Korea, NZ team up on velvet

New Zealand's deer industry intends working with Korean deer farmers to increase demand for New Zealand velvet in South Korea, its largest market.

While the Korean Deer Breeders Association used to be opposed to velvet imports, it now accepted there were benefits for farmers in both countries from working together, Deer Industry New Zealand (DINZ) chief executive Dan Coup said.

Velvet supply from Korean deer farms had always been insufficient to meet demand from the traditional Oriental medicine market and health foods industry. That shortfall became more acute when herds were badly affected by foot-and-mouth disease four years ago, Mr Coup said.

There was growing demand among affluent consumers in South Korea for health foods and tonics based on traditional ingredients like velvet and ginseng.

DINZ estimated 20% of New Zealand's velvet production went into health foods and tonics in South Korea -a market segment nearly non-existent 10 years ago.

The retail value of those products was now more than $US100 million ($NZ115.8 million) a year.

That demand was one factor in the gradual increase in New Zealand farmgate prices for velvet from an average of $NZ60 a kg six years ago to nearly $NZ100 a kg in the season just ended, he said.

Other important factors include declining velvet production in Asia and North America, and increasing wealth in China.

DINZ and exporters were mindful of the free trade negotiations now under way between New Zealand and South Korea, Mr Coup said.

''South Korean government charges, in particular a 20% import tariff and excise duty of around 9%, are costing NZ farmers and Korean consumers dearly.

''Oriental medicine doctors and health-food companies in South Korea share our view on this. It's in all our interests to create a tariff-free pathway from the NZ producer to the Korean consumer,'' he said.