Ratifying the Gulf Cooperation Council (GCC) trade agreement should be seen as a key priority for New Zealand agribusiness as the growth potential is undeniable, according to a new report from Rabobank.
A new research report was released recently by Rabobank. Competitive Challenges – Getting on the global market access ‘VIP’ list shows that improving market access is critical for the future growth and success of New Zealand agriculture, given the importance and reliance on exports across all sectors, according to the bank’s animal proteins analyst Matt Costello.
The GCC, led by Saudi Arabia as the most important trade partner, comprises six member states – including Bahrain, Oman, Kuwait, Qatar and United Arab Emirates. Costello says the value of New Zealand’s exports to the GCC has increased over time, with exports in 2006 valued at $653 million and by the end of June 2013 this figure had doubled to $1.3 billion.
“As New Zealand and the GCC progressively introduce lower tariffs, it is likely that this figure will continue to rise, representing an even larger share of New Zealand’s total exports,” he says.
“A large segment of this growth is likely to come from the dairy industry and sheep and beef sectors. Most of the potential surrounds the rising trade expectations with Saudi Arabia, although the flow-on from the other member countries would encourage increased export growth overall.”
According to Costello, the dairy industry would be the biggest beneficiary of a reduction in tariffs with New Zealand exporting $424 million worth of dairy product to Saudi Arabia in 2013.
According to the Meat Industry Association, the volume and value of New Zealand meat exports to the GCC has been fairly steady over the last five years. Statistics New Zealand figures show 37,812.5 tonnes of New Zealand sheepmeat, beef and offal worth $194 million were exported to GCC countries in the year to end December 2013. Over two-thirds was sent to customers in Saudi Arabia, the majority of it sheepmeat. This represents a rise of 0.07 percent in volume and 4.6 percent on the 2009 calendar year.
Earlier this year, the meat industry welcomed the establishment of a new agribusiness hub in Saudi Arabia by the New Zealand government.
The Rabobank report also suggests that priority must be given to policy and regulatory settings that improve market access for exporters, with a heightened focus on the negotiation of Free Trade Agreements and building business-to-business and government-to-government working relationships.
Further leveraging New Zealand’s world-class production and supply chain systems is also of utmost importance, says the report.