New Zealand: new pork market?

Faced with declining prices, uncertain feed costs, inefficient production methods and reduced protective tariffs, New Zealand pork producers are making a fast, painful adjustment to a global economy. Now is the time for U.S. pork producers to take advantage of this market anomaly and bring home

Always a pork products importer, New Zealand has upped its imports even more during the past two years to compensate for declining domestic production.

During the 1995/96 marketing year, the number of producers fell nearly one-third to 615, with some remaining farmers cutting production because of falling prices.

The overall effect is fewer pigs for New Zealand; this table shows the declining production:

            Metric Tons       % Change From
             Produced          Year Before

1995          51,237             Peak Year
1996          49,911                -2.5
1997          47,908                -4
1998          44,900(1)             -6

1 projected

The average cost of production in New Zealand is $1.70/kilogram of meat. With feed costs accounting for 75 percent of pig production costs, even the slightest increase in feedgrain prices directly affects the size and profitability of the domestic pig industry To further control production costs, New Zealand's domestic herd is being shifted from the North Island to the South Island, where feedgrain is more abundant and cheaper.

Pork Industry Board Regulates Market

Membership on the New Zealand Pork Industry Board, established in 1982, is weighted toward pork producers. A Pork Industry Levy funds the Board, which provides the following services:

* Generic market promotion of pork products.

* Promoting and developing the New Zealand pork industry.

* Improving stock quality and productivity.

* Providing advice to farmers.

* Participating in training, environmental issues and research and development programs.

New Zealand's Import Market

New Zealand imported almost 10,000 tons of pork in marketing year 1997, valued at almost $21 million. Canada supplied 82 percent; Australia, 15 percent. The United States supplied only 60 tons, or less than 1 percent of the imports.

The import product mix is mostly frozen boneless pork cuts. Most of the product is processed further in New Zealand, and this trend is expected to continue as imports increase.

The normal tariff set for fresh, chilled or frozen cuts of pork is now 7.5 percent, but will drop to 6.5 percent on July 1,1998, and to 5 percent on July 1, 1999. Australia and Canada, the current major supplying countries, pay no tariffs.

Tariffs on prepared or preserved pigmeat, such as canned ham and other cuts, that now range between 2.5 percent and 8.5 percent will fall to 0 to 5 percent by 2000.

Entry Requirements

New Zealand maintains an Import Health Standard for the importation of frozen pork from the United States. Every consignment must be accompanied by a standard declaration attesting that the pork originated in either the United States or Canada, is frozen to -18 degrees Celsius, and complies with all New Zealand import requirements. Health certification from an official government veterinary officer is also required.

Maxine Yule is an agricultural assistant at the FAS Office of Agricultural Affairs in Wellington, New Zealand. Tel.: (644) 472-2068, ext. 293; Fax: (644) 473-0772; entail: agwellington@fas.usda.gov