UK farmers will be 'negatively impacted' with New Zealand trade deal

AHDB's analysis looks at New Zealand agricultural production and trade, and the impact of it competing in the UK market
AHDB's analysis looks at New Zealand agricultural production and trade, and the impact of it competing in the UK market

New Zealand farmers will see far greater benefits compared to UK farmers after the post-Brexit trade deal was struck earlier this year, according to new analysis.

The report, published by the AHDB on Thursday (11 August), takes a detailed look for the first time at the potential implications of the New Zealand trade deal on UK agriculture.

The levy organisation's analysis also considers the limited opportunities presented for UK agri-food products in New Zealand.

Working in collaboration with Harper Adams University, economic modelling was conducted of the impact of the new FTA on the UK and other major players. It used a trade network model to measure the impact of the deal.

It reveals limited opportunities for UK producers to export product to New Zealand and a limited threat to the supply to the domestic market in the short term as New Zealand focuses its attention on lucrative existing markets such as China.

The analysis does, however, highlight the potential longer-term risks to the UK agricultural supply chain when potential future political relationships are factored in.

For lamb, New Zealand will increase its exports by diverting some of its existing exports (notably from China), coupled with a small increase in production.

A reduction of the current level of non-tariff barriers, in both directions will lead to reduced costs for New Zealand exporters supplying the UK market.

If China banned New Zealand lamb imports, New Zealand lamb exports to the UK would increase by 29,000 tonnes (69%).

For beef, New Zealand would have to increase output and reduce the amount exported to the EU and the US in order to send more to the UK.

If China banned New Zealand beef imports, New Zealand exports to the UK would increase by 7,000 tonnes (830%)

For dairy, the potential impact on the cheese and butter trade is much more subdued, compared with the beef and lamb results. From 2018 to 2020 only an average 0.1% of the UK’s dairy imports came from New Zealand

And for pork, New Zealand and the UK are both net importers, although the UK does export some pork products to New Zealand, the EU and China.

The EU and USA are significant global exporters and the model suggests that any changes to trade flows for pork as a result of the trade deal will be minimal.

The trade deal with New Zealand is the second major free trade agreement (FTA) to be agreed post-EU exit after the one signed with Australia in 2021 – both major agricultural exporting nations.

David Swales, AHDB head of strategic insight, said: "Inevitably, these deals prompt debate in the industry with farmers wondering whether this presents yet another headache in the form of cheap imports to the UK market.

“It’s clear that New Zealand farmers will benefit from this trade deal with UK farmers negatively impacted. Our analysis shows that the impact should be modest, but there are risks of a more substantive impact in scenarios where New Zealand’s trade with China is disrupted.”

Mr Swales added: “While FTAs create opportunities by lowering barriers to trade, it’s important to remember they don’t immediately create new demand or supply.

"While our analysis does highlight that the benefits to New Zealand farmers will far outweigh those for UK farmers, it’s important to remember implementation of FTAs takes time.

"As a result it is unlikely New Zealand red meat, for example, will start to flood UK supermarket shelves.”