One of the first controversies of the UK leaving the EU was what would happen to the huge sheepmeat quota that New Zealand was granted when the UK joined in 1973.

At that time the UK was New Zealand’s only significant export market for agricultural produce and a tariff-free quota of 228,000t was created to offset the loss of the UK for other agricultural produce in the then common market. However, with the UK deciding to leave, what would the fate of this 228,000t UK-generated access quota to the EU 28 be?

Brexit impact

The EU and UK did come to an agreement that they would divide the quota pro-rata based on how NZ sheepmeat sales to the EU were divided between the EU27 and the UK over the past three years. However, that wasn’t acceptable to NZ.

While the EU is less of a priority currently, that may change if the UK leaves the EU without a deal

They argued that dividing the quota this way didn’t give the same flexibility as they had with the 228,000t quota spread over any one of the 28 member states.

The only thing that would give the exact same flexibility was a 228,000t quota for the UK and a separate 228,000t quota for the EU 27.

Changing NZ trading patterns

Recent trading patterns, however, suggest that in practice this may not be as big an issue as it appears. For many years, NZ have failed to fill their EU quota, developing other markets in Asia and North America instead.

Now they have arrived at the point where for the first time China is buying more New Zealand lamb than the EU 28 is.

In the year ending September 2019, the EU bought 89,239t of lamb from New Zealand compared with China importing 128,861. In the year ending September 2018, EU imports from New Zealand were still ahead of China on 111,082 compared with 106,962 going to China and the year before that ending October 2017, China imported just 86,215t compared with 105,606 going to the EU.

FTA negotiation

Both New Zealand and Australia are currently involved in trade negotiations with the EU and market access for both sheepmeat and beef are priorities for them. Australia were left behind in 1973, securing a tariff-free quota of just over 7,000t for sheepmeat, and this is something they wish to address now.

While the EU is less of a priority currently, that may change if the UK leaves the EU without a deal. In a no-deal Brexit, the UK, the third biggest exporter of sheepmeat in the world, would face huge tariffs that would effectively exclude them from the EU 27 market.

With the EU 27 already less than self-sufficient for sheepmeat, this would create a further demand for imported produce.

Winners and losers

As well as Irish farmers benefiting from this, Australia and New Zealand would also be in a position to supply a net importer in the EU as well as their developing Asian and North American markets.

The big losers in this situation would be UK sheep farmers, including those in Northern Ireland who send almost half their sheep south for processing.

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