New Zealand is one of the big food-producing countries of the world. It supplies enough food to feed over 40 million people.
There are clear market similarities to Ireland.
They are both islands and export a large proportion of the food produced. In the case of New Zealand, a large proportion of food produced goes to China. For Ireland, it’s the UK.
Dairy farming in New Zealand is the big driver of the economy and has been growing steadily for the last 35 years.
Never say never, but yes we have effectively capped cow numbers
However, growth has stopped and when we asked New Zealand minister for agriculture, trade and export growth Damien O’Connor why is that the end of growth, he said: “Never say never, but yes we have effectively capped cow numbers and probably the area where we’ll farm dairy on. Some dairy land is going back to drystock, so yes we have reached peak cow and our view is that milk volumes will not climb.
“We are working on nitrate inhibitors and methane inhibitors and if we can move through challenges with new technology then maybe production can grow again.”
In the last year Irish farmers and businesses have seen the positive impact of frozen New Zealand lamb not arriving on Irish or UK shop shelves
Irish milk prices also often feel the tailwind or headwind of milk supply in New Zealand.
The reduction in growth there will affect markets in coming years. In the last year Irish farmers and businesses have seen the positive impact of frozen New Zealand lamb not arriving on Irish or UK shop shelves, resulting in higher Irish lamb prices.
On the environmental side, we would have always regarded Ireland and the EU as being 10 to 20 years ahead of New Zealand in terms of nutrient management at farm level. New Zealand is suffering now with water quality issues.
Among the other recommendations from the commission is that because methane is a short-lived greenhouse gas it does not need to drop to zero by 2050
Earlier this year it was announced that NZ farmers may be asked to cut numbers of dairy, suckler cows and sheep by 15% by 2030 if the recommendations from the New Zealand Independent Climate Change Commission are adopted by Government. No decision has been taken yet.
Among the other recommendations from the commission is that because methane is a short-lived greenhouse gas it does not need to drop to zero by 2050.
So what’s happening now?
Not all catchments are monitored correctly
“Our water quality is improving. However, we are not doing enough water monitoring. Not all catchments are monitored correctly. All the issues are on the table and we are having good honest conversations,” the Minister O’Connor said.
What about greenhouse gas emissions? “Our solution around emissions and how we deal with it is being developed by a partnership of farmers, industry and New Zealand government and they’ll spend 12 months with support of government and agencies discussing the options on how to meet international targets and at the same time how to continue to support livestock and improving long-term returns from pastoral systems.”
About 25% of our farmers will know and measure emissions off farm by the end of this year
Asked if any decisions had been taken that will affect farmers, Minister O’Connor said: “We have got legislative obligations to reduce emissions by 10% by 2030, and every six months without new technology makes it harder to achieve this.
“About 25% of our farmers will know and measure emissions off farm by the end of this year, and by 2025 these measures will be incorporated into a pricing system that will require 100% reporting and farmers paying an amount depending on their emissions profile.”
Irish students to New Zealand
I know a number of Irish students waiting for New Zealand to open its borders so they can get going on work experience. As of yet the door is not opening.
We have allowed some workers from the neighbouring pacific islands to come in and work after a period of quarantine
The minister said: “We haven’t officially moved from COVID elimination control yet, and about 50% of population have got the second jab now.
“We have allowed some workers from the neighbouring pacific islands to come in and work after a period of quarantine.”
When asked about the deal under negotiation with the UK, Minister O’Connor said they are “close to an agreement” that will conclude “hopefully in the next few weeks”.
There had been a target date for the end of August, but the minister said it was an “arbitrary deadline” which was “horrifying to officials” when he and UK trade minister Liz Truss announced it earlier in the summer. He pointed out that neither party wanted to sign a deal that was of low value and negotiations have continued.
When pressed on what was holding it up, the minister said it was “around the sensitive areas of beef, dairy and sheepmeat, plus some service and investment areas”.
We are not saying we want something the exact same as Australia
When asked about Australia having set a precedent with access, the minister responded that the Australia-UK deal was a “reference point but that there is a different mix between the UK and NZ. Some things of no interest to us are significant to Australia and vice versa. We are not saying we want something the exact same as Australia but clearly our traditional links are somewhat similar to Australia.”
On trade negotiations with the EU, the minister said “it has been sitting around for a few years making slow progress”. He pointed out that “aspirations on climate change, biodiversity, investment and digital are aligned between us ... [It] is a little bit further back than the UK negotiation but it is still progressing at what we think is quite a respectable pace.”
We asked Minister O’Connor if he was concerned at the level of NZ exposure to the Chinese market given Australia’s experiences over the past year.
In total, we can only feed 40m people
He replied: “I have said to groups and sectors in NZ that as a small businessperson that being exposed to one single customer beyond 30% creates a risk and we have said to them to be mindful of that and diversify their market opportunities.
“In total, we can only feed 40m people, there are a lot of people in the world and a lot of valuable market opportunities. Our exporters are taking the ones in China, they have been valuable and high returning but they have to look at other places.”
On marketing agri food, the minister was of the view that “the challenge we both have as countries is better marketing the value of animal protein that comes from a pasture base that is better for nutrition and better for the world”.
He said Chinese consumers regularly use the QR code to find out about the source of the product and how it was produced. That integration of the supply chain from the consumer right back to the source are part and parcel of maximising market return.
Clearly a NZ-UK trade deal will be concluded in principle in the coming weeks and while there will still be a way to travel before it takes effect, Irish beef will be competing alongside Australian and New Zealand beef in the UK market by the middle of this decade. The EU is progressing at a more cautious pace but there is likely to be a deal, with some uplift in access for beef as well.
The NZ ambition on promotion of grass-fed is interesting and has parallels with Bord Bia ambitions on grass-fed branding and PGI. That will be a challenge for both countries given the premium position already occupied in Asian markets by North American and Australian grain-fed beef.