Bakers prefer butter, helping prices soar
Consumers around the world are willing to pay more for products containing dairy and this is driving demand for butter and cream, says Fonterra.
Groser, who returned last week from the latest round of TPP negotiations in Sydney, told Rural News that if dairy is not excluded “then we are not part of the deal”.
Dairy Companies of New Zealand (DCANZ) executive director Kimberly Crewther says DCANZ is “very supportive” of the stance taken by the Government at the TPP talks. He points out TPP leaders agreed to work towards a comprehensive elimination of market access barriers; excluding dairy from TPP would be a breach of this.
New Zealand special agricultural trade envoy Mike Petersen says he agrees with Groser. “It’s inconceivable that we have a trade deal with countries that make up 40% of the world’s GDP and no liberalisation of dairy access,” he said.
But Petersen admits not all countries share this view. Canada, one of the 12 countries involved in TPP, opposes opening up its dairy sector. There is also concern at reports that the US and Japan may seek to conclude a deal which leaves dairy trade liberalisation out in the cold.
DCANZ chairman and Fonterra director Malcolm Bailey says a comprehensive deal cannot be achieved without addressing access for dairy, one of the most protected sectors amongst the TPP partner countries.
New Zealand, the world’s largest dairy exporter, is shut out of key markets like Japan and Canada because of steep tariffs. The Japanese World Trade Organisation (WTO) bound tariffs for skim milk powder and butter are equal to 217% and 360% respectively. Canada’s dairy market access regime is characterised by small quotas and large out-of-quota tariffs in the order of 200-300%.
Bailey says DCANZ agrees now is the time for bold reforms. “Pacific Rim nations must not look back on this agreement and regret they did not push harder and achieve more. Any deal that does not achieve good outcomes for dairy is an unacceptable deal,” says Bailey.
Groser is not surprised at the impasse over dairy. “From my experience in trade deals, dairy is the last issue to come in line. It is the most difficult and most highly protected sector in the world, probably apart from rice.”
However, Groser remains optimistic and believes a deal could be sealed by the middle of next year. “There was clear momentum in negotiations that I have not seen before at ministerial level,” he says.
Petersen, who has attended all ministerial meetings in recent years, agrees. “I believe a deal is within reach and there is certainly more momentum in negotiations. But we won’t be doing a deal by the end of this year as some are suggesting.”
TPP by the numbers
12 countries are involved: New Zealand, Australia, Brunei, Canada, Chile, Japan, Peru, Malaysia, Mexico, Singapore, Vietnam and the US.
Collectively the 12 TPP economies represent at least US$27 trillion in GDP.
Five of New Zealand’s top 10 trading partners (1st – Australia, 3rd – US, 4th – Japan, 6th – Singapore, and 8th – Malaysia) are included in TPP negotiations.
The TPP negotiating parties account for 45% of New Zealand’s total trade.
