China's demand for milk sees it become New Zealand's top export market for first time

WELLNGTON, New Zealand – China’s thirst for quality milk has seen it become New Zealand’s top export market for the first time.

Neighbouring Australia had long been New Zealand’s biggest market.

But figures released Friday by Statistics New Zealand show that in the first quarter of 2013, exports to China were up 32 per cent from a year earlier to 2.3 billion New Zealand dollars ($2 billion). Meanwhile, exports to Australia were down 7 per cent to NZ$2.2 billion.

The U.S. remained New Zealand’s third-largest market. In the quarter, sales to the U.S. increased by 10 per cent to NZ$1.2 billion.

Some 40 per cent of China’s spending on New Zealand exports was for milk powder and other dairy products. It spent 17 per cent on wood and 12 per cent on meat.

New Zealand’s exports to China have more than tripled since 2008, when the two countries signed a free-trade agreement, the first such agreement China signed with a developed nation.

At the time of the agreement, China bought about 5 per cent of New Zealand’s exports. Now it buys 20 per cent.

Economic Development Minister Steven Joyce said he thinks Chinese demand will continue to grow.

“The limitations are more ours than they are Chinese,” he said.

Joyce said China is one of several growing Asian markets.

“It’s part of a shift in consumer power from the West to the East,” he said.

The trade figures are for goods only and don’t include services and certain other economic activity. Joyce said Australia still holds an edge over China when using the broader measure.

New Zealand also imports more goods from China than any other country. In the first quarter, it spent NZ$1.8 billion on Chinese imports, up 3 per cent.

Sales of New Zealand dairy products to China have increased at a faster clip than overall trade. Some Chinese parents are willing to pay a premium for infant formula made with New Zealand milk powder because they consider it better quality and safer than local milk powder.

In 2008, six babies in China died and another 300,000 were sickened by infant formula that was tainted with melamine, an industrial chemical added to watered-down milk to fool tests for protein levels.