Sheep Meat Opportunities in China

Growth in sheep meat sales from New Zealand to China has been phenomenal. China is now New Zealand’s largest sheep meat destination by volume, and second largest after the UK by value. There is a chance that within the next 12 months it could surpass the UK in value. [Update of 17 May: In the four weeks since I wrote this post, statistics for the first quarter of 2013 show that China has indeed now become Number 1 by value as well as volume.]

The trade started off as mainly lamb and mutton flaps. These are the fatty off-cuts which in New Zealand we have always regarded as being very low quality, but which are highly regarded in traditional Chinese hotpot cuisine. Now the trade is moving up to higher priced cuts, as all the flaps are already allocated, albeit at increasing prices.

It is coming up five years ago that my colleague Malcolm Cone and I organised a three week trip around China for Blue Sky Meats Chair Graham Cooney and CEO Ricky Larsen. Blue Sky is a publicly listed Southland sheep meat processing and marketing  company. The focus of the trip was to lay the basis for a plan for Blue Sky to market sheep meats in China.

Graham has always been a strategic thinker, and he  saw the purpose of the trip as being long term. He wanted to set the foundation for a market that, in five years,  would take up the slack from a declining European market. I remember Graham saying that the recession that we were seeing at that time – late 2008 – would still be affecting Europe and the USA  six years hence.   Not many people were seeing it that way at that time.

On that trip we figured out that there was indeed huge potential, and that the trade would develop almost exactly as has occurred, moving up gradually from the lower priced to the higher priced cuts.  What we didn’t quite see was the speed with which this would occur.

In contrast, this was at the same time that the big companies were looking at whether they could work together to develop the top end trade in China. The big companies decided the opportunities were too limited to work together, and so each continued on their own path. However, all companies – and sheep farmers – have benefitted from the new markets in China, because essentially the Chinese have been buying from everyone.

Together with my colleague Xiaomeng (Sharon) Lucock,  I recently authored a paper on sheep meat opportunities in China that was published in the March 2013 issue of Primary Industry Management (PIM). This is attached here as a pdf. woodford & lucock sheep meat in china pim march3013

An earlier article from December last year, looking more generally at food opportunities in China and also published in PIM, is attached here. woodford and lucock pim dec2012

We have several more articles on China in the pipeline.

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About Keith Woodford

Keith Woodford is an independent consultant, based in New Zealand, who works internationally on agri-food systems and rural development projects. He holds honorary positions as Professor of Agri-Food Systems at Lincoln University, New Zealand, and as Senior Research Fellow at the Contemporary China Research Centre at Victoria University, Wellington.
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