Monday, April 22, 2024

NZ-UK FTA a sweet deal for honey

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A smorgasbord of horticultural produce and products look to benefit most immediately from the New Zealand-United Kingdom free trade deal that slices millions from tariff charges to this country’s oldest trading partner.
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Apiculture NZ chief executive Karin Kos says the removal of a 16% honey tariff to the UK was particularly welcome.

A smorgasbord of horticultural produce and products look to benefit most immediately from the New Zealand-United Kingdom free trade deal that slices millions from tariff charges to this country’s oldest trading partner.

The combined trade for horticultural products, honey and wine has surged to the old country in the past decade. Last year’s trade amounted to $605 million, including honey, wine, apples and onions.

But honey in particular stands to benefit significantly in terms of trade value, with the agreement promising to see the 16% tariff reduced to zero as soon as the ink dries on the deal.

In an agreement British PM Boris Johnson clumsily likened to a rugby game that had both sides “scrummed down and packed tight”, honey producers are welcoming the big zero tariff goal.

NZ’s honey exports to the UK have soared in recent years.

This has largely been on the back of high-value mānuka sales, and the UK market now represents $70m of sales or about 14% of total exports, and ranks as one of the top three destinations.

Apiculture NZ chief executive Karin Kos says that tariff had proven to be a significant barrier in the past and the agreement comes at a time when beekeepers and honey processors could well do with a platform to grow the UK market.

The industry has also recently been granted exclusive rights to use the term mānuka as a geographic descriptor for the high-value honey in the UK, a right that is also being sought in other markets, including China.

Wine sales to the UK last year totalled $464m, comprising 24% of NZ’s total exports, and as a sector has enjoyed year on year value growth of 23% based on Nielsen data.

All categories across whites and reds have enjoyed gains, with NZ wines contributing over 12% to the category’s total growth.

NZ Wine chief executive Philip Gregan says the UK was now NZ’s second-largest export market after the United States. 

Current tariffs on wine are $50 per 100 litres and removal will be effective on the agreement’s formal ratification date.

A specific agreement annex on wine also promises to remove technical issues around certification and labelling.

Pipfruit is another winner in the horticulture sector, with the current 8% tariffs due to drop to six, four, two and then zero percent on year four. NZ’s small pear trade to the UK reduces to zero-tariff straight away.

Pipfruit NZ chief executive Alan Pollard says NZ was also now able to export 20,000t of apples tariff-free during the UK’s peak season from August 1 to December 31, with all other volumes subject to the three-year step down.

“We worked out that the tariff amount to the United Kingdom, it’s not a huge amount and over the past decade the industry would have paid about US$13 million to US$14m in tariffs to the UK. However, it is still our second or third-largest market,” Pollard said.

Apple exporters typically send about 40,000t a year of crop or 10% and Pollard maintains dropping the tariffs provides some growth opportunities for NZ.

“Especially more so now we have quite a diverse product range of varieties. It is always better to try to develop these markets in a free trade environment,” he said.

He says there may also be opportunities for growers to develop relationships with growers in the UK, as has been done in some other Northern Hemisphere countries.

“This FTA is a good outcome for NZ, MFAT has done an outstanding job and Minister O’Connor has pulled it off in quite a short time period too,” he said.

Zespri market performance officer Linda Mills confirmed the marketer did not sell large volumes into the UK, but the agreement was good news for the industry.

“The UK is a focus market for Zespri and we are looking to make more fruit available to health conscious consumers there as production volumes increase over the next several years. The tariff relief will certainly help with that,” Mills said.

The humble onion also stands to benefit from the agreement, with NZ growers exporting over $10m of crop there as off-season supplies every year.

Until now the crop has also faced a tariff of 8%, competing against tariff-free South African and Australian crops.

“We expect to see the benefits come with our 2023 harvest. The tariff reduction means we can continue to offer growers a wide competitive portfolio of export outlets for their onions, including Germany and Indonesia,” Onions NZ chief executive James Kuperus said.

Estimates are that the entire agreement will generate an additional $1 billion in GDP, with total tariff elimination alone estimated to save exporters $37.8m.

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