons (CWE) reflecting export
performance to-date and the expectation that beef production will be slightly higher than previously reported.
Despite the upward adjustment, exports are forecast to be down 6 percent relative to the previous year.
Source: Agricultural Affairs Office, US Embassy, Wellington, NZ
New Zealand Beef Export Statistics
Year To Date: January - June % %
2009 2010 2011 Change Change
Coun Value Value tr Quantit antit Q Value uantit
y y CWE USD
Qu USD Qty Value
y CWE y CWE USD 2011/201
T million onons T millions T m
ons 0 0
s s s
World 327957 705.0 335833 892.6 312354 1,074.9 -7.0% 20.4%
States 158574 303.7 155789 382.8 144548 458.8 -7.2% 19.9%
South 26294 40.5 31159 65.7 32417 93.1 4.0% 41.8%
Japan 24290 65.9 27893 87.8 26353 92.5 -5.5% 5.3%
Canada 30021 58.0 19414 48.4 19758 61.2 1.8% 26.3%
Taiwan 17803 46.0 17785 53.1 18143 70.4 2.0% 32.8%
Indonesia 22418 33.3 29505 63.4 11332 30.0 -61.6% -52.6%
s 4027 7.0 8385 16.0 8144 20.0 -2.9% 24.4%
Singapore 4671 12.4 5523 17.8 5054 20.4 -8.5% 14.4%
Kingdom 3843 16.3 3227 14.7 4155 23.4 28.8% 59.2%
Australia 2390 7.6 3505 15.5 3871 19.8 10.4% 27.8%
the World 33623 114.4 33646 127.3 38583 185.2 14.7% 45.5%
Source: Global Trade Atlas (GTA) includes Beef PSD HS Codes
Source: Global Trade Atlas (GTA) note the years are June years
New Zealand beef exports to the United States in 2011 are estimated at 210,000 tons (CWE), down 5 percent
from exports in 2010. While year-on-year exports to the U.S. during the first six months of 2011 fell 11,000 tons
(CWE), depending on the US drought and other factors, the on-going decline in New Zealand beef exports to the
US market could be coming to an end. The factors that support this assumption include:
Drought: The ending of the drought in the southern US states and the timing as to when the effects
wear off which would prompt some herd rebuilding and lower the US cow kill which in turn may
encourage imports from New Zealand depending on the impact on prices.
Prices: FOB prices in USD terms for manufacturing beef reached the highest level ever in late Q1 early
Q2, 2011, although prices subsequently backed off the highs they remain at historically high levels (see
farm gate price chart)
Worldwide Supply: It is currently thought worldwide supply is having a hard time satisfying existing
demand, and the other leading beef exporting nations for various reasons may not be able (e.g. strong
Australian dollar) to meet U.S. demand for manufacturing beef at competitive prices.
Indonesia: If the situation in Indonesia doesn?t resolve itself soon NZ beef destined for that market may
end up being sold to the US.
U.S. importers: Reportedly U.S. importers are already looking at securing supply of manufacturing beef
prior to Christmas 2011 if shortages occur in US for manufacturing/grinding beef.
However there are other factors which will work against exports to the U.S. which include:
Appreciation of the NZ dollar against the US dollar will work against a larger swing back to exports to the
Even if the manufacturing beef prices in the US peak again they will probably drag Pacific Rim prices with
them and exporters in NZ may find it more advantageous to continue to trade with other countries
whose currencies haven?t devalued as much against the Kiwi.
Exports to Indonesia slumped during the first half of 2011 recording only 9,769 T CWE against 24,570T in 2010
(down 60%) for the same period last year. The trade reports that beef shipments have slowed to barely a
trickle. Factors at work in this market as reported in New Zealand are:
Since Q1, political interference has made it very difficult for major importers to obtain the necessary
The situation regarding trade policy as it relates to beef imports is very unclear.
It is complicated by the aspirational goal of the Government to be self sufficient in beef production.
The crisis which occurred over the exports of live cattle from northern Australia to Indonesia being
banned by Australian authorities.
While the Australian ban has been lifted, onerous conditions have been put on the resumption of actual
shipments and it is thought it may be some time before significant shipments resume.
The shortage of beef caused by the cessation of the live trade is likely to be 6-7000 tons per month and
if sustained for any length of time will likely boost domestic prices in Indonesia.
There was a temporary reprieve in July when the Government issued approximately 8,000 tons (Product
Weight) of licenses, of which NZ Exporters obtained approx 1,700 tons (PW) with Australian traders
receiving the balance.
It is widely maintained by New Zealand traders that it is only a matter of time before the shortage of beef
becomes important enough to the Indonesian Government that there will be a turn-around in the issuance of
During the first half of 2011, South Korea emerged as the second most valuable destination for exports of NZ
beef, both by quantity and value. This was probably supported by the speculative nature of traders in Korea
buying up large quantities earlier in the year in response to perceived heightened supply shortages that may
have been brought about by the Queensland floods exacerbating an already tight supply. It is thought that the
NZ has established a good niche trade for pasture fed product which may not yield spectacular volume growth
but will be worked on to grow the value.
The market in Taiwan has remained consistent, receiving stable quantities and the growth in was significant in
the first half of 2011, up 37 percent against the same period in 2010. It has been reported, however that prices
have come off their highs going into Q3, 2010. Quite a lot of market development work by Beef+Lamb NZ has
gone on to get over the idea that grass fed beef has its own particular attributes and is a satisfying alternative to
grain fed beef.
Export volumes during the first half of 2011 fell by 6 percent compared to the same period last year. This
decline matched the overall drop in New Zealand exports to all destinations during the first half of 2011. On a
value basis, exports increased 5 percent for the first half of 2011compared to the same period 2010, which is
significantly lower than the 20 percent increase globally. While Japan remains a relatively high-priced market,
trade contacts report it is not growing in comparison to other Asian markets. One commentator describes the
market as having been flat for the past two years.
In late July it was reported that the wholesale beef markets in Tokyo tumbled in response to reports that beef
contaminated with radioactivity had found its way into the food chain. Once one part of the beef market is
tainted consumer demand is turned off all beef.
Relative to the size of the market, there are a large number of traders exporting New Zealand beef. One
consequence of this is that the smaller to medium sized players have steered away from competing directly with
the largest players and have diversified into niche markets that have satisfied their price targets. In addition
grass fed beef is becoming better known and easier to sell.
In 2003, about 12 percent of NZ beef (on a volume basis) went to destinations outside the top six markets, by
2010 19 percent of exports went to these markets. This trend is likely to continue. Exporters continue to be
very flexible in their approach to which markets and customers they service.
Co-products, including hides, leathers, offals, and other products from cattle carcasses are not included in the
PSD numbers. Outside of the PSD HS codes, there were exports directly attributable to bovine carcasses worth
US$441 million for the period Jan-May 2011, compared to beef exports under the main PSD HS codes of US$1.63
billion. The value of these co-product exports has been growing at a compound rate of 13 percent per annum,
versus an annual growth rate of of 8 percent for beef exports. The main destinations are (in descending value):
Italy, China, Japan, US, Hong Kong, South Korea, Indonesia, and Australia.
By extracting more of the carcass for edible offals, processors have been able to grow volume and value even as
total beef production on a carcass weight basis has flattened out. This income has now become very important
to ongoing processor profits.
Tallow and fats are not included in this total for co-products because the export statistics groups all animal fats,
oils, and gelatins together. For the period Jan-May 2011, exports of total animal fats, oils and gelatins were
valued at $129.3 million. This trade is growing at about 7.5 percent per annum. China is the main destination
making up 66 percent of the total value of exports. A lot of the tallow exported to China is used in soap
GOVERNMENT AND INDUSTRY POLICY
New Zealand gains access to EU beef quota
In late July 2011, the EU announced that it has granted New Zealand access to a 20,000 ton tariff-free quota for
high quality grain-fed beef. While this is positive for NZ beef, the share of the quota will likely be low, given the
small amount of annual grain-fed beef produced in New Zealand. The total quota volume is set to increase to
45,000 tons in 2012. The main beneficiary of this new access arrangement will be ANZCO, a meat and meat
products processor that owns the only significant grain-fed beef feed lot in New Zealand.
Red meat industry fund announced
In April 2011, a NZ $850,000 fund to help stimulate the red meat industry was announced by the Government.
The fund, a joint initiative between the New Zealand Trade and Enterprise (NZTE) and Beef + Lamb NZ, aims to
encourage industry-led projects that have the potential to enhance the profitability and competitiveness of the
NZ meat sector.
Red Meat Sector Strategy
The red meat sector strategy report, commissioned by the Meat Industry Association (MIA), Beef + Lamb New
Zealand, NZ Trade and Enterprise, and the Ministry of Agriculture and Forestry, was released in May 2011. The
strategy is an industry-wide approach that includes both processors and farmers. It aims to enhance
profitability and increase earnings from NZ $8 billion to NZ $14 billion by 2025.
The report, which was done by a team at Deloittes that also delivered strategy documents for the horticulture
and aquaculture sectors, identified the greatest potential for significant improvement in three key areas:
in-market co-ordination: creating a strong brand position and acting with scale through greater co-
ordination of exports to enlarge targeted markets;
efficient and aligned procurement: a critical need to shift the focus of competition from the farm gate to
offshore competitors; and,
sector best practice: developing farming systems and improving productivity at all stages of the
supply/value chain, leveraging research and development and knowledge transfer.
According to a model developed by the New Zealand Institute of Economic Research, there would be a
measurable improvement in New Zealand?s GDP if the recommendations were implemented.
As part of the implementation process, a red meat sector strategy co-coordinating group has been formed to
promote, advise, monitor and report on implementation of the sector strategy. In addition to two independent
members, the group includes representatives from the Meat Industry Association, Beef + Lamb New Zealand
and the Ministry of Agriculture and Forestry.
From a farmer standpoint, the report includes practical ways to assess business options that could enhance
profitability. To support adoption of the recommendations in the report, Beef + Lamb NZ is ramping up its
extension effort to help farmers achieve productivity gains.
National Animal Identification and Tracing Scheme (NAIT)
In late May 2011, NAIT Limited and MAF jointly announced that the mandatory implementation of the NAIT
scheme will be postponed until mid to late 2012. It was previously due to go into force on November 1, 2011.
The NAIT Bill has not yet passed Parliament and the IT system supporting the scheme is not in place.
Under the scheme, only cattle and deer are to be included. The cost of the tags is not significantly higher than
the plastic tags that were already mandated under the Animal Health Board tagging system, which will be rolled
into NAIT. While there are likely to be some productivity gains, the program has been controversial among
farmers. More detail on the scheme can be found at: http://www.nait.org.nz/
New Zealand Trade Agreements
New Zealand has eight free trade agreements (FTAs) in force. According to calculations by the National Bank of
New Zealand, these FTAs cover 29% of the global population and include some of the world?s fastest growing
The GONZ is in the process of negotiating an additional five FTAs with, among others, India, Korea, Russia and
the United States. It is hoped these FTAs will achieve enhanced access to rapidly growing economies and
markets comprising a further 27% of the global population. The India FTA has the potential to benefit meat
exporters in the long run as tariffs for most animal products are 33 percent. While exporters report that FTAs do
not drive business decisions, they do provide a framework to work out trade-related issues, especially SPS and
non-tariff barriers, and, in some cases, can provide significant market access advantages.
The FTAs in force are:
New Zealand-Hong Kong, China Closer Economic Partnership (NZ-HK CEP entered into force on 1 January 2011)
New Zealand-Malaysia Free Trade Agreement (MNZFTA entered into force on 1 August 2010)
ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) - 2010
New Zealand-China Free Trade Agreement (NZ-China FTA) - 2008
Trans-Pacific Strategic Economic Partnership (P4) - 2005
New Zealand-Thailand Closer Economic Partnership (NZTCEP) - 2005
New Zealand-Singapore Closer Economic Partnership (NZSCEP) - 2001
Australia-New Zealand Closer Economic Relationship (CER) - 1983
In addition, the New Zealand Government is currently negotiating the following FTAs:
New Zealand-Gulf Cooperation Council Free Trade Agreement (NZ-GCC FTA negotiations have been concluded
but not yet signed)
Expansion of the Trans-Pacific Strategic Economic Partnership (TPP)
New Zealand-Korea Free Trade Agreement (NZ-Korea FTA)
New Zealand-India Free Trade Agreement (NZ-India FTA)
New Zealand-Russia-Belarus-Kazakhstan Free Trade Agreement (NZ-RBK)
TransPacific Partnership Agreement (TPP)
Beef+Lamb NZ, formerly called Meat and Wood NZ, and the Meat Industry Association jointly made submissions
to the Ministry of Foreign Affairs and Trade on the TPP. These organizations support an elimination of both the
US tariff rate quota, which currently stands at US 4.4 cents/kg, and the over-quota tariff rate, which is currently
26.4% of FOB value. The industry would like to receive a level of access equivalent to the Australian beef
industry. They maintain that New Zealand?s beef exports to the US are complimentary to US beef production
because lean meat from New Zealand is blended with US fat trimmings to manufacture burgers, patties, and
pizza toppings. Beef+Lamb NZ notes that New Zealand supplies, at most, 2% of total US consumption, and
contends that, because of land constraints, is not going to be able to significantly increase market share.
More information on TPP can be found at:
Fonterra, Silver Fern Farms launch cargo company
Silver Fern Farms, the country?s biggest meat company, and Fonterra, the country?s largest dairy cooperative,
jointly launched a new import-export cargo management company called ?Kotahi? in July 2011. The new
company began operations in August and is expected to handle approximately one-third of all containers leaving
Kotahi reportedly aims to attract shipping lines that can deliver fast service for perishable exports and help
smooth out the peaks and troughs associated with highly seasonal shipping demands by providing more
certainty regarding shipping volumes and timetables. At a future date, the company plans to broaden its
business plan to include other sectors such as kiwifruit and seafood. The company's initial focus is working with
ocean carriers but it also has plans to drive more efficient rail, road and port infrastructure usage.