Supply chain adjustments for frozen velvet exports to China

Nov 24, 2023

China has signalled changes to its rules for imported velvet used in Traditional Chinese Medicine (TCM), meaning upcoming changes in New Zealand frozen velvet exports.  
Nothing changes immediately. Frozen velvet exports for this season will continue as usual. China will accept these shipments until April 30, 2024. After that, velvet imported into China for TCM will need to be dried velvet. Frozen velvet exports for other purposes and to other markets may continue. 
This change means the New Zealand velvet export industry will need to adjust. We have time to do this, and DINZ is working closely with MPI, processors and exporters to ensure we can modify our supply chain to continue to grow the industry. We do not expect it will dampen the ample opportunities for velvet exports as a bright spot for pastoral farmers in current market conditions. MPI is working with Chinese authorities to clarify the future rules for frozen velvet, and DINZ is considering options for dried velvet exports. 
Velvet producers should plan for business as usual this season, working towards shipping frozen velvet as early as possible to meet the April 30, 2024 deadline.  
DINZ will work with MPI, New Zealand processors, and velvet exporters to understand China’s new regulations and establish an alternative pathway that complies with a new TCM import protocol between New Zealand and China.  
DINZ will keep close contact with pastoral farmers and velvet producers about future options as these new export pathways develop. A dried velvet protocol will offer us clearer market access and provide an ability to add further value in New Zealand.  
DINZ will update you on all developments and ensure that longer-term solutions are agreed upon to enable the continued growth in our trade with China of frozen and dried deer velvet.  
For further information you can watch DINZ’s public zoom call discussion on the matter below, or here >>

Frequently Asked Questions 

Will frozen deer velvet be allowed to be imported into China? 

  • Yes. MPI has negotiated a transition period to allow New Zealand’s deer velvet exporters to deliver this season’s consignments to China. Consignments must be cleared in China by 30 April 2024. 
  • MPI is working with Chinese authorities to agree on conditions for the continued trade of frozen deer velvet exports to China. 

Will I be able to sell velvet in 2024/25 

  • Yes. 
  • Korea is New Zealand’s main market and consumes about 60% of New Zealand’s velvet. 
  • There is some additional processing capacity in NZ relative to what is being used currently, this will enable the export of more dried velvet. Over time, processing capacity may need to be scaled up. 
  • MPI will continue to negotiate for access for all New Zealand velvet into China in the year ahead. 

Why is GACC no longer allowing frozen deer velvet as TCM?

  • Frozen deer velvet is currently exported as Traditional Chinese Medicine(TCM). China has advised that in future, only dried deer velvet will be able to be exported to China as TCM. 
  • We understand China’s Pharmacopoeia definition requires deer velvet to have less than 13 per cent moisture to be considered a TCM. Frozen deer velvet does not meet this definition.
  • DINZ will work with MPI to investigate possible pathways for frozen velvet trade under a different category. 

Why is this happening now?

  • Chinese authorities are making these changes to clarify the rules for the importation of TCMs. Long-term, we hope to see this benefit our industry with more stable, and transparent rules being implemented by China. 

What is DINZ doing to resolve this issue? 

  • DINZ is working closely with MPI to resolve this matter. 
  • MPI is working with Chinese authorities to agree on conditions for the continued trade of frozen deer velvet exports to China. 
  • DINZ will work with NZ exporters, Chinese importers, and its Chinese regulatory contacts to assist in a longer-term solution for frozen NZ velvet. 
  • DINZ has pulled together an action group to meet daily to ensure we minimise the risks and maximise potential opportunities. 

How important is the Chinese market for New Zealand deer velvet? 

  • Currently, 65-75% of New Zealand’s velvet crop is exported in a frozen form to China. 
  • However, we estimate that at least half of this is processed and re-exported to South Korea, the largest consumer of New Zealand velvet. 
  • Overall this means that the China frozen market consumes approximately33% of total NZ exports 

What is the value of velvet exports to China? 

  • New Zealand exported around $70 million of deer velvet to China in 2022(source: StatsNZ). 

Is New Zealand velvet imported into China destined for that market? 

  • Around half of the deer velvet exports to China are processed and re-exported to South Korea in dry-whole stick form.

Is China the biggest consumer of New Zealand deer velvet? 

  • South Korea is the main consumer of New Zealand deer velvet. 

Why has New Zealand velvet been targeted? 

  • This change is not specific to New Zealand.  Ensuring products meet TCM definitions in China’s Pharmacopoeia will apply to all countries that export TCM ingredients to China.
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