Food to China – reputation is key
Food imported from New Zealand to China makes up about 9% of total food imports to China by value. A new report by the China Chamber of Commerce states that New Zealand food imports made up US$6.4 billion of the US$73.6 billion of food imported from 185 countries.
Dairy accounted for 62% of the imports and is reported to be based on the fact our cows are grass fed. In 2017, New Zealand was ranked third behind the US and Australia but a concern is that our main southern hemisphere fresh fruit competitor, Chile, is now 10th on the Chinese list, with year-on-year growth of 50.2%.
If this pattern continues, Chile will rapidly overtake New Zealand to become the biggest exporter of foodstuffs to China. From the New Zealand perspective, China is now our biggest trading partner, buying NZ$18.95 billion of produce, goods and services. China takes the lead from Australia, which is now our second biggest trading partner. For fresh fruit and vegetables, the value of all of our markets is increasing but the greatest increase is into Asia, which is our biggest market by value, and out of Asia into China.
China is a very important market for all New Zealand’s produce, goods and services. This situation might change if Australia takes more of our produce, to make up for what they have lost and are losing through the brush fires. But the difference in value between what we export to Australia and China is NZ$5 billion. So that seems to be an unlikely scenario.
The reasons for this growth in value are: how we grow our produce; the high quality of that produce; its nutritional value; and what consumers believe are New Zealand’s environmental credentials compared with their own country’s environmental standing.
The challenge New Zealand faces is living up to these expectations and delivering what consumers will pay high prices for. This is because New Zealand has to transport its produce a long way and because it is expensive to grow produce in New Zealand, compared to many of our direct competitors. If we cannot continue to command this market premium, exporting will become less and less viable.
The risk we face is one of reputation. It has taken many years to earn our reputation but it can take only days to lose it. It is not a case of just ensuring that your specific product is the best and can withstand international scrutiny. A totally unrelated product can affect your product’s reputation. So, as a country, we need to protect and enhance our reputation. This requires us to work together to address those issues that can so easily damage reputation. There are now many ways in which to lose reputation, including employment, food safety and environmental transgressions. Plus, it only takes one producer or exporter to damage that reputation even though the other 99.9% may be totally compliant.
Therefore, the food and fibre sector needs to work together to address reputational risks. We need to provide support and help for every participant so that they can perform at the required standards. We need to be responsive to the demands of consumers and meet environmental and other challenges head on.
This is where the climate change partnership between the food and fibre sector and the Government, He Waka Eke Noa, has real potential to not only protect our collective reputation but to significantly enhance it.
There are two benefits to this partnership. The obvious one is the food and fibre sector undertaking climate change adaptation. The less obvious one is, as we work through what has to be done, we will be protecting our ability to grow food to feed New Zealand and also, protecting our reputation for export markets like China.
Mike Chapman, Chief Executive