Well into this season, NZ velvet exporters and producers report prices to be steady achieving levels similar to last year.
Although there was an early indication that Chinese buyers were holding off placing orders, velvet exports to China for the month of December were ahead of December in 2014 and significantly higher than the five year average. There were reports of some Korean buyers delaying their purchases until the recently concluded NZ Korea Free Trade Agreement benefits and the removal of velvet excise tax took further effect (1 January 2016).
December and January were significant months in improving market access for velvet in its most important market of South Korea:
- On 4 December, Korea’s National Assembly voted in favour for the complete removal of the excise tax (known as SET) applicable to velvet, and
- On 20 December the NZ Korean FTA kicked off, enabling a second round of tariff cuts just days later on 1 January 2016. For processed velvet, this meant an almost 2.7% drop in tariffs (differentiating NZ from competing countries) and combined with the excise tax removal it removed nearly 13% of unproductive costs compared with last season.
This double whammy of benefits has helped to entrench the stable position the velvet industry has enjoyed for the last seven years. And the industry continues to grow - which can provide its own set of challenges ensuring appropriate placement of product to continue its relatively stable platform.
A continued drive for improving trading conditions is important for economies like NZ. Again, DINZ commends the NZ government in achieving agreement on the Trans Pacific Partnership (TPP). It is a proud position to be a part of with NZ taking a lead role in its initiation. While the TPP does not provide any direct benefits to the NZ deer industry (as there are no current trade impediments for deer products to the 12 partner countries), DINZ recognises the benefit it will have to the NZ agriculture sector and wider economy. Further, it will provide a process should non-tariff (regulatory type) barriers become an issue in the future. It will also provide opportunities as other countries join, as intimated by China and Korea.
NZ’s Ministry of Foreign Affairs and Trade continues its strong support for the NZ deer industry, with the NZ Ambassador to Korea visiting KGC in Daejeon on 29 January. Having such a high ranking visit is testament to how strong NZ’s relationship is with this important customer.