As we move towards the end of October and the UK leaving the EU, New Zealand’s meat exporters dealing with the region are on high alert. Nobody still really knows what will happen on 31 October, and it is a pressing business issue for $1.2 billion of the red meat sector’s trade, writes MIA trade and economic manager Sirma Karapeeva.
The likelihood of a No-deal Brexit has increased over the past few months and New Zealand’s meat companies are concerned about what that will mean for their businesses. We’ve been working through the year with government agencies, Beef + Lamb NZ Ltd (B+LNZ) and the New Zealand Meat Board (NZMB) on contingency plans to minimise trade disruption.
We’ve been at this place before, of course. Plans were put in place, but not activated, during the important Easter trade season and are now ready to safeguard the Christmas trade in both the UK and the EU, should the UK crash out of the EU on 31 October 2019.
MIA has worked, alongside the Ministry for Primary Industries, to ensure veterinary standards and agreements with New Zealand will continue to be upheld. Our team has also worked with NZMB on the required adjustments to the tariff-rate-quotas (TRQs) management system in the event of a No-deal Brexit, and we continue to support our members on any non-tariff trade barriers that crop up.
Collaboration with B+LNZ and AGMARDT has enabled Jeff Grant, to represent the red meat sector in the in-market team, including diplomatic and trade officials, to make sure the sector’s business policy interests are guarded.
Thankfully, warnings of reports of congestion at the ports seem to be limited, we believe, to the cross English-Channel trade and the ports of Dover and Southampton. Most of New Zealand’s container shipments to the UK, however, go via Felixstowe and the Port of London at Tilbury.
Each of the exporting companies have been working with their representatives and customers in-market on their own plans to make sure trade goes smoothly. They have had warning to re-route shipments accordingly. Other work might include things like monitoring the moving situation, maybe finding new agents or setting up a new office, reviewing contracts, mapping supply chains and considering foreign currency fluctuations.
While the UK remains an important market for New Zealand, it is important to note New Zealand’s red meat trade has diversified over the past few decades. The UK is now our fifth largest red meat customer, taking around a fifth of exports, and is just one of our 120 markets around the globe.
However, Brexit uncertainty, along with very strong demand in North Asia for New Zealand meat, has already had an impact. Export statistics have tracked drops in sheepmeat exports to both the UK and the remaining EU countries over the past year.
Our newly released annual report shows our sheepmeat exports to the UK fell by 16 percent to 42,878 tonnes over the 12 months to end June 2019. This was the lowest volume exported to the UK in a 12-month period and less than half of what New Zealand was sending to the market just a decade ago. The value of those shipments dropped 12 percent to $417 million. However, it remains one of our most important sheepmeat customers, especially for high-value chilled lamb, in the past year taking 26 percent of total exports of that product, worth $227 million.
But the issues not only affect trade with the UK. The volume and value of shipments to the continental EU markets – a cornerstone market for sheepmeat – also dropped by 15 and 17 percent respectively to 56,131 tonnes worth $811 million.
We were heartened by a recent visit to New Zealand by the British trade minister Liz Truss, which underscored the British government’s intention to secure a free trade agreement (FTA) with this country, alongside ones with Australia, Japan and the US. Meeting with our own Minister David Parker, they discussed mutually acceptable solutions to not disadvantage New Zealand traders as a result of Brexit.
We’ve also welcomed the start of negotiations for the EU-NZ FTA, but because of the Brexit uncertainty it is still unclear how agricultural goods market access to that region will be addressed.
Our members are still very concerned about the UK-EU decision to split 50:50 the WTO bound TRQ of 228,389 tonnes (carcase weight equivalent) a year, between the two parties with no consultation with New Zealand. There is a possibility this will interfere with companies’ ability to service customers in the region with adequate quantities of the products they demand.
We will continue to work with our Government and other stakeholders to keep up the pressure to make sure the red meat sector’s business interests are protected.