Deal labelled ‘slap in the face for NZ farmers’
Kiwi primary industries give Jamie Gray their thoughts on what the NZ-EU trade agreement will mean for them
The primary sector has delivered its verdict on the New Zealand-european Union Free Trade Agreement that was signed yesterday
The meat industry was less than impressed, as was the dairy sector, but kiwifruit, onion and wine growers treated the deal as a win.
New Zealand exported $3.9 billion worth of goods to the EU in 2021.
For comparison, the EU bloc of countries and Asean group accounted for 6.4 per cent and 10.1 per cent, respectively, of New Zealand’s exports over the same period, Westpac said.
The bank’s senior agri economist Nathan Penny said he expected the goods trade benefits of the deal to prove modest for “New Zealand Inc”.
The Ministry of Foreign Affairs and Trade estimates tariff savings will exceed $100 million per year when the trade deal comes into force, rising to $110m after seven years.
Penny said the trade concessions made were largely on the EU’S side.
Catherine Beard, director of advocacy at Businessnz, said the agreement fell short for meat and dairy but that horticulture, wine, honey and seafood exporters would be pleased.
Federated Farmers president and trade spokesperson Andrew Hoggard said the deal was “a slap in the face for New Zealand farmers”.
“That the Europeans’ protectionist mindset on livestock products remains entrenched is sadly not a surprise but the very small quotas agreed are considerably worse than we expected,” Hoggard said.
Meat
The Meat Industry Association said it was a disappointing outcome and one that would continue to put growers at a disadvantage in their third largest export market.
The deal will see only a small quota for New Zealand beef into the European Union — 10,000 tonnes into a market that consumes 6.5 million tonnes of beef annually — far less than the red meat sector’s expectations.
“We are extremely disappointed that this agreement does not deliver commercially meaningful access for our exporters, in particular for beef,” said Sirma Karapeeva, chief executive of the Meat Industry Association.
Sam Mcivor, chief executive of Beef and Lamb NZ, said the outcome was “difficult to reconcile” given the longstanding relationship between the EU and New Zealand.
“It’s difficult to understand why a more ambitious outcome wasn’t possible.”
Dairy
The Dairy Companies Association of New Zealand (DCANZ) said the deal leaves the EU market “98.5 per cent closed” to key New Zealand
dairy products.
“The combination of very small quota volumes relative to the market size and trade-restrictive inquota tariffs has this deal falling well short of being commercially meaningful for the dairy industry,” DCANZ chairman Malcolm Bailey said.
New Zealand’s biggest exporter, Fonterra, said it was a disappointing result and reflected the degree of protectionism which continues to afflict dairy trade globally, and particularly among the EU dairy industry.
“The agreement provides some small pockets of access for certain products over time, but overall commercial opportunities for products such as butter, cheese, milk powder and key proteins are constrained relative to the size of the EU market by a combination of small permanent quotas, in-quota tariff rates, and quota administration requirements,” Fonterra said.
At the same time, the outcomes for the EU on geographical indications (GIS) mean that Fonterra, alongside other New Zealand cheese producers, will no longer be able to use the term “feta” after a transition period of nine years.
Fonterra has, however, retained the ability to use the terms “parmesan” and “gruyere”.
Kiwifruit
Kiwifruit exporter Zespri welcomed the deal, which includes the removal of tariffs on New Zealand kiwifruit exports to the EU upon entry.
Zespri paid around $46.5m in tariffs on sales of more than $1b into the EU last season.
Chairman Bruce Cameron said the agreement would help Zespri meet the growing demand for its fruit in Europe.
“This is a strong deal for a wide range of exporters including New Zealand’s kiwifruit industry and we’re really pleased to see it finalised.
“The FTA will set us up to expand our exports to Europe, providing more European consumers with the highest-quality Zespri kiwifruit and helping deliver strong returns for our growers.”
Onions
The $189m onion export industry gave its seal of approval for the deal, which will mean the complete elimination of tariffs — worth $6m annually — on onion exports to the (EU) when it comes into effect.
The EU is the number one market for New Zealand onion exports.
“The elimination of tariffs — from 9.6 per cent to zero — puts the New Zealand onion industry on a level footing with competitors such as Chile and South Africa,” Onions New Zealand chief executive James Kuperus said.
Onions are an important rotation crop for vegetable growers so the FTA would benefit growers across the country, he said.
In the year to March 2020, the New Zealand onion industry contributed $189m to GDP and employed 1762 people.
Wine
Philip Gregan, CEO of New Zealand Winegrowers, said the deal would help remove technical barriers to trade, and reduce burdens from certification and labelling requirements.
“It will also support future growth in the market, and encourage exporters to focus on the EU.”
The EU is a significant export market for New Zealand wine, with over 20 million litres of wine exported, valued at over $150m over the past 12 months.
“The EU’S complex rules can make market access difficult for winegrowers, so it is encouraging to see some easing of restrictions in this area. We look forward to publication of the full text of the agreement so that we can examine the agreement in more detail.”
Under the agreement, tariffs on NZ wine will be lifted as soon as it takes effect. The Government estimates this will save wine exporters $5.5m annually.