New Zealand exporters will soon be allowed to send high-value chilled meat to China - potentially opening up trade worth hundreds of millions of dollars - under a deal announced today.
The agreement - signalled by then prime minister John Key early last year - will give exporters access to China for chilled meat from 10 New Zealand meat processors, initially on a six-month trial with a view to later expanding trade, government ministers said.
The deal will allow meat exporters to move into a more lucrative part of the value chain. It also goes some way towards levelling the playing field with Australia, which has been exporting chilled beef, on a limited basis, to China since 2015.
As it stands, New Zealand meat exported to China is frozen - much of it being at the lower value end of the value chain.
The trial marks "positive progress" for New Zealand's plan to expand market access to China for a range of meat products, Primary Industries Minister Nathan Guy and Trade Minister Todd McClay said in a joint statement.
"This agreement has the potential to be worth hundreds of millions of dollars for our farmers, exporters and the wider economy," McClay said.
The deal was part one of several signed off by Prime Minister Bill English and China Premier Li Keqiang covering cooperation deals spanning trade, customs, travel and climate change.
English and Premier Li also confirmed commencement of official talks on an upgrade to the nine-year old free-trade agreement between the two countries.
In terms of chilled beef exports, New Zealand is playing catch-up with Australia.
Premier Li, in last week's visit to Australia, announced a deal which will allow more Aussie beef producers access to China.
Meat Industry Association chief executive Tim Ritchie said today's deal "goes towards levelling the playing field" with Australia. "It's positive in the sense that we now have a foot in the door," he said.
Ritchie said that, given the challenges involved in the exportation of chilled meat, such as shelf life and the need to maintain strict temperature controls, he did not expect chilled meat exports to China to suddenly take off. "It's going to require a consistent and sensible approach," he said.
In today's announcement, English said official talks to upgrade the existing free trade agreement between the two nations will start on April 25 with a goal of building on the deal that's seen two-way trade triple to $23 billion since it came into force in 2008.
"This memorandum is an important step towards meeting our joint target of $30 billion dollars of two-way with China by 2030," English said.
For sheep meat, industry insiders said the deal was seen as a positive - especially against the background of uncertainty surrounding the trade to Britain after last year's vote to leave the European Union.
China is New Zealand's second largest market for beef and sheep exports. New Zealand exported about $1b worth of frozen sheep and beef meat in the year to December 2016 - a trade that has grown five-fold since 2011.
Invercargill-based Alliance Group - New Zealand's biggest sheep meat exporter - said the deal was an important first step.
ASB rural economist Nathan Penny said the deal would boost the joint venture between China's Shanghai Maling and New Zealand's biggest meat processor and exporter, Dunedin-based Silver Fern Farms.
"This will obviously give Silver Fern Farms - who have now got connections into that market - a kick start to develop that consumer base at the higher end," Penny said.
Shanghai Maling last year bought a 50 per cent interest in Silver Fern Farms.