The UK’s post-Brexit free trade agreement with New Zealand could spell bad news for British farmers, AHDB has warned.
In a report published this week, the levy board illustrated its concerns with a worst-case scenario. If New Zealand suffered a souring of its relationship with China –its biggest exports market – it could end up exporting far more meat to the UK. Or so AHDB reckons.
“If China banned New Zealand lamb imports, New Zealand lamb exports to the UK would increase by 29,000 tonnes, or by 69%,” its report warned. An even bigger jump could be in the offing for beef, though AHDB conceded that would only happen if China, the US and the EU – vast markets compared with the UK – all decided to cut imports from New Zealand.
Big ifs? Maybe, maybe not.
Beijing has cut several ties with the US, a close ‘Five Eyes’ ally of New Zealand, in the wake of House of Representatives speaker Nancy Pelosi’s recent visit to Taiwan. In 2020, China in effect banned Australian wine in response to Covid-related criticisms from Canberra, setting a possible precedent of sorts.
In the UK, the NFU and meat industry representatives have previously sounded the alarm over the New Zealand FTA.
Their concerns were similar to those voiced by AHDB, which this week spoke of “yet another headache” for farmers “in the form of cheap imports to the UK market”. Even UK onion growers have warned of British produce potentially being supplanted by Kiwi competitors.
AHDB points out New Zealand’s farmers have generally been able to operate at a lower cost than their British counterparts – which means they could be more competitive than Brits in the UK once the FTA is implemented.
Their exporting power could weaken as new laws for maintaining landscapes curb some farmers’ scope for expansion. “They might have hit a limit,” says Richard Scheper, dairy analyst at Rabobank.
New Zealand’s exports are, however, already gargantuan; it is the world’s biggest exporter of butter and lamb. So if it ever needs an alternative market to China, British farmers could face stiff competition.
Easy to do business
Not everyone shares AHDB’s fears. Others, such as the FDF and scotch distillers, have hailed the agreement for potentially making it easier to do business in New Zealand.
And of course, the UK government trumpeted the agreement with a blizzard of hyperbolic soundbites about the “ambitious, comprehensive, future-focused” deal, which made no mention of the sorts of concerns raised by AHDB. It pledged to help small and medium sized enterprises “seize the opportunities” on offer.
But AHDB questions whether the deal really will work both ways. The problem boils down to the “limited opportunities presented for UK agri-food products in New Zealand”, it says.
The playing field is not level, in other words, between a small market with a population of five million and a GDP of around $200bn, and one with a population of almost 70 million and a near $3 trillion GDP.
The inequity was arguably highlighted by the near universal positive reaction to the deal in New Zealand, and widespread criticism from farmers, meat processors and growers in the UK.
Kimberly Crewther, executive director of the Dairy Companies Association of New Zealand, argues the FTA could smooth the way for the UK to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, an 11-nation free trade deal to which New Zealand and Australia are already party, along with Japan.
But Rich Clothier of Wyke Farms, which sells cheese in over 160 countries, is unsure of the benefits. “I am still struggling to see what food and farm producers are getting out of the trade deals, which have so far been with small countries [Australia and New Zealand]”, he says. For him, “big Asian or Pacific Rim economies” such as India and the US should be the focus. The government “promised us deals with big countries that would buy our products”, he stresses.
And though a deal with India is in the offing, no such agreements have been signed.
A Department for International Trade spokesman said: “UK farmers will continue to thrive under this agreement, which will increase bilateral trade by almost 60% and open even greater opportunities by paving the way to accession to the Trans-Pacific Partnership – a trade bloc worth £9 trillion in combined GDP.
“Our deal with New Zealand has robust protections for our agriculture sector, including gradual tariff liberalisation for beef and sheepmeat over 15 years, and the independent Trade and Agriculture Commission agreed it will encourage positive competition while ensuring neither side is disadvantaged by existing regulations.”