Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Fonterra, Zespri supportive of TPP

Thursday 14 April 2016 03:51 PM

Fonterra, Zespri supportive of TPP, see long-term gains from trade pact

By Sophie Boot

April 14 (BusinessDesk) - Fonterra Cooperative Group and Zespri International have voiced their support for the Trans-Pacific Partnership at a select committee hearing, although neither could quantify the benefit of the treaty being ratified.

Fonterra's director of global stakeholder affairs Philip Turner told the foreign affairs, defence and trade select committee that the dairy cooperative was disappointed with the immediate outcome for its sector but sees longer-term benefits.

"Although TPP falls well short of full liberalisation of dairy products, it will provide some limited new access for key traded products," Turner said. "New Zealand exporters currently face prohibitively high tariff barriers on dairy products. Dairy exporters in New Zealand will benefit more from being within the TPP than if New Zealand remained outside it."

Turner said Japan, the US, Mexico and Canada were four of Fonterra's top ten markets, and had a collective trade of US$2.56 billion in 2015. At the end of the transition period, New Zealand will have limited quotas to export butter and milk powder to Japan, most cheese types and butter into the US, milk powder, cheese and butter into Mexico, and butter, cheese and milk powder into Canada.

Fonterra hasn't done any deeper analysis of the potential financial benefit from tariff removal, saying there was potential to draw inaccurate conclusions about the impact down the track and Turner dismissed the government's projected gain from tariff reductions of up to $96 million at the end of the full term as "very hard to use as an indicator of full benefits."

"Tariffs are paid by importers, not exporters, so it does not necessarily change into a benefit for New Zealand," Turner said. "The tariff savings are simply a crude proxy for trade opportunities which would result from greater market access. More market access will benefit our farmers, but trying to quantify that is very hard."

Zespri had a quantifiable number - $15 million, which was their calculation of tariff removal in Japan, the kiwifruit marketer's most valuable market.

Zespri's chief operating officer Simon Limmer predicted a 33 percent growth in that market should the TPP be ratified, although when asked how he could quantify the benefit to producers, he said the benefit would accrue more over time.

"It's not an immediate benefit back into growers' pockets, but the direct indirect benefit from that long-term investment and a sustainable position in that long term market is going to be very valuable," Limmer said. "The $15 million is the exact quantum in terms of what the tariff represents, but it will flow through in the market in terms of our ability to be more competitive. Now that flows through into additional volumes, additional run rates, our ability to build volume in the market, which does have an indirect financial benefit for us through the supply chain."

Six of Zespri's top 20 markets are present in the deal - Japan, Malaysia, the United States, Singapore, Australia, and Canada - which had about $500 million in collective sales in 2015. Zespri is expecting a 50 percent increase from those markets to $750 million in sales by 2020.



© Scoop Media

Business Headlines | Sci-Tech Headlines


Taxing Multinationals: Next Step To Improve System

New legislation to improve the fairness of the tax system and prevent large multinationals from exploiting rules in order to shift their profits offshore has passed another step closer to becoming law. More>>

A Fuel And His Money: Petrol Prices Hit Records

The cost of 91 octane in Wellington and the South Island hit $2.30 a litre last week, beating the previous high set in 2013. Crude oil prices have been rising globally while the New Zealand dollar has fallen, making the cost of fuel more expensive. More>>


NZentry: EU And NZ To Start Free Trade Talks

A free trade deal between New Zealand and the European Union (EU) has taken a major step forward with the announcement overnight that the EU’s Foreign Affairs Council has approved its negotiating mandate. More>>


You'd Hope: Employers Told To Pay Minimum Wage

Advertisers offering jobs to backpackers are being told they must pay the minimum wage or risk prosecution. Last week, RNZ revealed a job website - Backpackerboard - was advertising roles below the $16.50 per hour minimum wage. More>>


Still Gaining: More Migrants Head Back Overseas

Annual net migration is down 4,800 from a high point a year ago, largely because more non-New Zealand citizens are leaving the country, Stats NZ said today. More>>

Christchurch: Red Zone Used To Boost Endangered Bee Population

“May 20 has been declared World Bee Day by the United Nations, and I am pleased to announce today that we have been able to use the red zone to protect and grow our native bee stocks,” says Minister Megan Woods. More>>

Trips, Support, Conferences For Agents: Insurers Spend $34 Million On Soft Commissions

“We are concerned that insurers are designing and offering incentives that potentially set advisers up to fail in complying with their obligations.” More>>