Sustainability and trade

// International Trade

The days of looking at trade solely through an economic lens have passed and this blog post is going to explain how trade and sustainability are becoming increasingly intertwined and what B+LNZ is doing to advocate for Kiwi farmers' interests through trade policy.

sheep in a paddock

Trade and Sustainability – how do they fit together?

The main idea behind trade is one of efficiency and comparative advantage. This theory recognises that certain countries are relatively better at producing some things than others because of a natural advantage. In New Zealand, we have a temperate climate that is good for growing grass and therefore have a natural advantage in sheep and beef production. Because of this, it makes sense to focus on producing things that we are good at (like meat, dairy and horticulture) and using the money received from exporting those products to buy things New Zealand isn’t good at producing, such as cars or cell phones.

New Zealand has a very open economy, which means we don’t restrict trade or protect certain sectors of the economy. This has resulted in farmers, companies and industries that respond to the market and do not need to shelter behind tariffs, quotas or subsidies from the government.

Our red meat production is efficient because of a focus on reducing unnecessary costs, but also because our farmers work with the natural environment to minimise the need for inputs, such as fertiliser or irrigation. As a consequence, New Zealand has a lower environmental impact than production in other countries, because it is less resource-intensive and matches natural advantages, such as spring grass growth to production.

New Zealand farmers see themselves as environmental stewards, and over many years have invested in infrastructure and on-farm practices that have improved greenhouse gas emission efficiency, while also looking after biodiversity and improving water quality.

The link between trade and sustainability goes much further than the potential for markets to deliver positive environmental outcomes by driving efficient, low-input red meat production, however. Increasingly, as countries grapple with domestic and global environmental issues, trade agreements are seen as a way to promote high environmental standards across borders.

So how does this relate to B+LNZ’s role?

With trade and environment becoming increasingly linked, we are beginning to hear arguments against trade based on environmental reasoning.

While some of these, such as the widely discredited food miles argument have been around for a long time, others are more novel and focus on specific issues. The thing that they all have in common, is that they have the potential make it more difficult for New Zealand exporters to compete with local producers.

As the industry body representing New Zealand sheep and beef farmers, B+LNZ is responsible for ensuring that the sustainability credentials of our farming systems are recognised, and we are not unfairly discriminated against through restrictions on trade.

How does B+LNZ advocate on behalf of farmers?

Firstly, we need to understand the arguments against increasing market access for New Zealand sheep and beef products. We do this by keeping an ear to the ground and scanning the news – this includes talking to counterpart organisations overseas, reading academic papers and ensuring we are up to date with any developments in our major markets.

Secondly, we need to have solid evidence to refute these arguments. B+LNZ does this by commissioning research from independent sources to look into specific issues. Other information comes from sources such as the New Zealand Government, international research or data gathered by B+LNZ’s Economic Service team.

The Trade Policy team then ensures that this information gets to the right people in order to influence decisions. This could be supporting the New Zealand Government when they negotiate Free Trade Agreements (FTAs), such as the UK-NZ FTA or the EU-NZ FTA in which negotiations are currently happening.

What environmental issues are our trading partners concerned with?

The major environmental impact our trading partners are concerned about is the greenhouse gas (GHG) emissions footprint of sheep and beef production. Other emerging issues are around biodiversity and ecosystem health.

What is B+LNZ currently working on?

We are supporting the NZ Government’s FTA negotiations with the EU and the UK. These are both longstanding and important markets for our sector. British and European consumers expect high quality food produced in a sustainable and healthy way and are prepared to pay a premium for it. They are also prepared to push back strongly on trade deals that they believe will have negative environmental impacts.

They are therefore ideal consumers for New Zealand red meat; however, we need to ensure that there are no barriers to trade in order to get our product into market.

Currently, we have access to the EU and the UK through Tariff Rate Quotas (TRQs). These TRQs let New Zealand exporters send a certain amount of beef and sheepmeat to those markets at a reduced tariff rate. Outside of these quotas, red meat exporters are subjected to a tariff of around 50 percent of the total value of the product. This tariff is so high that any out of quota trade is not viable.

There are also a substantial number of products (such as processed meats, petfood and blood products) for which there is no TRQ and tariffs must be paid.

In order to support the New Zealand Government with the FTA negotiations, B+LNZ, in conjunction with the Meat Industry Association (MIA) works to ensure that these strengths of New Zealand production systems are known.

Recent independent research has shown that New Zealand sheep and beef farms are already sequestering a significant amount of carbon through on farm woody vegetation. Other studies have looked at the total amount of native vegetation on sheep and beef farms, which as well as capturing carbon has significant benefits for native biodiversity and water quality.

So how does this tie back to trade?

European and British consumers want to be assured that New Zealand has equivalent or better standards compared their own red meat production. Because Europe and the UK have different standards and regulations to New Zealand, we need to ensure that European and British trade negotiators understand our systems of production. On top of this, we need to work with counterpart groups such as farmer organisations and Non-Governmental Organisations (NGO’s) assure them that New Zealand isn’t going to undercut them with low cost production from farming with lower standards.

So how does New Zealand sheep and beef stack up internationally?

New Zealand sheep and beef farmers are among the best in the world. We farm with the environment and due to New Zealand’s temperate weather we don’t need to keep animals indoors during winter. This means animals are free to exhibit their natural behaviours of eating grass outside all year round.

The New Zealand agriculture industry along with Māori and the New Zealand Government have signed an agreement for agriculture to be carbon neutral by 2050 called He Waka Eke Noa. This is world leading and demonstrates the commitment that New Zealand farmers have to improving their environmental impact. For more information, visit our He Waka Eke Noa webpage.

New Zealand farms are also implementing a farm planning system, which will ensure farmers understand and mitigate their impacts on the environment in areas such as soil health, water quality and biodiversity. The current goal is for all sheep and beef farmers to have a farm plan and understand their farm’s emissions profile by 2022.

On top of this, farmers are faced with regulation from the Government and regional councils which sets environmental rules that all need to be complied with. This is all done without any subsidies from the Government!

Telling our sustainable story

Globally, we’re letting consumers know about New Zealand’s sustainable difference through the Taste Pure Nature programme (which we will cover soon in a blog). Domestically, we’re letting New Zealanders know how our farming is different to our global competitors through Making Meat Better – a website and social media channels dedicated to telling our sustainable red meat story through facts and answering valid questions from consumers about sustainability.

Learn more about how New Zealand farming is making meat better and see bite-size bits of proof you can share through your networks on the Making Meat Better website.