19 Jul 2021

Why red meat is getting more expensive

7:43 am on 19 July 2021

If you feel like red meat is more expensive than it used to be, you're right.

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Photo: RNZ / Vinay Ranchhod

Around 95 percent of New Zealand's sheep meat and 87 percent of beef is exported, and what's left behind for locals is being sold at a premium.

In January 2007, 1kg of beef mince would have cost $9 according to Stats NZ's food price index. If you put a pack in your shopping trolly in January this year, it would have cost $16.39.

That's an 82 percent increase and inflation doesn't explain the difference. Had the price of beef mince simply risen with inflation, that $16.39 pack of mince would have cost just $12.09.

A packet of NZ Beef Mince. Photograph for Who's eating New Zealand.

Photo: RNZ / Claire Eastham-Farrelly

Stewing beef, such as blade steak, shows a similar pattern. In 2007, a kilogram cost $11.90. In January this year the same amount cost just over $20. Had it matched inflation it would have cost $15.98.

It's a similar story with lamb. A kilogram of lamb chops cost $10.51 in 2007. Now it's $18.02. Had it matched inflation it would be $14.11.

Beef + Lamb NZ chief executive Rod Slater said the cost of meat in New Zealand reflected what markets overseas were willing to pay.

"If a housewife in the middle of Oxford in the UK is prepared to pay a certain price for a cut of meat, we have to match that in New Zealand," he said. "We are price takers, not price makers in this country."

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Slater had heard New Zealand consumers complain about the price of meat for years.

"It's nothing new. Consumers always have - and maybe justifiably - have tended to think that we're paying too much for our product and some of them go to the UK and they see lamb being on special in the supermarket at less than what they can buy it."

One of the emerging buyers for our red meat is China.

African swine fever decimated the country's pig numbers in 2018 and former trade negotiator and partner at the  consultancy Sanders Unsworth Charles Finny said this was why China had been importing more beef and lamb.

Finny said there were previously misconceptions about what goods would sell well there. "I can remember exporters saying to me, 'Oh, well, China is never going to be a big dairy market because people don't really like milk products, and they don't like lamb either'."

Now it's the top buyer of New Zealand's dairy and sheep and, in 2019, it was the top buyer of beef before slipping back to second place behind the United States.

He put the increased demand down to the growing wealth of China's citizens. Parents with increased earnings wanted the best nutrition possible for their child, making New Zealand's dairy products, with their reputation for high food safety standards, popular.

NZ China Council's executive director Rachel Maidment said the Chinese government had also sent strong messages about nutrition. "There's been a big focus in China on nutrition and high-quality protein and the impact that that can have on building immunity. So over the Covid period, there's been quite a government focus on high-quality food to build immunity."

While New Zealanders may pay more because of the demand for our food from other countries, there is a flipside to global competition. Sometimes other countries produce food cheaper than New Zealand does and there's nothing stopping New Zealanders choosing a cheaper, imported option.

Pork prices, for example, have risen at lower rates than inflation. In January 2007, a kilogram of pork loin chops cost $14.25. Now it costs just 26c more. Had it followed inflation the cost would be $19.14.

It's thanks to imports. Around 60 percent of the pork consumed in New Zealand is imported. In 2020 almost 30 percent of imports came from Spain, and 25 percent came from Canada.

"Imported pork is often cheaper than New Zealand pork because many overseas countries pay subsidies to their farmers, which reduces the costs of farming. Overseas, pig feed inputs are also cheaper," said NZ Pork chief executive David Baines.

Animal welfare standards, however, are lower in the majority of countries pork is imported from, and some countries allow growth promotants to be used.

The New Zealand industry pushed for country of origin labelling to make it clear to consumers where pork and pork products come from.

While New Zealand imports pork for consumption here, it also exports it. In 2020, 93,000 tonnes were exported. In 2019 over 350,000 tonnes was sent offshore.

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