Report Date: October 2005
Report by Professor Ray Winger of Massey University
This report by NZTE and Massey University analyses the proportion of New Zealand's food and beverage exports that are added-value, using Customs Data.
Since 2000, the proportion of value added products of total exports has grown nearly 10 per cent from 44.5 per cent to 54 per cent in 2004. This is a trend that has occurred year on year and the focus on value added products is expected to continue into the future.
>> The level of added-value in New Zealand's food and beverage exports (PDF, 230KB)
New Zealand exported $15.03 billion food and food ingredient products for the year ended June, 2004. This represents 50.3% of the $29.88 billion of total merchandise exports from New Zealand.
Detailed export data were provided by Statistics New Zealand. Human food products and ingredients used for the manufacture of human food products were identified from the most detailed export codes available. It should be noted that animal feeds, pharmaceuticals, and inedible products derived from agricultural and related raw materials are not included in these food data. There were approximately 1500 codes per year for food products. These were then grouped into industrial sectors (beverages, cereals, dairy, fruit & vegetables, meat, seafood, miscellaneous). Industry representatives identified which of the 2002 year export codes contained value-added products: each code identified as “value-added”, “commodity” or “mixed” (contained both types of products). For “mixed” codes financial analysis based on export prices was used to estimate the proportion of value-added and commodity within each individual code.
Export code data contain many different food products within each of the codes used. This makes quantitative identification of value-added products extremely difficult. It should also be recognised that “value-added” in the context measured here does not reflect level of innovation. For this study, value-added is a reflection of added shareholder value as measured by FOB export prices for broad categories of food products. One of the most important innovation practices in food manufacture focuses on reducing cost – a feature which would be completely missing from a study of export prices alone.
Food products and food ingredients export revenue increased from $11.85 billion in 2000 to $15.03 billion in 2004. The food sector represents around 50% of the total merchandise exports from New Zealand.
In comparison to 2003, beverages, fruit & vegetables, meat and miscellaneous products all increased their export revenue. Seafood exports were down by $0.02 billion (or 1.5% lower than 2003); cereals were down by $0.04 billion (or 25% lower than 2003), and; dairy was down by $0.06 billion (or 1% lower than 2003).
Value-added products represented $8.11 billion (or 54%) of all food and food ingredient exports for 2004 which was higher than 2003 ($7.60 billion, or 53.3% value-added). Individual sectors include:
It is interesting to note that the value-added component of New Zealand’s food export sector has increased steadily and unabated since 2000. The dairy sector recorded a decline in total revenue for 2004, but a 20% increase in value-added products compared with 2003. If New Zealand industry is going to thrive, then companies and researchers need to focus on innovation and to continue to move away from commodity products.
This study indicates New Zealand food manufacturers have a high level of value-added in their export food products and food ingredients. However, this study did not include benchmarking against other countries. The available data were limited to five years and this was insufficient to establish any meaningful time trends. “Value maps” would be a useful tool to assess the performance of the food industry in recent years and how their current strategies focus on future performance and product innovation.
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