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James Parsons.
“There is absolutely no question that Brexit is something we are focused on,” says Beef + Lamb NZ chairman James Parsons.
“There are a lot of factors in how this thing can play out,” he told the recent Agcarm conference in Auckland.
“We are watching this closely. We have staff based in Brussels and we are looking at having more of a footprint up there. While there is risk, there is also opportunity. We are [intent on] preserving our current interests.”
Parsons also chairs the NZ Meat Board, a slimmed down version of the old Meat Board. It looks administration of our sheepmeat quota into the EU, our beef quota into the US and a very small, high-quality beef quota into the EU – about 1300 tonnes.
The sheepmeat quota is 228,000 tonnes, so the EU takes 50% of NZ’s sheepmeat exports, a significant portion of which the UK takes about half.
He says there is a bunch of scenarios as to how this could play out.
The European Union and UK – in its own right – are members of the World Trade Organisation (WTO). The sheepmeat deal done years ago was compensation for UK entering the European Community.
“Under the WTO, they have an obligation to honour that agreement. So it is not just a case of the EU or the UK saying ‘you can’t have it anymore’. It is ours by right,” Parson says.
“If the UK leaves the EU and isn’t part of their customs union, there needs to be compensation to NZ. Between the EU and the UK they need to work out some arrangement. And if they don’t come up with something satisfactory to NZ’s interests we will take them to the WTO to look for compensation.”
He says this quota is worth over $1 billion to the NZ economy which is “massive” in terms of our economy.
“That would be a lot less money floating around rural communities. It makes it challenging for a lot of hill country to make it viable. We would have to find alternative markets, etc.
“It is not going to come to that, but how this plays out will be quite interesting,” Parson adds.
“If you look at Ireland, for example, it is feeling threatened by this because the inter-EU trade in sheepmeat is significant, so Ireland actually sells about 50% of its lamb to the UK and also beef.
“Ireland is a big player in beef: it produces a similar amount to NZ. The UK exports about 30% of its sheepmeat to the EU. NZ supplies lamb in the off season; they would struggle to keep lamb on the shelves 12 months of the year.”
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