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Farmers could face increased competition from Australia and New Zealand (NZ) produce as a result of new trade deals with the two countries.
With trade negotiations with Australia and NZ officially beginning last week, the UK government has published its strategy for the two sets of talks.
In the Australian document, the government expects the trade deal to “reflect increases in imports of sheep meat” as well as “bovine meat”.
A similar approach is taken in the NZ strategy with the deal forecast to follow the current trading pattern which “would in part be an increase in imports of sheep meat, including lamb”.
In the long run, NZ producers may be able to supply UK retailers […] at lower cost relative to domestic producers
Australia is the world’s largest exporter of sheep meat and NZ is second, with exports worth €2.9bn and €2.6bn last year respectively.
However, the documents will raise concern across almost all farming sectors in the UK.
The UK government states that NZ has a “comparative advantage” in dairy products, beef products, vegetables and fruits.
“In the long run, NZ producers may be able to supply UK retailers […] at lower cost relative to domestic producers,” the document reads.
After an Australian trade deal, the UK government expects a contraction in domestic agriculture. Again, the country is seen as being more competitive in exports of livestock products.
Impact
The UK government assessed the impact of two potential types of trade agreements for both countries. The models cover two different levels of trade liberalisation, achieved by reducing or removing tariffs, and lowering non-tariff barriers, such as regulatory standards.
Across 23 sectors of the UK economy, agriculture and semi-processed foods are the only two sectors that would see output drop as a result of a comprehensive trade deal with Australia, with a reduction of over 0.5% forecast.
Economic output in NI would also reduce by between 0.15% and 0.25% as a result of the deal, making it the only region of the UK to be negatively affected.
The benefits to the UK economy of a trade deal with NZ are even less
The overall benefit to the UK economy is marginal with GDP, a measure of economic output, forecast to increase by £500m or 0.02%.
A less comprehensive deal with Australia would not be as damaging to UK agriculture and the NI economy, but the increase in UK GDP would be lower at £200m or 0.01%.
The benefits to the UK economy of a trade deal with NZ are even less, with no change in GDP forecast under both types of agreement.
However, output in UK agriculture sector would be 0.05-0.5% lower under a limited trade deal with NZ and it would reduce by over 0.5% as part of a comprehensive trade agreement.
Again, NI is the only region of the UK that sees negative economic growth under both trade scenarios with NZ.
Political win
Despite the limited economic benefits, trade deals with both countries could be seen as a political win after leaving the EU.
“The UK must not be willing to sacrifice our farming industry or undermine our values and standards for the sake of a deal that might benefit other British industries,” commented Phil Stocker from the National Sheep Association.
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