Consumers face steeper meat prices as African Swine Fever bites
New Zealand consumers are getting squeezed as Chinese buyers scour the world for animal protein, pushing up prices after
African Swine Fever decimated Asia's pork industry.
China’s pig herd has shrunk by about a third since the first outbreak of the disease was reported in mid-2018. Global
meat prices have soared in response with the Wall Street Journal reporting that retail prices for chicken breasts,
thighs and legs have increased roughly 16 percent in Brazil. Europeans are on average paying 5 percent more for pork and
Australians are paying 14 percent more for lamb.
Statistics New Zealand figures today show the nation's September food prices lifted 2.2 percent from a year earlier.
That was largely due to meat, poultry and fish prices rising 5.3 percent, with a number of cuts and meats notching up
records in recent months.
About 85 percent of New Zealand's red meat is exported, meaning domestic prices are linked to the global market.
“The bulk of our meat is exported so yes, the export price does underpin the price New Zealand consumers have to pay for
beef as well,” said ANZ agriculture economist Susan Kilsby.
“In countries that have larger domestic markets, export prices have a lesser bearing on what their local consumers have
to pay, but here in NZ we have to pay international rates to secure domestic supply,” she said.
According to Stats NZ, the weighted average price of lamb chops, blade steak, and bacon all reached record highs in
September. "This follows previous records for bacon in August, lamb chops in July, and blade steak in June and July.”
In relation to exports, ANZ's Kilsby said China has now become New Zealand’s largest trading partner for beef, reducing
reliance on the United States. Manufacturing grade imported bull and cow meat is trading at record prices in the US and
prices have remained strong throughout the winter months as US buyers have had to compete with demand from Chinese
buyers, she said.
“This is not a situation which the US buyers are used to, as traditionally they have been the dominant buyers,” she
China’s appetite for lamb and mutton also remains strong as they look for alternative protein sources to fill the void
in domestic pork production, she said.
The September lift in New Zealand food prices was also influenced by increasing prices for restaurant meals and
ready-to-eat food, up 3.3 percent.
“Rising prices for takeaway foods, like pizza, which is up 5.8 percent, contributed to the overall annual food price
increase in the year ended September," Stats NZ's Johnson said.
Food prices were unchanged from August.
The food price index accounts for about a fifth of the consumers price index, which is one measure the Reserve Bank uses
to pursue its inflation target when setting interest rates.
The central bank is mandated with keeping inflation between 1 and 3 percent with a focus on the midpoint. Annual
inflation is currently running at 1.7 percent. The bank is widely expected to cut rates by a further 25 basis points in
November to a record low 0.75 percent.
Separately, Stats NZ's new measure of rental price inflation remained steady in September.
It draws on Ministry of Business, Innovation and Employment tenancy bond data, replacing a quarterly survey of
landlords. It also feeds into the CPI.
The 'stock' measure shows rental price changes across the entire renting population, whereas the 'flow' measure only
captures dwellings that have a new bond lodged against them.
The national stock rental price index for September rose 3.4 percent from the same month a year earlier, following an
annual increase of 3.4 percent in August. It rose 0.2 percent in September from August.
On the flow basis, rental prices rose 4.1 percent on the year in September after lifting 4.3 percent in August. It was
up 0.3 percent on the month.