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Korea tariff reductions benefit value-added velvet

Korea tariff reductions benefit value-added velvet

The potential to add value to velvet in New Zealand as tariffs reduce is the one big positive for deer farmers to come out of the Korea-New Zealand Free Trade Agreement.

“It’s no secret that Deer Industry NZ was unhappy with the terms of the agreement in respect to tariffs and taxes on frozen velvet. But we now need to make the most of the opportunity we have gained – elimination of the 20 per cent tariff on processed velvet over 15 years,” says DINZ chief executive Dan Coup.

“It’s a better outcome than some other countries have achieved, and the overall result of the FTA for the NZ primary sector will be very positive. We look forward to the FTA starting as soon as possible because within two or three years the reduction will be quite meaningful.”

Mr Coup and DINZ velvet market services manager Rhys Griffiths are in Korea this week to support the signing of the FTA and to meet some major current and potential customers of NZ velvet. The FTA was signed by the trade ministers of the two countries and witnessed by Prime Minister John Key.

“It’s great to have the support of the Prime Minister for such an important market, a fact that will not be lost on Korean businesses trading with New Zealand. His attendance will increase the profile of this event and we are really pleased to be a part of it.

“For many years, DINZ and exporters worked on raising awareness of NZ velvet, especially with Oriental Medicine Doctors. This has been very successful. From being the third-ranked velvet after Russian and Chinese, New Zealand velvet is now recognised as the premium product in Korea,” Mr Griffiths says.

“Now the quality of what we have to offer is recognised, we have been increasingly focussed on marketing NZ velvet to larger healthy food and oriental medicine businesses with strong consumer brands. These companies buy, or have the potential to buy, large volumes.”

The most prominent example is the Korean Ginseng Corporation. It is the largest single customer for NZ velvet and has had significant success for one particular product – a health tonic targeted at children. It recently had a high-profile launch of a second product with a focus on NZ velvet as a key selling point.

DINZ worked recently on a joint promotion with the second largest healthy food customer for NZ

velvet, which promoted the New Zealand provenance of their velvet product ingredients. It is also working with another major user on their NZ brand story and product integrity system. This enables customers to use a unique code to trace back a velvet product to New Zealand.

Mr Griffiths says brand name companies like these put a high value on New Zealand’s biosecurity and food safety standards.

“Their brands rely on the integrity of their raw material supplies. So, everything else being equal, they much prefer to have their velvet supply processed in New Zealand, rather than in a third country,” he says.

“We are optimistic that those major customers will now move to having more of their supply processed in New Zealand in the knowledge that tariffs will fall. Processing in New Zealand eliminates a major area of risk for their brands and New Zealand as a supplier.”

[ends]

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