Trading thoughts

Placing the customer first and foremost is key for profitability in agriculture in New Zealand, but to do that you first have to get your product over the border.

Phil Houlding, MIA trade and economic managerFormer trade negotiator and diplomat Philip Houlding, now the Meat Industry Association (MIA)’s trade and economic strategy manager, pondered export trade in a well thought out blog post to support last nights #agchatnz Twitter gathering.

“The average sheep and beef farmer is stung with around $30,000 in tariffs each year,” he writes. But tariffs are only the most visible trade barrier.

“Non-tariff trade barriers (essentially every other thing stopping our produce getting to market – think pre-shipment inspection, auditing, certification, testing requirements, product separation, religious requirements etc) are often far more difficult to navigate and ad more and more cost to the ‘post-farm-gate’ industries in NZ. This all feeds back to the farmer via lower returns.”

He reckons that red meat exporters are missing out, potentially, on well over a billion dollars of revenue annually, thanks to trade barriers of different kinds. “Wouldn’t that billion dollars be a useful boost to our sector?”

However, removing trade barriers is getting harder, not easier, he notes. New Zealand’s markets are “increasingly where the governments are used to controlling every part of the production process with an iron fist.” Each meat plant has to implement a screed of processes to satisfy all the markets.

In addition, agricultural trade is “inherently emotional”, he writes, pointing to the move towards food security globally.

“Scrutiny now falls on every part of the supply chain,” he says, noting that “laboratory testing is so good now that any residue that can be found and acted upon, regardless of whether it’s there deliberately, or whether there’s a trade risk.”

When there’s a problem, the first and easiest reaction for politicians is to ban imports, but getting back on the approved list is a complicated, time-consuming and expensive process.

In Houlding’s view New Zealanders should be proud: “Of our ability to export so much product, in such a heavily scrutinised area, to so many countries and retain a reputation for safety and quality.”

He praises the trade negotiators, diplomats and market access officials, who “do a fine job on a relative shoestring – but they can’t be expected to work miracles,” he says.

“So anything less than world-class performance from all parts of our industry is asking to be punished. And, your niche premium is no good to you if it’s rotting away on a wharf.”

Read the whole blog at agchatnz …

#agchatnz is the New Zealand version of AgChats on Twitter around the world. It takes place every Wednesday night at 8pm, with a different topic. Next week: the upcoming NZ election. Simply join in, using the hashtag #agchatnz.

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