Commentary: Kiwi controversy

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New Zealand meat exports being held up in Chinese ports represent a “bureaucratic blockade” that may have been caused by Chinese efforts to curb counterfeit meat sales, according to news reports.

That’s a glass-half-full explanation.

A substantial but undetermined amount of New Zealand lamb, mutton and beef is sitting in containers after Chinese officials determined there were problems with the documentation.

New Zealand Prime Minister John Key said that Carl Worker, the country’s ambassador to China, had confirmed the problem was “a technical issue.”

“The Chinese were waiting for some updated information from the Ministry of Primary Industries, which I understand has now been provided,” Key told Reuters. “The Chinese are working through the information quickly and constructively and we're hopeful the issue will be resolved this week.

 “That’s quite a good long-term thing, because they are working on making sure there’s a more robustness about their system,” he added. “Therefore, the issue of counterfeit meat, meat that is claimed to have come from New Zealand but maybe wasn’t from New Zealand, can be combated.”

That’s a glass-totally-full explanation.

A paperwork problem?

Of course, this holdup is more than merely a matter of “technical details.” According to a report by Bloomberg, China is New Zealand’s largest export customer and its biggest buyer of milk powder and dairy products. China’s purchases of New Zealand beef and mutton more than tripled to $230 million in the first quarter of 2013, versus a year earlier. Combined those exports comprise about 17% of the country’s entire meat export trade.

“Chinese have got a very significant appetite for New Zealand meat,” Key noted. “They see New Zealand as a very good supplier. The potential for meat exports to China is exponential.”

Potential being the operative word.

Reportedly, hundreds of tons of meat are held up, as the blockage has been in place for as long as three or four weeks, news reports suggested. That takes it beyond the realm of a mere “paperwork problem.”

Allegedly, Chinese authorities blocked imports of meat when the Ministry of Primary Industries, the New Zealand ministry that certifies the authenticity of the products—and the safety of the country’s processing plants—changed its name.

However, the name change took effect on March 1, and MPI Deputy Director-General Andrew Coleman was unable to state exactly what the documentation problem was.

“We are not being told at this stage what the specific issue is,” he said.

However, Coleman said he was aware of reports that China’s domestic pork and poultry industries may have had a hand in blocking New Zealand beef and mutton imports, but had no official confirmation to that effect.

This issue, although relatively minor in the context of global trade in animal foods, illustrates the difficulties in growing domestic production of commodities on the basis of export sales.

Basically, the exporter is at the mercy of the foreign customer. Recent examples of numerous countries unilaterally banning U.S. beef in the wake of BSE cases here a decade ago are merely the built-in setbacks that come with the territory.

Back in New Zealand, Primary Industries Minister Nathan Guy told chaotic press conference in Parliament earlier this week that New Zealand’s relationship with China officials was “wonderful.”

However, he refused to provide a timetable on a possible resolution of the impasse and warned that speculation about the reasons behind the dispute “could be damaging.”

Federated Farmers of New Zealand president Bruce Wills noted that producers are struggling with the after-effects of drought and falling lamb prices and called on the government to quickly resolve the problem.

“It is a concern because this is a critical market for New Zealand, and there has been a fair bit of excitement at how quickly our exports have been going to China,” Wills said. “To get a hiccup like this is a concern.”

The bottom line here is simple: New Zealand needs China a lot more than China needs New Zealand.

Going forward, export growth represents the future of U.S. animal agriculture. Domestic consumption is never going to dramatically rebound, so to keep the industry vibrant, we will continue to treat our foreign trading partners as our best friends.

But those relationships won’t be without their “hiccups.”

Unfortunately, hiccups can sometimes be awfully hard to cure.

The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.


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