New Zealand lamb is at the centre of a growing political crisis in Britain as farmers mount a last-ditch attempt to limit meat exports from Australia and New Zealand.
Though their prime target is Australian beef, lamb exports are also under attack.
The issue centres on the free trade agreements Britain is trying to negotiate with Australia and New Zealand to show that it is ready to trade after Brexit.
The row is pitting the free trade Ministers in Boris Johnson’s Cabinet against the traditionalist pro-farming Ministers.
The Financial Times has reported that there was “an absolutely ferocious row ” within the Cabinet between the Environment Secretary, George Eustice and Michael Give, a previous Environment Secretary on one side and Liz Truss, International Trade Secretary and former diplomat, Lord Frost, on the other.
The newspaper said UK officials said Australian and New Zealand negotiators were holding firm on demands for full tariff liberalisation, which Truss was under pressure to grant to have the first of the deals which will be with Australia concluded by the time of the G7 meeting in Britain in early June. Australian Prime Scott Morrison has been invited to that meeting.
Consequently, the British National Farmers’ Union has begun a high profile campaign warning of the dangers to British farming of liberalised tariffs.
“If we go forwards and allow a totally liberalised route to trading with no checks and balances, no review mechanisms, then we could potentially be watching a complete slow-motion car crash in the countryside,” its president Minette Batters told Britain’s Channel Four News on Tuesday.
“The British government faces a choice. It must recognise that opening up zero-tariff trade on all imports of products such as beef and lamb means British farming, working to its current high standards, will struggle to compete.”
Trade Minister Damien O’Connor is shortly to travel to Britain to talk about New Zealand’s Free Trade Agreement negotiations.
He told POLITIK his trip is not motivated by the current row but he conceded there are issues that are still to be resolved.
“I think we’ve moved through this agreement very quickly,” he said.
“And I have to compliment officials on making so much progress.
“But there are always issues there that, you know, politicians need to discuss.
“The possibility of doing it in person is something is that we’ve grabbed and I hope will be valuable.”
Brexit has meant British farmers now have to pay high tariffs to get their meat into the European Union. The EU tariff on sheepmeat averages 48 per cent. (This is incorrect: Britain’s last minute Brexit exit deal with the EU last December meant UK meat enters Europe duty free)
So they want to sell their meat in Britain.
There they run head-on into the much cheaper product from down-under.
Britain imported approximately 67,500 tonnes of sheepmeat last year, and New Zealand supplied about 39,900 tonnes of that. That figure was lower than usual because of droughts here.
Before Brexit New Zealand had tariff-free access to the EU (including the UK) for up to 228,000 tonnes of sheepmeat a year.
But now, the EU and Britain are proposing to split that quota between them. Exports to Britain that fell outside the reduced quota would pay an average 50 per cent tariff.
Under the proposed splitting of the quota, tariff-free entry for NZ sheepmeat would be capped at 114,000 tonnes for both the UK and the remaining EU countries.
Beef and Lamb Chief Executive told RNZ last December that the split between the UK and meant a significant reduction in the flexibility and the value that could accrue from the quotas “because we’ve lost the flexibility to put product into either the EU or the UK as customers demand it.”
O’Connor told POLITIK that New Zealand did not want to compete with British farmers.
“We want to complement what they do in the market,” he said.
“We’re producing an off-season supply of high-quality animal protein through meat, and we hope that we can fill the gaps in the market when they can’t supply.
“And that complementary role, I think, is valuable for both the UK and New Zealand farmers.”
But the British farmers are gearing up for battle.
A group of 19 farmer and rural organisations called the UK Farming Roundtable issued a statement on Monday which appeared to threaten to use animal welfare standards as an argument against imported meat.
“Our government should not be rewarding other countries with access to our markets who do not share the same environmental and climate ambitions,” it said.
“We should be careful that increased imports and downward pressure on farmgate prices do not lead to farmers either falling by the wayside or attempting to go toe-to-toe with overseas producers who gain a competitive advantage through production methods that are not acceptable to the UK public or are even illegal in the UK – for instance through employing feedlot systems or largescale, long-distance exports of live animals.”
However, O’Connor did concede that there are some difficulties in the Free Trade Agreement negotiations.
“I’m not going to be unrealistic and say all the issues will be resolved because of my meeting, but hopefully, it will assist officials that will still have some way to go to work.
“There are some legal obligations around those tariffs and quotas, and we worked well with them in place.
“So we hope that the enthusiasm from both the UK and ourselves to conclude this deal means we can negotiate our way through it to a sensible and eventually commercially worthwhile conclusion.”
But what is clear from the reports coming from Britain is that the British farmers do not want a commercially sensible deal; they want a politically acceptable one.
