A free trade agreement (FTA) with the United Kingdom will provide greater security for the livelihoods of Rodney farmers and drive sustainability, but meat prices in supermarkets are likely to rise, local farmers say.
The Government announced last month that it had reached an agreement in principle for an FTA with Britain.
While dairy is the big winner, with free access to the British market within three years, the FTA could have a more meaningful impact for the struggling beef and sheep meat industries, which will have an expanding quota and free access in 15 years.
The New Zealand sheep industry has been declining since the UK joined the European Union in the 1970s, while also facing diminishing wool prices.
Beef has also been challenged by changing land use in New Zealand, with forestry consuming arable land, driven by carbon pricing.
Helensville farmer, and Beef + Lamb Northland chair David Kidd says the UK market is an opportunity because its consumers are willing to pay a higher price for food. Agricultural sector-wide tariff reduction and elimination will also mean sheep exports will benefit from shipping efficiencies.
David believes that the key to unlocking premium prices is New Zealand’s story around producing grass-fed sustainable meat. Traditionally, New Zealand meat has been marketed in Britain as a cheaper alternative.
“The New Zealand agricultural industry has been working hard to farm in a regenerative manner. The UK market will recognise the value in that,” he says.
Higher prices will help young farmers, who are working with increasingly tighter margins, to establish their sustainability credentials and meet increasing regulation.
However, David admits that a consequence will likely be higher meat prices in New Zealand supermarkets – a reality of an “export-driven economy”.
Ahuroa sheep farmer Nicky Berger is unsure how the New Zealand market will respond to increasing lamb prices with premium meat already commanding around $40 a kilogram.
But she sees the FTA as an opportunity for Welsh and Kiwi lamb farmers to collaborate, supplying both markets with meat during their seasons, which alternate every six months.
“It will give consistency of supply, which will be attractive for markets, similar to what Zespri has been able to achieve with Kiwifruit growers in Italy.”
Nicky acknowledges that some UK farmers are not happy about the FTA, including the “Red Tractor” union, but says that forward-thinking British farmers are not taking a protectionist stance.
Retired Wellsford sheep breeder Gordon Levet says the FTA will help, but wool prices will need to increase if the sheep industry is to return to historic highs.
“In the 1950s wool was booming, and fathers wanted their daughters to marry sheep farmers. I don’t think we will return to that, but the FTA could keep sheep numbers up at around 20 million, which would be equivalent to the 1930s,” he says.
Gordon says the returns farmers get from wool currently don’t cover the cost of shearing. The price of wool is around $2 per kilogram, whereas 30 years ago it was $5.
“But, I think the market will right itself as new uses for wool are found. For example, it could be used in houses for its fire resistance,” he says.