Opinions differ on dairy as UK-New Zealand trade deal signed

By Jim Cornall contact

- Last updated on GMT

Pic: Getty Images/Tatomm
Pic: Getty Images/Tatomm

Related tags: New zealand, New zealand dairy, Milk, Fta, NFU

The UK and New Zealand have signed a trade deal following the UK’s exit from the European Union.

However, with respect to representatives of the dairy industry, whether or not it’s a good deal depends on which country you’re in.

The National Farmers’ Union (NFU) in the UK said it doesn’t benefit British farmers, while the Dairy Companies Association of New Zealand (DCANZ) said the agreement provides new trade opportunities for New Zealand dairy exporters from day one.

In the UK, NFU president Minette Batters said, “As expected, this deal takes the same approach as the UK-Australia deal in eliminating tariffs for agricultural products, meaning that even for sensitive sectors like beef and lamb, dairy and horticulture, in time there will be no limit to the amount of goods New Zealand can export to the UK.

“I have consistently pointed out that the real risk to UK farmers, and longer term for people wanting to buy British food, from the government’s approach to trade deals is not the individual deals themselves but the cumulative impact of each deal when added together. This deal today shows I was right to be concerned.”

Batters added, “Once again, there appears to be extremely little in this New Zealand trade deal to benefit British farmers. UK farm businesses face significantly higher costs of production than farmers in New Zealand, and margins are likely to tighten further in the face of rising input costs, higher energy bills and labor shortages. The government is now asking British farmers to go toe-to-toe with some of the most export-orientated farmers in the world, without the serious, long-term and properly funded investment in UK agriculture that can enable us to do so; the sort of strategic investment in farming and exports that the New Zealand government has made in recent decades.

“There remains an urgent need for government to have a coherent approach across all of its departments to focus on UK farming’s productivity, as well as recognize and remedy the contradictions within current domestic policy, which is still woefully sparse on the detail of how farmers will be supported to become competitive food producers at a time when food security is an increasingly important concern.”

The DCANZ, however, welcomed the deal, and said it was looking forward to tariff-free dairy trade after five years.

"We are pleased that the final ink has been applied to the high-quality agreement that was reached in principle with the UK last year,"​ says DCANZ chairman Malcolm Bailey.

"This FTA is an important addition to New Zealand’s trade architecture. We welcome the UK’s ambitious approach to deepening its economic relations within our region."

The DCANZ said while the UK is the world’s second-largest dairy import market, New Zealand exporters have had participation in this trade curtailed by serious tariff disadvantages compared with European Union competitors. In 2021, New Zealand supplied less than 1% of UK dairy imports.

The endpoint of tariff elimination for all dairy products after five years will provide a level playing field for New Zealand dairy exporters to the UK, the organization said.

"We congratulate Minister O’Connor and trade officials on reaching this milestone, and hope to see ratification and entry-into-force of the agreement this year,"​ Bailey said.

The DCANZ said the agreement will provide new trade opportunities for New Zealand dairy exporters from day one, with all dairy products except butter and cheese reaching duty-free trade status in three years. It added for butter and cheese, transitional quotas will provide commercially-meaningful access during the five-year transitional tariff elimination period.

New Zealand cheese exporters will have access to a tariff-free quota starting at 24,000 tonnes and growing to 48,000 tonnes over five years. For butter, a duty-free quota with a starting volume of 7,000 tonnes grows to 15,000 tonnes over the five-year period.

"This is an outstanding outcome for a negotiation that has taken less than two years,"​ Bailey said.

"At the same time, it is exactly the dairy market access outcome that should be expected in an FTA with a developed OCED economy. DCANZ will be looking for no lesser opportunity for commercially meaningful trade from day one and endpoint of complete tariff elimination in New Zealand’s FTA negotiation with the EU."

Related topics: Emerging Markets, Markets

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