Local News

Scotland’s Farming Sector Hit By Energy Price Hikes & New Zealand FTA

The UK Government’s Free Trade Deal with New Zealand will seriously damage Scotland’s world renowned farming sector, Scottish Government Ministers have warned.

Image credit Bell

Beef

Currently New Zealand can export 450 tonnes of beef into the UK.

In the first year of the New Zealand Deal the UK will allow 12,000 tonnes of New Zealand beef into the UK. By year 15 that will have risen to 60,000 tonnes of New Zealand beef flooding into the UK market. From then on there will be no limit put on the amount that can be brought in tariff free.

Lamb

The UK-New Zealand FTA allows 50,000 tonnes of sheepmeat per year into the UK from year 5 to 15, (in addition to New Zealand’s existing access of over 100,000 tonnes through its WTO quota), with no limit on imports after that.

Butter and Cheese

Quotas from New Zealand produce will be tariff free. In the first year of the Deal it allows for 7,000 tonnes of NZ butter and 24,000 tonnes of cheese. After 6 years there will be no limits.

The European Union is the world’s largest free trade area but when the UK came out of that it had to forge trade agreements with other countries.

EU New Zealand Deal

The EU has also negotiated a Deal with New Zealand but on different terms.

The deal will see only a small quota for New Zealand beef into the European Union — 10,000 tonnes into a market that consumes 6.5 million tonnes of beef annually — far less than the red meat sector’s expectations.

EU-NZ Free Trade Agreement outcome disappointing for New Zealand’s red meat sector
  • 10,000 tonnes carcase weight equivalent of new beef quota with 3,333 tonnes in year 1 with the rest increasing linearly through to year 7, an in-quota tariff rate of 7.5%.
  • New Zealand’s existing high quality beef quota of 846 tonnes will see a decrease of the in-quota tariff rate from 20% to 7.5%.
  • An increase of 38,000 tonnes of sheepmeat access, which will see an extra 12,667 tonnes on entry into force with the rest linearly increasing over seven years.

For butter and cheese, the EU will retain its tariffs on these products.

Unsurprisingly New Zealand see the Deal with the UK as being extremely good for their own farmers and producers.

Sam McIvor, chief executive of Beef + Lamb New Zealand, says sheep and beef farmers will be pleased with the outcome of the FTA, which will further strengthen New Zealand’s already diverse export base.

“This FTA will unlock value in an important market for New Zealand farmers. New Zealand’s free range, pasture-raised farming systems are highly regarded by UK consumers and the perfect complement to the United Kingdom’s northern hemisphere production season.”

And Sirma Karapeeva, chief executive of the Meat Industry Association (MIA) in New Zealand commented:

“New Zealand has not had tariff-free access into the UK since Britain joined the European Economic Community (EEC) in 1973 so this deal will deliver a major boost for sheep and beef farmers and exporters.”

Two Scottish Government Ministers , Mairi Gougeon , Cabinet Secretary for Rural Affairs and Islands and Ivan McKee, Minister for Business, Trade, Tourism and Enterprise have written a letter voicing their concerns to the UK Minister of State for Trade Policy, Rt Hon Penny Mordaunt MP. The letter states:

It is clear from looking at the outcome of the EU – New Zealand negotiations that they have succeeded in getting an agreement that delivers a similar level of benefit to the UK – New Zealand FTA, while maintaining stronger controls on agri-food imports and protections for domestic producers. Given the EU’s size and negotiating strength, this is perhaps not surprising, but it emphasises the futility and economic self-harm of the UK Government leaving the EU, making its own trade agreements, and then ending up with a worse deal than if we had stayed in the EU.

A letter from the Cabinet Secretary for Rural Affairs and Islands and the Minister for Business, Trade, Tourism and Enterprise to the UK Minister for Trade Policy.

This disastrous trade deal for Scotland’s farmers is coming in at a time when the industry is also facing eyewatering increases in their energy bills. The energy price cap is a tool used by Ofgem to protect the consumer, not businesses.

According to The Scottish Farmer: “ This is putting some mixed family farm’s bills up from £10,000 per year to £40,000 – the equivalent of an extra member of staff.”

Many farms have wind turbines located on their land. Unfortunately the huge profits being made by the Energy Companies are not having the same pay off for owners of wind turbines.

The price of Scottish produced food will increase as farmers and food processors try to offset the huge rises in their energy bills by passing on some of those costs to the consumer.

Fiona Grahame