Irish sheep farmers concerned over New Zealand trade deal with the UK

With the UK remaining the largest single destination for Irish food and drink exports, the threat to Ireland’s food and agriculture industry is obvious
Irish sheep farmers concerned over New Zealand trade deal with the UK

New Zealand's Prime Minister Jacinda Ardern speaks with Britain's Prime Minister Boris Johnson over video conferencing as they seal a free trade deal. New Zealand is in the top five beef exporters globally, shipping primarily to the US, but more and more to China also.

IFA President Tim Cullinan has said the proposed trade deal between the UK and New Zealand is very concerning for Irish sheep farmers.

But it is expected to also open up the UK to significant tariff-free quotas of butter and cheese from New Zealand and will expand tariff-free quotas for beef from Down Under.

The agreement in principle for a future trade deal with New Zealand is understood to remove import tariffs on New Zealand’s agricultural goods coming into the UK.

For sheep meat, New Zealand already has access to a 114,000-tonne, tariff-free quota into the UK. But this quota hasn’t been filled in recent years, as sheep meat production in New Zealand has been slowly declining, and the Chinese market has grown in importance.

The new trade deal could provide an extra 35,000 tonnes of tariff-free access for the first four years, after which it will rise to 50,000 tonnes, and trade will be fully liberalised after 15 years.

New Zealand is in the top five beef exporters globally, shipping primarily to the US, but more and more to China also.

With access currently to only 454 tonnes at a zero tariff rate into the UK, New Zealand is expected to benefit from this rising to 12,000 tonnes, and to 60,000 tonnes by year 15 of the deal, after which unlimited volumes will be able to access the UK tariff-free.

China is also a key New Zealand dairy trading partner, taking more than 30% (by value) of exports. For butter and cheese, New Zealand doesn’t have UK tariff-free quotas, but in the new deal, these would start at 7,000 tonnes for butter, and become fully liberalised after six years. For cheese, it is similar, with the year-one quota set at 24,000 tonnes.

Minette Batters, President of the National Farmers Union in the UK, said the deal, like one signed early this year with Australia, could have a "huge downside" for the UK’s dairy, livestock and horticulture sectors.

She said it opens the door to significant extra volumes of imported dairy, red meat and horticulture foods, while securing almost nothing in return for UK farmers.

“UK farm businesses face significantly higher costs of production than farmers in New Zealand and Australia.

“The government is now asking British farmers to go toe-to-toe with some of the most export-orientated farmers in the world."

And with the UK remaining the largest single destination for Irish food and drink exports, the threat to Ireland’s food and agriculture industry is obvious.

In 2020, 33% by value of Ireland’s food and drink exports went to the UK (worth €4.3bn).

Trade experts believe the UK is striking a deal primarily as a pre-requisite to joining the Comprehensive and Progressive Trans-Pacific Partnership bloc of 11 countries around the Pacific Rim, thus opening the way for increased exports. New Zealand is projected to gain a €600 million boost to GDP, but the UK Government’s own analysis suggests the NZ deal will have little effect on the UK’s GDP.

Currently, wine is New Zealand’s largest export to the UK, worth nearly €300m per year. Winemakers and honey producers will be the initial NZ beneficiaries of the UK trade deal.

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