The recently signed European Union-New Zealand trade deal received a lot of media attention and there’s some confusion as to why the red meat sector is disappointed.
The new deal only allows for an additional 10,000 tonnes of New Zealand beef quota access over seven years which is minuscule considering the European Union (EU) consumes 6.5 million tonnes of beef annually.
“That’s only 2 percent of New Zealand’s beef,” says Beef + Lamb New Zealand (B+LNZ) chief executive Sam McIvor.
Missed premium opportunity
“It’s not just about volume, the EU is a market where we can look to derive greater value for our premium products.
“We’re missing out on a high-value market where we can be rewarded for our environmental and production credentials and unique farming systems like we do in other markets.
“EU consumers are willing to pay a premium for high quality, sustainable product that meets superior animal welfare standards such as New Zealand’s grass-fed beef and lamb.
“This was a real opportunity to return better prices to both companies and farmers, but unfortunately this outcome will limit our ability to respond to that demand.
“Instead, the outcome maintains small quotas that will continue to constrain our companies’ ability to export to the EU,” says McIvor.
Market volatility amplifies need to diversify
The global market continues to be volatile, with lasting impacts from the COVID-19 pandemic, supply chain disruptions and a rise in protectionism.
“What the last few years have taught us is how crucial diversification is, especially to one of New Zealand’s biggest export industries,” says McIvor.
“A high-quality FTA with the EU would have helped us achieve better diversification, lowering risk.”
About the outcomes
Prime Minister Jacinda Ardern and President of the European Commission Ursula von der Leyen concluded negotiations of the NZ-EU Free Trade Agreement last week.
Outcomes included:
- 10,000 tonnes carcase weight equivalent of new beef quota with 3,333 tonnes in year 1 with the rest increasing linearly through to year 7, an in-quota tariff rate of 7.5%.
- New Zealand’s existing high quality beef quota of 1102 tonnes will see a decrease of the in-quota tariff rate from 20% to 7.5%.
- An increase of 38,000 tonnes of sheepmeat access, which will see an extra 12,667 tonnes upon entry into force with the rest linearly increasing over seven years. New Zealand has an existing tariff-free sheepmeat quota of 125,769 tonnes.
- “While we acknowledge the hard work of our New Zealand trade negotiators, frankly speaking, the EU has not supported their consumers and failed to live up to their rhetoric of being free traders,” says McIvor.