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Nicholas Jolly, Beef + Lamb New Zealand’s (B+LNZ) Trade Policy Advisor discusses New Zealand’s red meat trade history leading up to where we are now.
With this blog, I thought it would be worth stepping back and looking at a brief history of New Zealand’s red meat trade and where it is now. In a later blog, I will look at some of the possibilities for the future.
Early beginnings of the New Zealand red meat trade
New Zealand’s red meat trade really began in 1882, with the first shipment of frozen meat to the United Kingdom (UK). The commercial application of refrigeration technology opened up significant opportunities for sheep farmers, who had previously relied on wool for income because it could easily be transported long distances. Meat trade before 1882 was mainly domestic, with a small amount exported in cans or an otherwise preserved form.
The red meat trade until the 1920’s was mainly frozen carcasses to Britain, where it was sold to butchers who further broke down the carcasses in their shops. In 1926, the first shipment of beef, mutton and lamb was sent to the United States of America (USA) and Canada, opening up new markets. This was the foundation for New Zealand’s red meat exports for the next 40 years, with sheepmeat mostly exported to the UK and beef exported to the USA.
During the Second World War, New Zealand’s reliance on these two markets increased due to an agreement signed with the UK to supply as much as possible to them to help out with war related food shortages. In 1952, this was extended to a 15-year agreement giving unlimited access to the UK market.
In the 1960’s, it became clear that the UK was going to join the European Union (EU) and exports would be limited by European trade policy through tariffs and quotas. New Zealand then attempted to find new markets, with the Meat Board establishing offices in Japan and the United States in the 1960’s, followed by offices in Brussels and Tehran (Iran) in the 1970’s. The chart above demonstrates the reliance that New Zealand had on only a few markets during this period.
Following the UK joining the EU (or European Community as it was then known), a sheepmeat quota of 245,000 tonnes was introduced with an in-quota tariff* of 10 percent, which was then subsequently reduced to 0 percent in 1989 in return for New Zealand agreeing to limit the amount of sheepmeat exported to the EU to 205,000 tonnes. This was subsequently increased to 225,000 tonnes during the Uruguay Round of negotiations which resulted in the formation of the World Trade Organisation (WTO). The formation of the WTO was an important chapter in the history of our agricultural exports as it locked tariffs at current levels and committed countries to progressively reducing them.
While agricultural tariffs have not reduced significantly for agricultural products as a result of WTO negotiations since then, this has provided security for exporters because they cannot rise above the locked in levels.
Where we are now – New Zealand’s current trade policy
In the early 2000’s, New Zealand embarked on a new trade policy of signing Free Trade Agreements (FTAs) with our major trading partners. We now have Free Trade Agreements with Australia (CER 1983), Singapore (2001), Thailand (2005), Singapore, Chile and Brunei (P4 2006), China (2008), Malaysia (2010), Hong Kong (2011), Myanmar, Laos, Vietnam, Cambodia, Philippines, and Indonesia (AANZFTA 2012), South Korea (2015), and Japan, Mexico, Peru, and Canada (CPTPP 2018).
Note that this is just a list of when we signed FTAs with new markets, as some countries we have multiple FTAs with, for example we are in multiple agreements with Australia such as the CER, AANZFTA and CPTPP.
We are currently in the process of negotiating new FTAs with the UK and the EU, which will further increase our network.
The below pie graph shows what percentage of New Zealand red meat exports are currently covered by FTAs. “Preferential entry” relates to where we have access to a market through other means, such as quotas agreed at the formation of the WTO. We currently have quotas with the United States, Canada, Europe, and the UK.
The UK and the EU are covered by the ‘Negotiating FTA’ segment as negotiations are ongoing.
It is also important to note that even if we have a FTA with a market, that does not necessarily mean tariffs are at zero, for example with South Korea tariffs are reducing from 40 percent to zero over 14 years. They are currently at 21.3 percent.
The “Concluded but not in force” segment refers to the Gulf Cooperation Council (GCC), made up of Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain. Negotiations concluded in 2009, with increased access for red meat exports but the FTA has since stalled. Current regional dynamics have also impacted on the ability of GCC states to take a collective decision. As a result, the FTA is unlikely to be completed until this deadlock is resolved.
The below charts, put together by the Meat Industry Association show how our trade has diversified since the 1960’s. While a significant percentage of exports are destined for China, we have a network of FTA’s that mean if something happens to China, our exporters have other options. We saw this when the COVID-19 outbreak first started, as when Chinese ports were closed exporters were able to redirect product originally destined for China to other markets. In 2020, the sector exported over $9.52 billion worth of product, the highest level ever.
This demonstrates that our trade strategy of having a large network of FTAs is working. It provides resilience in times of crisis, while returning value as exporters can match cuts to demand, therefore providing maximum value from each carcase and returning this to farmers pockets.
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 Beef + Lamb New Zealand (B+LNZ) is doing to advocate for Kiwi farmers' interests through trade policy.
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.
Beef + Lamb New Zealand’s (B+LNZ) Trade Policy Team discusses what Brexit means for New Zealand’s red meat exports in their latest trade blog.
The UK formally departed the European Union’s Single Market at midnight on 31 December. As the dust settles from Brexit, we can now look at what is happening in the UK and Europe and get a better sense of what it means for New Zealand red meat producers.
New trade arrangements between the EU and the UK
In order to understand what has changed as a result of the UK leaving the EU, it is important to understand how red meat was traded when the UK was part of the EU Single Market. Under the Single Market, goods could be traded within Europe with no internal borders or other regulatory obstacles. Basically, sending a leg of lamb from England to France was the same as sending a leg of lamb from the North Island to the South Island.
Now that the UK is not part of this Single Market, it has had to negotiate a new trade agreement with Europe – the Trade and Cooperation Agreement (which covers trade, citizens’ security and a governance framework) and which was only concluded in the closing weeks of 2020.
And what does the TCA say about trade between the EU and the UK?
The deal allows for tariff-free and quota-free access for trade in goods between the EU and the UK, but treats the UK as a “third country”, meaning that British goods exported to the EU will now be subject to same paperwork that New Zealand exports there require.
All of this paperwork takes time to understand and fill out. It is highly technical and getting it wrong means that the consignment will be rejected at the border – but even just the process of border checks has added significant time delays to trade processes for British exporters. All of this can add up to make the costs of exporting prohibitive, especially for small UK companies who may not have dedicated expertise. The costs to submit this paperwork also adds up, with the British government estimating that 265 million customs declarations would need to be filled out at a cost of around £7.5 billion per year.
What has happened to EU-UK trade since 1 January?
Because many companies had stockpiled products in anticipation of Brexit disrupting supply chains it has taken a while to understand how trade has been affected.
We are now hearing reports that trade from the UK to the EU is significantly disrupted. The British Meat Processors’ Association has said that even experienced exporters are having difficulty and exports to the EU are at 25 percent of normal levels for this time of the year.
Trade from the EU to the UK has also been affected, with businesses reporting that the new administrative burdens make exporting to the UK prohibitive. There have been reports of food shortages and empty supermarket shelves in the UK, including meat. The ‘special status’ of Northern Ireland (subject to EU rules while part of the UK) has meant particular challenges at the border there.
What about the impact on UK red meat markets?
While we are still learning what the full effects of Brexit will be on the British and European beef and lamb markets, if the current situation is anything to go by, there is likely to be ongoing disruption and potentially less trade between the two.. To date, the EU-UK lamb market has been dynamic, with lamb produced in the UK being exported to the EU for processing before being re-exported back to the UK. The UK market has a preference for certain cuts (legs) and the EU for racks. Around 90% of British lamb is exported chilled, with only a 27-day shelf life. If British lamb producers struggle to get their product to France for processing as a result of the new administrative measures, that is likely to drive down prices in the UK due to oversupply in the domestic market. At other times of year, however, there is likely to be under-supply. (British lamb is also exported during their production season and imported from NZ or Australia when British production cannot meet local demand.) A study conducted last year estimated that even with a deal like the TCA, UK lamb exports to the EU could drop by 30 percent, likely depressing prices in the UK.
On the other hand, the British beef market is not self-sufficient, with around 25% of beef consumed in the UK imported, mainly from Ireland and France. Any market distortion resulting from trade difficulties between the EU and the UK will therefore increase prices for British consumers.
What about New Zealand beef and lamb exported to the EU and the UK?
In a nutshell, other than navigating the disruptions in the market we talk about above (and a serious issue around tariff rate quota volumes we discuss further below), it should be business as usual for New Zealand exports.
The good news: Health certificates
New Zealand red meat products need to have certain documents in order to enter the EU. This includes a health certificate issued by the Ministry for Primary industries (this certificate verifies that the product meets the required animal and human health standards such as food safety and that the product carries no disease risk) and a quota certificate issued by the New Zealand Meat Board (this verifies that the product is eligible to enter the EU under the quota allowance).
As of 1 January, there was no change in the health certificate requirements for New Zealand meat products sent to the EU, but new certificates were needed for the UK market. Thanks to preparatory work done by MPI, MFAT, NZTE, NZ Customs, the Meat Board, the Meat Industry Association and Beef + Lamb NZ, this was all settled ahead of time and exporters had a clear idea of what they needed to do once the UK left the EU Single Market at midnight on December 31.
The challenges: Market disruption
New Zealand exporters have not faced the same ‘shock’ of new paperwork as their British counterparts; positively, our exports have largely been able to skirt around the current border chaos as in general New Zealand exports use different ports than those used by EU-UK trade. Much of the EU-UK trade is carried on lorries that use either the channel tunnel or ferries. Freight from New Zealand, Asia or the Americas arrives at deep-water ports such as Felixstowe on container ships.
That said, there have been reports of some minor effects on trade in terms of delays in border processes, although with COVID-19 also affecting port operations it is difficult to tell whether these issues are related to Brexit or COVID-19.
The bad news: Quota split
As you may remember, the EU and the UK unilaterally decided to split New Zealand’s existing WTO tariff rate quotas, which give preferential access for New Zealand product to these markets. (Outside of the quotas, tariffs are prohibitive meaning trade is unlikely to take place.) With the 31 December departure of the UK from the EU, those quota splits have now come into effect. What this means in practice is that the volume of sheepmeat that New Zealand is able to send to each of the UK and EU has been split roughly in half, and the volume of beef has been split around two-thirds to the EU and one-third to the UK.
New Zealand continues to oppose the EU and UK’s decision to split the quotas. Before Brexit, New Zealand exporters were able to respond to price signals in any of the countries that made up the European Union, by sending more or less product to those customers according to demand. But with the quota split, New Zealand exporters no longer have that flexibility meaning if there is increased demand in one market, product cannot be diverted to meet that demand. For beef, as well, the split volumes are so small that they will impact the ability of New Zealand exporters to build commercial relationships in the market, undermining the quality of our access.
Looking at the current food shortages in UK supermarkets a result of Brexit, this ability to respond to market demand and maintain good connections with customers has never been more important. Now that Brexit has been resolved, we expect to see the EU and the British Governments taking urgent steps to find a practical approach that ensure that, consistent with their WTO obligations, New Zealand will not be left worse off as a result of their choices.
RCEP: A Big Deal
The largest trade deal in the world, the Regional Comprehensive Economic Partnership (RCEP) in the Asia-Pacific region, has just been signed, with New Zealand one of the founding members. Although its impact is modest in terms of tariff reductions on our exports – reflecting the fact that we already enjoy pretty good trade terms with the other members – RCEP should deliver better access into Indonesia for red meat and co-products, and should help to streamline trade in the region overall. Even better, it gives us a seat at the table when important trade rules are being written.
RCEP: A “Mega-Regional” trade deal
RCEP covers roughly one third of the global economy across 15 nations, including three of the five largest economies in Asia (China, Japan and Korea). Other partners are Australia and the Association of South East Asian Nations (ASEAN), including important partners Indonesia, Malaysia, Singapore, Thailand, the Philippines and Vietnam.
Together, these countries are quickly becoming the center of world economic growth and are located in New Zealand’s backyard, making them very important to New Zealand’s red meat export future. The grouping of countries that make up RCEP account for 27 percent of global merchandise trade, and are the only region in the world forecast to see an increase in beef consumption over the next ten years, according to the UN Food and Agriculture Organisation
Don’t we already have agreements with all of these countries?
New Zealand has a comprehensive suite of Free Trade Agreements (FTAs) which cover all of the countries currently in RCEP. Through this network of FTAs we already have good access - or progressively getting better, in the case of Japan and South Korea. Tariffs are relatively low in most of these markets.
To put this grouping of countries into perspective, we currently export $5.5 billion to RCEP members, which is over half of our total red meat and co-product exports.
What does the New Zealand red meat sector get out of RCEP?
Indonesia is our 11th largest export market for red meat and co-products and was worth over $165 million for the past 12 months (year ending October 2020). RCEP will help us to achieve even better value out of this market. While we already had relatively good access into Indonesia through existing arrangements, tariffs on a few products had not been fully liberalised, remaining at 5 percent. Under RCEP, however, those remaining tariffs will all go. As soon as RCEP enters into force – which is expected to happen at the start of 2022 – the tariffs on boneless frozen beef, chilled sheepmeat cuts with bone-in and frozen offal will all be removed. Last year, we sent around NZD$18 million in frozen boneless beef to Indonesia; once the tariffs are removed, we could save around a million dollars per year on this product alone.
The remaining tariffs on frozen sheepmeat carcasses, frozen sheepmeat cuts, frozen beef livers and frozen beef cuts will be phased out over the following 15 years.
Tackling red tape, complex rules and procedural obstacles
Non-tariff barriers, or NTBs, impose additional costs and delays on our exporters. RCEP will streamline all of the different rules in the region in a number of important areas. This will lower compliance costs, reduce the time exporters spend waiting for goods to clear customs and enhance transparency and predictability for businesses operating in the RCEP region. In particular, under new RCEP rules, Customs authorities must release perishable goods including fresh and chilled meat and meat products within six hours of arrival. This will reduce spoilage and mean we can serve our customers better. The agreement also lays the foundations for region-wide rules in new areas including e-commerce and digitally-enabled trade. This may eventually help to reduce friction, increase supply chain integrity and lower costs for New Zealand exporters.
Having a seat at the table
New Zealand is committed to the liberalisation of trade as a way to enhance our prosperity and create new opportunities for all in our communities. By being part of RCEP, we have a seat at the table for the making of rules that will govern trade within a broad sweep of the Asia-Pacific region – not just the current elements of RCEP, but also potentially as the agreement is updated into the future, and if its membership can be expanded.
Bringing India on board
One of New Zealand’s original goals for RCEP was to integrate India more closely into regional trade. Although India had been closely involved in negotiating RCEP through most of the process, it ultimately decided to pull out of the agreement in late 2019 due to concerns about opening up its market. Fortunately, however, there is still a pathway left open for it to rejoin the agreement at a later stage.
India would be a huge opportunity for New Zealand sheepmeat and associate products, with a population of 1.3 billion and a growing middle class with a taste for healthy, safe and nutritious food. There is already one New Zealand company making inroads into India, but there are significant constraints imposed by India’s high tariffs of 30 percent on imported sheepmeat.
Removal or lowing of these tariffs would give New Zealand exporters a massive opportunity in a fast-growing market. It would also provide additional market diversification in a time where the challenges of COVID-19 have highlighted the importance of having access to different markets. We remain hopeful that India will come aboard the agreement at some point in the future.
The bigger picture
In a time of increased protectionism and concerns about the impact of international trade, being part of an agreement that covers 30 percent of the world’s economy is an important message to send. Importantly, this is the first time that China, Japan and South Korea have been part of the same agreement. It is also the first time that China has signed up to an agreement with multiple countries (otherwise known as a plurilateral agreement). Previously it had only negotiated agreements with one other partner (known as bilateral agreements).
The Peterson Institute for International Economics estimates the deal could increase global national income by $186bn annually by 2030 and add 0.2 percent to the economies of its members.
What are the next steps for RCEP?
For the agreement to enter into force, it requires six ASEAN nations and three other nations to ratify the agreement. (In New Zealand’s case, the ratification process involves consideration of the agreement by Parliament.) It is expected that these domestic processes in RCEP nations will have reached the threshold for entry into force by early 2022.
So, what’s this trade blog all about?
This is the first in what will be a regular blog covering all things related to sheep and beef trade from the New Zealand perspective. We are hoping to give you an overview of work that the Trade Policy Team here at B+LNZ does to support New Zealand’s sheep and beef industry. We will also be updating you on any big trade policy happenings around the world that may impact New Zealand’s red meat exports.
NZ trade background
New Zealand has long been a trading nation, from Māori trading with early whalers and settlers through to gold, wool and the beginnings of our red meat trade today with the first export of frozen mutton from Dunedin to London in 1882.
Red meat trade has changed beyond recognition since then – now reaching over 120 countries around the world, and with a wide range of innovative and high-value products on offer. Unfortunately, however, the sector also faces a raft of barriers that reduce, restrict and distort trade, including tariffs (that is, effectively a ‘tax’ on our products as they go into the different markets), tariff rate quotas (a fixed volume of product that enters at a special tariff rate, sometimes zero), non-tariff barriers (red tape and various technical requirements) and production subsidies that tilt the playing field in favour of our competitors.
Tell me more about these trade barriers!
We currently estimate the red meat sector pays around $250 million in tariffs each year, on total exports worth around $9.3 billion. But we also save over $350 million a year in tariffs we don’t have to pay thanks to New Zealand’s free trade agreements (FTAs). Increasingly open markets thanks to liberalisation resulting from World Trade Organisation (WTO) negotiations demonstrates the value in ongoing support for trade liberalisation by the red meat sector. B+LNZ, alongside the Meat Industry Association (MIA), plays an important role in supporting our government negotiators in opening up markets through FTAs, by sharing data and analysis and championing good market access outcomes for our products.
As tariff rates have come down, non-tariff barriers have become a more significant issue. By one estimate made in 2016, non-tariff measures cost the beef sector over NZD$1 billion in the Asia Pacific region alone. Not all of these measures are barriers as such – but in some cases, we face requirements that are not based in science or international norms, such as administrative or labelling requirements – that add significant cost and may make imported goods less attractive to consumers than domestic products.
While we continue to send our products to customers in traditional markets such as the European Union, the United Kingdom, the United States and Japan, we are constantly looking out for new opportunities for New Zealand sheepmeat and beef. The best recent example of this is China. Before the New Zealand China FTA was signed in 2008, red meat trade with China was worth $469 million per year. Exports have rapidly expanded since to $3.84 billion for the year ending July 2020, with China our most important market for both sheepmeat and beef.
What else is affecting sheep and beef trade?
Looking to the future, there are both challenges and opportunities for New Zealand’s red meat exports. On one hand, COVID-19 has had an impact on export markets, with social distancing and lockdowns impacting an important customer base for us in the restaurant industry across the world, and longer-term forecasts of economic contraction also likely to dent demand and prices. In turn, we have seen increased protectionism and subsidies as countries seek to protect their own farmers. The international rules-based trading system that New Zealand has relied upon to protect us from unjust tariffs and rules, and to set a stable base for exporters, is under threat from a rise in ‘economic nationalism’ in some countries.
That all sounds a bit grim, is there any hope?
There are still plenty of exciting opportunities for the sector, though. The Food and Agriculture Organisation predicts that global demand for red meat will rise faster than supply as the world population increases, meaning prices in the long term are likely to recover from the COVID shock, stabilise and rise. We are fortunate that many of the countries in our backyard, including China as well as other Asian nations such as Vietnam, Thailand, Indonesia and India, will see an expanding middle class of discerning consumers, eager for high-quality red meat and other products. Africa is a continent that is projected to follow a similar path as it matures, modernises and grows.
COVID has taught the world the importance of having a secure supply of safe, high quality food, with countries such as Singapore and China managing this through high quality FTAs with countries like New Zealand. In many countries, consumers are focusing on issues around sustainability and animal welfare – with New Zealand well positioned to supply those consumers, given the focus of our farmers on raising animals humanely while also preserving biodiversity, reducing carbon emissions, and protecting the water, soil and air – a message that is underscored by our “Taste Pure Nature” campaign.
And of course, B+LNZ is continuing to support the government’s efforts to broaden our portfolio of FTAs – with both the European Union and United Kingdom currently on the negotiating agenda, and the final polish being given to a large multi-country deal among Asian trade partners including South-East Asian countries, Korea and Japan, as well as Australia and New Zealand, the ‘Regional Comprehensive Economic Partnership Agreement’.
While this is just a quick introduction to some complex issues and by no means exhaustive, we hope you will join us on this blog as we explore these topics in more depth.
See you next time,
The Trade Policy Team.