Does Europe need NZ lamb?

New Zealand’s free trade deals with the European Union and United Kingdom are raising hackles of farmers in France and Britain. By Chris McCullough.

Free trade agreements (FTA) between nations are sometimes hard to fathom and involve a lot of “you scratch my back, I’ll scratch yours” mentality.

In other words, they can be a huge PR exercise for countries promoting themselves to the rest of the world as keen business entities, but with no real financial benefit to those producing the goods.

Politicians on either side of the debating table, heavily weighted with prime meats and expensive wine, form these agreements promising “I’ll buy your cheese, if you buy our lamb” scenarios.

Take the New Zealand free trade deal agreed with Europe, signed by top brass in each region who promise big things will happen, but who actually benefits?

Prime Minister Jacinda Ardern says the deal is expected to increase the value of New Zealand’s exports to the European Union by up to NZ$1.8 billion a year from 2035. She also stated it was “more lucrative than the benefits derived from our recent FTA with the United Kingdom.”

The vociferous French

However, several thousand miles away from NZ, farmers in both the UK and EU are seething at the thought of NZ meat, especially lamb, skipping ahead of the home-produced meat and busting local prices.

In particular, French farmers, who are the world’s most active protesters, have been very vociferous on how lamb coming in from NZ will destroy their industry.

French farming leaders have warned that 38,000 tonnes of NZ lamb would arrive in Europe at half the price of its competitors.

French National Sheep Federation president, Michele Boudoin warned the EU Commission the agreement foresees sending 38,000 extra tonnes of sheep meat to Europe every year over the next seven years, on top of the current 114,000 tonnes.

“We know how this is going to happen. Our sector was globalised very early on in the 1990s. The sheep is a very political animal. A bargaining chip.”

Boudoin says since the 1990s, 228,000 tonnes of tax-free sheep meat has been imported into Europe every year, with the UK at the time. Since then, the European industry has been in decline. And this new agreement will make the situation even worse.

The French are also complaining about the timing of the NZ shipments to Europe, arriving at Easter, which is the most important market for lamb as it is eaten at many religious celebrations at that time, including Easter, and sells at a much cheaper rate than domestic lamb.

The UK situation

Lobby groups in the UK have suggested NZ lamb exports to the UK will increase by about 5800 tonnes (14%).

However, these figures all depend on China and its trading relationship with NZ. If trade relationships were to break down and China imposed tariffs on NZ lamb imports, or banned them altogether, there would be much more lamb on the global market looking for a new home.

Predictions by British experts suggest NZ lamb exports to the UK would rise by about 13,000t (31%) if China imposed a 25% tariff on Kiwi lamb imports, and by 29,000t (69%) if there was an outright ban.

The EU is a significant exporter and importer of sheep meat and is the main market for UK exports. China and the United States are both major importers of sheep meat. Neither export any lamb of significant value.

The UK’s National Sheep Association chief executive Phil Stocker says they’re concerned the UK-NZ FTA will create an unnecessary risk for Britain’s sheep farmers in years to come.

“Despite the current global supply and demand dynamics suggesting the UK won’t see a sudden increase of NZ lamb imported, this deal is opening ourselves up to a level of risk that could come and bite us in years to come.”

The NZ FTA gives the opportunity for tariff-free volumes to rise incrementally from 114,000t now to 165,000t by year 15. This, combined with the Australian agreement of 125,000t is almost the total volume of lamb consumed in Britain.

At the end of this 15-year period, trade is expected to be liberalised completely, Stocker says. The only impact this can have is a move to more exports and imports which cannot be good for their carbon footprint or food security, or a winding back of domestic production.

Stocker says NZ farming bodies claim the countries’ seasons complement each other, ensuring lamb can be found on supermarket shelves all year round. It ignores the fact that this is largely a one-way trade with little benefit to be gained by British sheep farmers.