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Fonterra is entering the British dairy market
Dairy giant Fonterra sees great sales opportunities on the British market, helped by the free trade agreement between the United Kingdom and New Zealand signed at the end of May last year. Mike Bones, director of Europe, states that 10.000 tons of product have now been sold.
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Bones tells this in an interview with the New Zealand Herald. Thanks to the free trade agreement, New Zealand companies now have tariff-free access to the UK market. According to Bones, for the first time in fifty years.
The products currently sold mainly concern Cheddar and butter, but Fonterra sees room to broaden the range of dairy products. And the 10.000 tons mentioned is just the beginning, according to him.
Fonterra hopes that the United Kingdom, which is the world's largest dairy importer after China, can in some way compensate for the decline in sales to China.
When the UK was still a member of the EU, high tariff barriers applied to dairy from third countries. For Cheddar it easily amounts to around €400 per tonne. That threshold keeps American and New Zealand dairy outside the EU, but no longer outside the UK.
For traditional exporters to the UK, especially those in Ireland, but also in continental Europe, New Zealand supply means stiff competition and likely pressure on margins.
Fonterra is not concerned about the climate effects of long-distance dairy transport. According to Bones, transport is only responsible for 1% of total emissions in the dairy chain.