Farming leaders “disappointed” as NZ trade deal officially signed
1st March 2022
Farming groups have raised concerns about the government’s approach to free trade deals and the cumulative effect on British farming and food.
The free trade agreement between the UK and New Zealand was officially signed yesterday (28th February), having been agreed in principle at the end of last year.
It will see New Zealand eliminating all tariffs on UK products entering the country from day one of the agreement, and the UK eliminating 96.7% of tariffs from NZ entering the UK.
The exceptions are the UK’s sensitive agricultural products, including beef, sheepmeat and cheese – for which there will be a transitional tariff rate quota.
Farming leaders have criticised the deal, which takes a similar approach to the Australia FTA signed last year, for undermining British farmers by granting “unfettered” access to major food exporting nations.
Announcing the news, the Department for International Trade claimed the ‘far-reaching’ deal will remove trade barriers on a range of UK goods and services and provide new opportunities for British businesses.
Deal offers “virtually nothing” to farmers
NFU president Minette Batters said the government’s approach to trade deals – and the cumulative effect of each deal added together – presents a “real risk” to UK farmers and for people wanting to buy British food.
She added that there is “extremely little” in the NZ deal to benefit British farmers.
“UK farm businesses face significantly higher costs of production than farmers in New Zealand, and margins are likely to tighten further in the face of rising input costs, higher energy bills and labour shortages.
“The government is now asking British farmers to go toe-to-toe with some of the most export-orientated farmers in the world, without the serious, long-term and properly funded investment in UK agriculture that can enable us to do so; the sort of strategic investment in farming and exports that the New Zealand government has made in recent decades.”
There is an urgent need for the government to take a coherent approach across its departments to focus on the UK’s farming productivity, and to recognise and remedy the contradictions within current domestic policy, she concluded.
In a similar vein, NFU Scotland said it is disappointed by the deal, which threatens sensitive areas such as dairy, beef, lamb and horticulture by granting access to large volumes of imported food – while offering “virtually nothing” to Scottish farmers.
NFUS president Martin Kennedy said: “Our fears that the process adopted by the UK government in agreeing the Australia deal would set a dangerous precedent going forward have just been realised. Having now signed off on a similar deal to grant unfettered access to New Zealand, another major food exporting nation, the cumulative impact of all such deals on farmers and crofters will be substantial.”
He added: “We are ambitious to identify and grasp opportunities to build our industry and wider economy and our reputation for world class produce. Trade deals could be an enabler of this, but it is going to require investment and collaboration between UK government and the industry; collaboration which does not exist at present.”
Meanwhile the National Sheep Association said the NZ and Australia deals do not go far enough in protecting UK sheep farmers, and warned that the significant increase in sheepmeat imports to the UK creates ‘unnecessary risk’ for the sector.
NSA chief executive Phil Stocker commented: “Despite the current global supply and demand dynamics suggesting the UK won’t see a sudden increase of New Zealand lamb imported, this deal is opening ourselves up to a level of risk that could come and bite us in years to come – and it could pave the way for Britain’s environmental and land management policies to reduce domestic production and then feed ourselves from anywhere across the globe.”
He also refuted claims that the NZ and UK seasons complement each other, ensuring lamb can be found on supermarket shelves all year round. “[This] ignores the fact that this is largely a one-way trade with little benefit to be gained by British sheep farmers. The UK’s rich diversity of sheep farming systems, and climate, means we can and do, serve our domestic market very well already. It is worth considering that the last two years have seen reduced imports of New Zealand lamb due to Brexit and Covid, and our domestic supply chains have catered well for demand in the absence of this.”
NSA said it does not agree with the proposition that UK sheep farms tighten their production window and export more, with more imports brought in when product is not available. “This to me doesn’t benefit our sheep farming system here in the UK and neither does it win on our aspiration for high standards, climate change targets, or reliable food security,” Mr Stocker concluded.
Transitional tariff rate quotas explained
Analysing the NZ deal, AHDB’s senior strategic insight manager Sarah Baker said tariffs on sensitive agricultural products will be phased out as follows:
Beef: Tariffs will be eliminated over 10 years, during which time, a TRQ of 12,000 MT in year one, rising in equal increments to a TRQ of 38,820 MT in year 10, will be applied. Between years 11–15, a product-specific safeguard will be in place, limiting beef imports into the UK to 43,056MT in year 11 and rising in equal increments to 60,000 MT in year 15. Any product exceeding this safeguard will be subject to a 20% tariff. This safeguard will be removed after year 15, at which time beef trade will be fully liberalised.
Sheepmeat: The UK will liberalise trade after 20 years. A transitional TRQ starting at 35,000 MT for years 1–4, rising to a TRQ of 50,000 MT for years 5–15, will be implemented. This TRQ is for any given year and will only be triggered once the WTO country-specific TRQ of 114,000 t has been filled by 90%.
Between years 16–20, a product specific safeguard will be in place, as for beef, meaning the UK sheepmeat sector will have some protection for 20 years, after which trade will be fully liberalised. Again, the TRQs have been expressed in volume terms, not carcase weight equivalent (CWE) which is an important consideration for the UK market, in particular for the beef sector.
Dairy: Butter tariffs will be eliminated over five years in six equal reductions. The transitional quota will open at 7,000 MT and increase in equal instalments to 15,000MT in year five. Cheese will become tariff free over five years, with the transitional quota starting at 24,000 MT and rising in equal instalments to 48,000 MT by year five. Trade in both butter and cheese will be fully liberalised by year six onwards.
Next steps will require the agreement to be scrutinised by the Trade and Agriculture Commission for a three-month period. Then, scrutiny by government and select committees before the process of ratification is triggered. This is likely to take until the middle of 2023 to allow time for the necessary legislation to be in place ahead of ratification of the deal.
AHDB has been examining the potential impact of the deal alongside Harper Adams University, and the results will be available later this year.