Meat processor Affco says its first shipment of high value beef into China reflects a bullish outlook the meat industry feels towards its international markets.

The shipment by the company owned by the Talley family was packaged and sent from its Horotiu site in Waikato and consisted of 33,000 frozen steaks and tenderloins for two of its Shanghai customers.

New skin pack technology was used for consumers to better judge the shape and quality of meat cuts. The cuts went into the food service industry or were bought by consumers online.

Speaking at Fieldays, Affco general manager Andy Leonard said the high value red meat market in China was growing. In addition to China, markets in the Middle East and South East Asia were able to pay more for the cuts than Western European markets.

"The willingness and the ability to pay is growing faster in China than anywhere else in the world to the point where elsewhere in the world, those more expensive cuts are diminishing as wealth moves from west to east.

"In western markets, goods are imported because they are cheaper. In eastern markets, good are imported because they are premiums."

The emerging markets continued to be strong with China in particular helping to hold up meat schedule prices in the wake of uncertainty over Brexit.

Affco China sales manager Clint Bailey said the high value beef shipment was a dramatic shift from the early days of shipping meat to China.

"One of our Chinese customers who has procured this meat was the first buyer of New Zealand lamb flaps to China back in 1993. Back then, lamb flaps were the most common exports to China.

"They were the cheapest cut of meat fetching around 60 cents a kilogram, now they're worth around $8.40 a kilo and we're also shipping beef tenderloins at $35 plus a kilo."

Beef exports to China are a relatively new event, having only begun the past six or seven years.

While the Free Trade Agreement in 2008 opened up new opportunities, the real driver behind beef exports is the changing face of China's population, Bailey said.

"Over the last decade 300 million people have moved from inland China to the city. There's a growing middle class who want to put high quality meat protein on their tables."

In March, the Government announced a six-month pilot to export chilled meat to China to help boost earnings for the beef and sheepmeat sectors.

Bailey said it would take the Chinese a while to build infrastructure to handle chilled meat and be in a position to pay a premium over frozen meat.

Affco achieved a good premium for sending chilled product in the marketplace compared with frozen lines, sales and marketing manager Mark de Lautour said.

There was a huge preference for chilled over frozen products and there was a perception that it was superior in quality, he said.

Leonard said the company also attracted a higher level of customer because there were some chefs that did not work with frozen meat.

"Dealing with customers who have the facilities to keep the product in a pristine condition at the other end was important and Affco's got a strong customer base in China with large players with the facilities to be able to do that."

Leonard said the markets looked reasonably settled for the new season. Beef prices were also set to remain strong.

"There is less competition globally, Australian supply numbers are down and that doesn't look like it's going to be a quick turnaround so I think we can be fairly settled on where beef numbers are at."

Source: NZFarmer. Date: 2017-06-23