Background trade deal
British fear invasion of Fonterra after trade deal
Fonterra sees opportunities in the UK market as the UK and New Zealand signed a trade deal this week. From CEO Miles Hurrel, the New Zealand dairy cooperative speaks of a fantastic result that offers many opportunities for export. The UK dairy sector is very concerned about the invasion of New Zealand dairy products into the UK market.
The governments of the United Kingdom and New Zealand are both delighted with the free trade agreement signed last Thursday (October 20). New Zealand Prime Minister Jacinda Ardern even speaks of the best trade deal ever for her country and her British counterpart Boris Johnson is also very enthusiastic.
Tariffs on dairy have expired
Food products are central to the trade agreement between the two countries. This makes it easy for the British to import products such as white wine, honey, kiwis, dairy and meat. Conversely, New Zealand benefits from importing machinery and clothing from the UK, among other things. The deal states that the tariffs on dairy will be reduced to virtually nothing within 5 years. Exceptions to this are cheese and butter, for which a longer transitional period applies.
CEO Fonterra sees opportunities
Fonterra, New Zealand's largest exporter, welcomes the trade deal. CEO Hurrel sees an interesting market for dairy products in the UK. "The UK is the second largest importer of dairy products by underlying value." He expects that sustainable New Zealand dairy products will appeal to many Britons.” Until now, New Zealand dairy has barely had a foothold in the UK due to high import tariffs of up to 45%. The same applies to beef exports.
'Clap for British dairy sector'
The British dairy sector is actually concerned about the loosening of trade tariffs. Industry organization Dairy UK speaks of a blow to British dairy and signals an uneven playing field. This is because the cost price in New Zealand is lower than in the UK. The deal is not fair from Dairy UK's perspective, as the UK market is much larger than New Zealand's. In addition, New Zealand, led by market leader Fonterra, is an excessively large player in the global dairy market. They blame the British government for using agriculture as spare change to bring about the deal.
Wouter Job
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