Less red meat produced and available for export
Lower volumes from meat processing plants are impacting export returns for New Zealand red meat.
MIA chief executive Tim Ritchie says no one knows whether it will be a hard or soft Brexit and that could have a huge impact on Britain’s domestic product flows.
“Britain exports about 30% of its products to the continent, mostly to France in whole-carcase form. If it is a hard Brexit that product will face high import tariffs so it will probably stay in Britain and that will impact the British market and leave a shortage in France,” he told Rural News.
“During the foot and mouth [disease outbreak] in Britain in 2001-02 suddenly they found they couldn’t export to the continent. So the logical thing was we [New Zealand] tempered our exports into Britain and filled the gap on the continent – because the TRQs cover both markets. But as this proposal stands it will potentially destabilise farmers in the UK, NZ and the continent.”
Ritchie says the 50:50 split is based on a rolling three-year-average, which he claims is meaningless given that NZ has been a trading partner with the UK for at least a century. He says the NZ meat industry will not accept any decrease in the quality or quantity in the present quota and because the deal is sanctioned by the WTO he’s predicting a long and protracted negotiation.
“The UK and Europe is a pretty important market especially for the leg of lamb. There is no other market in the world that returns that sort of money for chilled legs through supermarkets,” Ritchie explains. “That leg contributes 30% of the farmgate value of NZ lamb and we want to maintain that.”
A scourge on world trade
While NZ’S red meat sector has responded well and in an agile fashion to the various trade roadblocks, Vangelis Vitalis says it still faces an insidious obstacle – non-tariff trade barriers (NTTBs).
He says NTTBs cost the agriculture sector at least $6 billion a year.
Vitalis adds that while ordinary tariffs are bad, at least they are transparent and written down and can be dealt with.
“Non-tariff barriers affect people all the way through the supply line and they can hit you at various points; many issues come up in the area of non-tariff barriers,” he told Rural News. “They are a major burden and we have taken cases against countries which have applied these.”
Vitalis says MFAT recently set up an internet page where people can ask questions about non-tariff barriers. “We will answer these with 48 hours – try us,” he says.
Vitalis says MFAT will keep working to conclude free trade agreements because they bring real benefit by way of tariff reductions. For example, he says, NZ is still paying $231 million annually in tariffs but this will reduce by $63m when the CPTPP is signed.
Vitalis warns that NZ also has to watch out for subsidies to farmers, such as the ones the US has just introduced.
Finally, he says NZ farmers must operate in an environmentally sustainable way. “One bad news story could wreck years of hard work,” he said.
