Henry Russell: ANZ economist on the US overtaking Australia as New Zealand's second-biggest export market

Growing demand for burger meat has super-charged New Zealand's exports to the United States.

The US has recently overtaken Australia as New Zealand’s second-largest export market last year, according to new Stats NZ data.

ANZ economist Henry Russell says this is good news for New Zealand's beef industry, which has been hit hard by decreased demand from China.

"The US market has actually overtaken China for meat exports in the past year, so that's a very positive story in the sense that we've been able to pivot away from that market."

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Episode Transcript

Speaker 1 (00:00):
First up. Though demand for burger meat has fueled our
exports to the United States. The US became New Zealand's
second largest export market last year. This is according to
Stats and Z data that came out today. It means
that Australia has taken a slide from second to third.
A Z economist Henry Russell is would mean tonight, Henry,
good evening.

Speaker 2 (00:19):
Good evening.

Speaker 1 (00:20):
Why is the US so keen on our burger meat?

Speaker 2 (00:24):
Well, it's very much a tight supply story over there.
So the US beef inventory has been in steady declined
for the past few years and has actually at the
lowest level in over seventy years currently, and so that's
been a particularly good news story for our exporters, and
particularly given it's come at a time where demand from
China has been very subdured. So the US market has

(00:45):
actually overtaken China for meat exports in the past year.
So that's a very positive story in the sense that
we've been able to pivot away from a market which
in the past we've been heavily concentrated, and so it
adds to our resilience move forward.

Speaker 1 (01:01):
What's hampering domestic production for them in the US.

Speaker 2 (01:05):
It's several reasons. It's kind of a throwback to what
we saw during during the COVID pandemic and the war
in Ukraine. Mu Zeons. Mu Zeon's pasture based system has
been relatively more resilient than other are produced, particularly those
in the north Northern hemisphere where it's predominantly grain fed beef.

(01:26):
And then there was obviously some other supply side disruptions
with respect to energy prices, surges and gas gas gas
prices and the like, so we've paid fairly well out
of that relative to violet producers.

Speaker 1 (01:38):
Obviously, Trump is in. We don't know what he's going
to do with the tower's set. We're all waiting and
watching and seeing. But given our increased exposure to the US,
does that worry you at all?

Speaker 2 (01:50):
It's, as you said, it's still uncertain as to what
these tariff measures look like. One of the benefits and
it's going to the impacts are certainly going to vary
across different industries, but with respect to beef, I'll say
the impacts are likely to be fairly minimal. If you
think about the incidents of the impacts of tariffs, they
can neither fall on the export ie New Zealand producers

(02:14):
or on the importer US producers and consumers. And given
that supply it's very tight in the US at the moment,
and we are filling that whole, it's likely that, you know,
without the US able to scale up its own production
very quickly, the part of the cost of those tarrifts
will be passed on to US consumers and they'll be

(02:35):
paying a little bit more for their hamburgers, which they
probably won't be very happy about. And you know, that
leaves us in a good position. And it is also
important to kind of consider what the focus of these
tariff policies have been lately, and it's Trump's rhetoric has
been they are targeting countries with very large trade deficits
with our trade surplaces with the US rather and New

(02:57):
Zealand's trades has a trade serplace with but it is
very small relative to others, so we're not likely to
be impacted to the same extent. And if he does
pursue a policy of universal tariffs, then we're not going
to fear any worse than any other countries and that
we'll all be facing the same tariffs at the border.

Speaker 1 (03:17):
Right because as you say, Americans are still going to
want to eat beef paddies and hamburgers, and they're still
going to need to get the beef because they won't
be able to turn their production around very quickly. I
guess the only caveat is if some country are the
Australians or I don't know, the Argentinians or something, we're
able to get an exemption and we were happy with
the tariff. That's when things would be skewed.

Speaker 2 (03:39):
Yeah, that is a risk. I wouldn't say it's a
significant risk for New Zealand, but certainly we don't have
the full details yet, so it's something to look out for.
But I think a really important message to make on
tariff related policies is why do we trade in the
first place. It's because countries have a comparative advantage. They
can produce goods and services cheaper than others. So the

(04:03):
ultimate cost of these terror of policies is the consumer,
and US consumers are likely to face higher prices in
the long run.

Speaker 1 (04:12):
Hey, you've had your latest while we've got your A
and D business confidence survey out today. What's the mood?

Speaker 2 (04:17):
So we did see a pullback in business confidence, but
I wouldn't say something to be particularly concerned about. As
you know, we saw through the second half of last
you know, the last quarter of last year business confidence
was at a near decade high, and so what we're
seeing to start the new year is probably a little
bit of a reality check of firms and that you know,

(04:38):
these levels are still very elevated, but firms are likely
reassessing how quickly it's going to take for the economy
to get back to some new normal. It's the survey
today certainly isn't suggesting that the recovery has stalled. In fact,
it's consistent with a continued gradual recovery. So there are
positive stories in the survey despite the pullback.

Speaker 1 (04:58):
We saw it all right, Henry, Thank you very much
for that. Henry Russell ains it economist with us for
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