China remains the key to where the global marketplace is heading in dairy prices, says Westpac economist Anne Boniface.
The Dairy Companies Association of NZ (DCANZ) says this increases the importance of high quality and timely access improvements for dairy from the other trade negotiations currently underway.
“Despite the close relationship NZ and China enjoy, NZ dairy exports to China continue to incur over a $100 million in tariffs each year, with the safeguards regularly triggered in early January,” says DCANZ chairman Malcolm Bailey.
“Additionally NZ exporters of milk powder, cheese, and butter will be at a growing tariff disadvantage relative to Australian competitors until these safeguards end in three-five years”.
DCANZ agrees with the assessment that NZ will have the best dairy access into China of any country when dairy safeguards end in 2024.
However, five years will be a long time for NZ dairy exporters to be at a tariff-rate-driven commercial disadvantage. So it is important for NZ to advance high quality and timely access improvements for other markets.
Beyond China, dairy exports remain highly constrained in their access to many markets. DCANZ estimates that only 12% of global dairy consumption occurs in markets it would classify as open to trade.