MOST PEOPLE probably don’t realise New Zealand has a similar land mass to the UK – NZ is the 75th largest country in the world, just beating the UK at 78th. New Zealand is closer to the equator stretching from about 35o South to 45o South (the UK covers 50o to 59o North), so New Zealand is warmer, has more sunlight and is slightly wetter than the UK with annual rainfall at 1250mm compared to the UK’s 1154mm.
But there are a few more significant differences. New Zealand has a surprisingly small amount of arable land. According to the CIA World Fact Book, NZ has only 564,200 hectares of cultivated land growing everything from maize to apple orchards to grapevines. While the UK has about 11 times as much arable land at 6,163,100 ha. New Zealand has less grazing land than the UK as well: only 9 million hectares while the UK has 11.4 million ha of permanent and temporary grasslands. And yet New Zealand is a major exporter of agricultural products while the UK imports 45 per cent of its food.
How can this be so? Well one difference that stands out is New Zealand’s free market credentials – it was one of the first countries to drop all of its agricultural subsidies and embrace free trade. Incredibly, since doing this, although its agricultural exports have boomed, the amount of agricultural land in New Zealand has fallen considerably. According to the World Bank in 1980, 65 per cent of New Zealand ‘s land was used for agriculture but since subsidies were removed this area has fallen to just under 40 per cent.
Meanwhile, and this isn’t surprising, the UK’s agriculture – still heavily subsidized on a per hectare basis – occupies 72 per cent of UK land. And yet the UK imports 45 per cent of its food – mostly from the EU – a similarly expensive and heavily subsidized producer. Additionally, according to the OECD, NZ employs 164,000 people in agriculture while the UK employs 319,000. DEFRA puts that figure at 476,000 but if true that only makes the UK appear even more hopeless – using more people and more land to not produce enough food to meet local demand.
So let’s recap: NZ and the UK are of similar size; 72 per cent of the UK is under agricultural use; agriculture employs between 319 to 476 thousand people depending on who you believe; and yet UK farms are unable to supply the UK’s demand for food – even though they are heavily subsidized. While New Zealand only uses 40 per cent of its land mass for agriculture, agriculture employs only 164 thousand people; New Zealand farms are completely unsubsidized and unprotected from international competition; and yet its agricultural production makes up about 80 per cent of its total exports and is valued at over US$30 billion. In contrast, the UK’s total income from farming was only £5.3 billion in 2019 and Defra puts agriculture’s GVA at only £10.4 billion (US$14.4 billion).
While some will quickly point out New Zealand has a much smaller population to feed than the UK (5.1 m against 67.8m), I would retort the Kiwis are producing enough to feed their own population multiple times. For example, NZ exports 95 per cent of its dairy products earning the country over US$10 billion, 94 per cent of its sheepmeat, 87 per cent of its beef, 90 per cent of its Kiwifruit, 90 per cent of its fish (by weight after cleaning), 85 per cent of its onions, 86 per cent of its apples, and 85 per cent of its wine – with the US, UK and Australia its biggest customers even though both the US and Australia have domestic wine producing industries.
So New Zealand could feed a population many times its own – provided they enjoy dairy, lamb, beef, wine, apples, kiwis, seafood, honey and onions.
And that is the point of this article and a lesson for the UK – New Zealand has become a successful exporter of food because it specialises in areas where it has a natural advantage. Spurred on no doubt by the fact that New Zealand farmers are unsubsidised – there is no government to fall back on for lazy, unlucky or simply chillaxed ‘lifestyle’ farmers. Unlike the UK, the New Zealand government is worried by the amount of prime agricultural land being used for urban development and sem-irural lifestyle farmers who do not take the agricultural industry seriously.
Now the UK has just finished the sixth round of its trade negotiation with New Zealand. This trade deal should have interesting results. New Zealand imports cars, delivery vehicles, crude and refined oil, and pharmaceutical products, while it exports are focused on the aforementioned nine agricultural goods. Meanwhile UK trade is the polar opposite. It exports cars and other vehicles, crude and refined oil, and pharmaceutical products while importing pork, beef, lamb (in the off season), butter, cheese, fruit, vegetables and wine. Gee whiz – do you think these two countries could do a trade deal?
Well possibly, but no doubt the UK’s National Farmers Unions (NFU) will be demanding protection as it did during the recently concluded Australian Trade Deal. But this time it will be harder to limit New Zealand imports with tiny quotas as the NZ lamb quota is already 114,000 tonnes. And astute UK shoppers will have noticed that New Zealand apples, kiwifruit and wine are already available in the UK – albeit apples mainly outside the UK apple season. But that does not mean that the UK’s National Farmers Union won’t be trying to stifle any concessions Liz Truss may give to New Zealand dairy or beef products. But I would urge Truss to hold firm and not to give in to these protectionists.
The embarrassing part of this trade deal is that New Zealand doesn’t charge tariffs on many imports especially if they are products that New Zealand doesn’t produce such as cars, vans, trucks – the government understands that this would only hurt New Zealand consumers. Even agricultural products like beef have no import tariff. Instead, it is the UK that will have to lower its tariffs and other trade barriers if it is to strike a trade deal. But why would the UK do this?
Well as we keep being told – the UK hopes that agreeing a trade deal with New Zealand will help it gain access to the Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTTP) – a group of 11 countries with a combined market value of $13 trillion. But, to achieve such a deal, the UK may have to drop its ridiculous agricultural protections. Although such a move will upset the NFU there are many consumers as well as secondary food manufacturers in the UK that would benefit from less expensive food or raw materials.
If there is anyone interested in Whitehall in actually saving UK farming – I recommend they drop all farm subsidies including the so-called ‘green’ ones.
A swift dose of market reality will force UK farmers to concentrate on the products where the UK has a natural advantage and where there is market demand – even if that is just UK market demand. It is embarrassing that the UK farmers cannot even meet local demand in basic goods such as pork, beef, butter, or cheddar and yet demand protection from non-EU imported products by imposing massive tariffs and small quotas.
The NFU may try to protect its market by claiming some sort of environmental superiority over food imported from the other side of the world but as the National Food Strategy points out – if UK farmers used more intensive farming practices they could, like New Zealand, use less land for agriculture and more for habitat restoration and broadleaf forests.
But one problem with intensive agriculture is that it is only environmentally efficient if the animal feed is grown locally. If farmers are importing soymeal from Brazil or the US to feed their animals, then there will be little environmental advantage. It would be better to simply import the parts of the animal that you want to eat than to import the feed to produce a whole animal and then discard most of the carcass. If it takes 3 kg of imported feed from Brazil, to produce a 2 kg chicken in the UK, which will then be filleted to remove the 1kg of breast meat while the brown meat is exported to South Africa – environmentally it would be better to just import the chicken breast meat from Brazil. No doubt the NFU will disagree with this analysis – but as Mandy Rice Davies once said: ‘they would say that wouldn’t they’.
New Zealand has also worked this out and it has found markets for every part of a sheep. Sheep carcasses are divided into over 40 different cuts to supply different markets. Importers no longer waste fuel shipping whole carcasses around the world as they once did. This is good for the environment and good for importers. Leaving very little waste.
There are a lot of problems with UK farming that need to be addressed not just in terms of their environmental footprint, but also in their general efficiency. If an industry needs to be subsidized to survive, should it exist? Especially when there are alternative suppliers such as New Zealand. But for this the UK needs to drop its tariffs and trade barriers that limit the availability of New Zealand products in the UK market. This would be a massive bonus for UK consumers and help address UK food poverty and inequality. It may also have the bonus of helping the UK join the CPTTP which would support the UK’s service and industrial exports and consequently the UK Government’s levelling up agenda.