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Food Focus May 2007

Growing the New Zealand brand

Food Focus looks at how NZFSA’s role in facilitating market access is contributing to the success of Export Year 2007, a Government and private-sector initiative to improve New Zealand’s long-term export earnings

A combined Government and private-sector plan to increase and diversify New Zealand’s exports is helping to raise awareness of the vital role exporters play in the economy.

Export Year 2007 is the start of a long-term project that aims to reverse trends which show New Zealand’s export growth slipping behind other similar sized OECD countries.

It aims to promote and encourage more Kiwi businesses to consider export opportunities.

New Zealand’s total exports have for several years consistently contributed to about 30% of our gross domestic product, compared with more than 40% in most other small OECD countries.

Export year is part of the Government’s wider Economic Transformation Agenda to forge an export-led, high-wage economy. Increasing the volume and value of exports will:

• create jobs and work for suppliers to the exporter

• put money into local communities and businesses

• raise living standards and support publicly funded services.

NZFSA support

Executive Director Andrew McKenzie says NZFSA is a keen supporter of Export Year 2007. “One of NZFSA’s key functions is to facilitate market access for New Zealand’s food and food by-products. We do this by ensuring our export food industry remains a trusted supplier of safe and suitable food to the world’s markets.

“Eighty percent of the food we produce is exported, providing just over half the country’s export earnings. New Zealand’s food industry contributes around 23% of the country’s gross domestic product, involves around 30,000 food businesses and employs close to 600,000 New Zealanders.

“We rely more heavily on the food sector for balance of trade flows than is the case in other OECD countries. It plays a crucial role in any strategy to lift New Zealand’s rate of economic growth.”

NZFSA facilitates exports of food and food by-products to more than 180 countries by providing government-to-government assurances that the animal, dairy or plant products an importing country receives from New Zealand comply with their standards.

Around 200,000 export certificates are issued every year by NZFSA for animal products, including seafood.

Dairy exports

The dairy industry alone – New Zealand’s single biggest export industry – exports around 95% of our dairy products (milk, milk powder, cheese, whey powders and proteins, colostrum, yoghurt and ice cream), worth $5.67 billion a year to the economy.

Exports of meat and meat products bring in $3.5 billion; exports of fish products, $1.1 billion.

“NZFSA’s market access negotiators work to gain the trust of our trading partners and so ensure ongoing market access,” says Dr McKenzie. “Much of that trust is gained via behind-the-scenes negotiations. The discussions are confidential and the agreements reached – often with huge cost benefits – are commercially sensitive.

“The work results in win-win situations, not only for New Zealand and our trading partners, but also for manufacturers, producers and the economy in general.”

Tony Zohrab, NZFSA’s Market Access Director explains: “The aim is to align standards or have a trading partner accept that New Zealand systems – based on sound science and a risk-based approach – deliver results that meet their requirements, are cost-effective and flexible for industry.

“Our negotiators work to secure market access at various levels. At a multilateral level we work with international bodies such as Codex (the international standards setting agency that helps facilitate global trading pacts), OIE (the world organisation for animal health), and the International Plant Protection Convention.

“These are multi-national groups made up of members of the World Trade Organisation that review international standards for trade. Our role is to do our best to ensure their rules are science- and risk-based and reflect New Zealand’s needs.”

Import requirements

Bilateral arrangements are negotiated with importing countries. NZFSA experts work to find the best ways to meet import requirements that are cost-effective and flexible for the industry.

Says Tony: “The integrity of New Zealand products is recognised by our trading partners. It’s vitally important that we protect the country’s reputation as a producer of safe and suitable food. We must ensure that our SPS (sanitary and phyto-sanitary) rules achieve the agreed outcomes that have been negotiated.”

As a country, New Zealand has very little leverage over its trading partners. “We’re very small and a long way from most of them,” says Tony. “But when we’re negotiating, our size can also work for us. We are seen as taking an independent, rational, middle course. And we make full use of the positive attributes we do have – our honesty, common sense and good science.”

NZFSA also sets standards, regulations and approval processes that give confidence that New Zealand produce meets agreed standards. With that confidence NZFSA is able to sign the government-to-government export certificates.

Negotiating strategies

NZFSA is currently negotiating with a number of markets to ensure New Zealand’s key trading partners accept our risk-based approach to food safety, as well as working towards equivalency negotiations that mirror those we enjoy with the European Union (EU).

Negotiations to attain our EU equivalency agreement took a number of years to complete and came into effect in 2003. It’s the most important equivalency agreement New Zealand has in place and parts of it continue to be renegotiated and updated as both parties evolve their sanitary standards.

“The EU is not currently considering any new equivalency agreements (though it has others with the US and Canada). This fact, combined with the adoption of EU standards by many of our trading partners, reflects its vital importance for New Zealand food exports.”

Closer to home, Dr McKenzie cites the Domestic Food Review as being a key tool in harmonising legislation which will allow food processors who previously had to meet different requirements under several pieces of food legislation meet the requirements of just one.

“In this way we can rationalise, align and streamline processes, ensure effective and consistent approaches to food safety and suitability right across the food chain, and keep compliance costs down.”

As part of Export Year 2007, workshops, seminars, education programmes and other events will be held throughout the year, concluding in November with the New Zealand Trade and Enterprise Export Awards.

For more information on Export Year 2007, visit www.exportyear.co.nz.

Recent market access gains

Despite our size and distance from other major world markets, recent NZFSA market access gains are proof that it is possible for New Zealand businesses to foot it with the best in world markets.

E-cert flexibility aids Chinese exports

Chinese concerns about New Zealand’s slaughter, processing and storage procedures have been allayed after talks with NZFSA officials gained acceptance that E-cert, (the electronic certification system devised by NZFSA to track internal product movements within New Zealand and provide government-to-government export assurances) provided the security and sanitary guarantees the Chinese sought.

China had originally required all meat slaughter, processing and storage procedures to be undertaken at the same physical location. NZFSA was able to successfully demonstrate how E-cert’s traceability functions ensure New Zealand’s processing procedures can meet their requirements.

E-cert produces official documentation every time a product is moved from one New Zealand premises to another during the production process.

“As a result, New Zealand exporters now have added flexibility in the way they source products for China, giving them the potential to increase the range and source of products that can be prepared for the Chinese market,” says Tony Zohrab.

EU trade boost

E-cert has also featured prominently in ongoing talks with European Union officials. From this month trials will see export certificates between NZFSA and the EU, New Zealand’s biggest importer, issued via a fully integrated electronic data swapping system. The trial uses NZFSA’s E-cert and the EU equivalent, called TRACES.

At present the TRACES system tracks the movements of all import consignments from the moment they arrive at any EU port. Paper certification of New Zealand products currently arrives with the consignment.

From May, new arrangements will extend the programme to allow data relating to EU-bound consignments from New Zealand to feed directly into the TRACES application. This means the EU will receive electronic notification/certification of New Zealand consignments as they leave our shores, rather than waiting for the hardcopy certificates to arrive with the ship.

Tony explains: “This is a world-leading initiative for both New Zealand and the EU. It protects our brand by providing a more robust system of export control and reduces compliance costs.

“Having a fully integrated system provides New Zealand exporters direct access to all the EU’s 27 states and should mean faster processing times at the border.

“Electronic certification also cuts the likelihood of fraud to almost zero. With that comes added EU confidence in our product and a degree of trust that will considerably diminish any future security and fraud issues that may arise.”

It is hoped the new system will become permanent once initial trials are complete.

To Russia with love

NZFSA market access experts have negotiated with the Russian Federal Veterinary Service to allow the export of New Zealand raw material intended for pet food manufacture. The market could be worth in excess of $30 million to New Zealand and exports should begin shortly.