$2b trade faces post-Brexit logjam
New Zealand’s valuable lamb exports to the United Kingdom and Europe could get caught up in a major traffic snarl-up this Easter.
The UK is due to exit from the European Union on March 29, just three weeks before Easter when volumes of Kiwi lamb jump 10 times for the festive season.
But New Zealand’s red meat sector Brexit representative Jeff Grant said the uncertainty over what sort of a deal the UK negotiates threatens the smooth flow of trade.
‘‘At the moment there’s free flow of trade across the Channel, but, once Brexit occurs, just a six-minute check of documents at Dover will back up traffic to London in 12 hours.’’
There was talk of turning some motorways into giant truck parks to accommodate the stalled traffic.
At present New Zealand exports more than $2 billion worth of red meat to the EU, most of it sheepmeat. It has a tariff-free quota of 228,000 tonnes of sheepmeat a year, although it virtually never fills it.
About 55 per cent of the sheepmeat is consumed in 27 EU countries, and 45 per cent in the UK.
Kiwi meat exporters are preparing contingency plans as Brexit negotiations continue. The British Parliament is set to vote before Christmas on the terms that UK Prime Minister Theresa May’s government and the EU agree.
Silver Fern Farms head of sales Peter Robinson said the Easter period was crucial for chilled lamb sales into the UK.
‘‘There is uncertainty. We are working with the Meat Board who are co-ordinating an industry preparedness plan for a variety of scenarios which may play out.
‘‘We are also working with our customers so they are aware of the options for orders which are programmed for arrival straight after the March 29 Brexit date,’’ he said.
Grant said there was also the threat of the UK and EU splitting New Zealand’s quota of 228,000 tonnes, which was decided on in 1973. If that occurred it would remove the flexibility exporters enjoyed now.
It was possible that as soon as Brexit occurred, the EU would slap high tariffs on British lamb. Because British exporters might effectively be shut out of the EU, New Zealand would be able to sell more into Europe, but not if its quota had been halved.
‘‘Companies are going to make decisions in a vacuum. Do they work on the basis that there’s a deal on March 29 or do they work on the basis there’s no deal and therefore start transferring product out of the UK into Europe?’’ Grant asked.
Meat Industry Association chief executive Tim Ritchie said the quota split might not occur because major trading countries such as the United States, China, Brazil, Australia, Argentina, Canada, and Japan had raised concerns about their export quotas also being split.
New Zealand has now lodged a complaint with the World Trade Organisation to ensure the quota remains as it is.
‘‘The sooner everyone knows where they are the better. If you’re a processor here it’s right in the middle of the Easter trade, so if you’re exporting to there with critical shipments of shelf-life sensitive product you might not be able to get it to your customer,’’ Ritchie said.