Fonterra sees opportunities in the UK market now that the UK and New Zealand have made 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 pleased with the Free Trade Agreement signed last Thursday (20 October). 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 pleased.
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, kiwi dairy and meat. Conversely, New Zealand benefits from importing, among other things, machinery and clothing from the UK. The deal states that the rates on dairy will be reduced to virtually nothing within 5 years. The exception is cheese and butter, for which a longer transitional period applies.
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 in terms of underlying assets.”
He expects that sustainable New Zealand dairy products will appeal to many British people.”So far, New Zealand dairy barely got a foothold in the UK due to high import tariffs of up to 45%. The same applies to beef exports.
On the contrary, the British dairy sector is concerned about the abandonment of trade tariffs. Industry organisation 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 that in New Zealand. In addition, New Zealand, led by market leader Fonterra, is an excessive player in the global dairy market. They accuse the British government of using agriculture as change to bring about the deal.