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

 

A rising tide of protectionism could hit NZ dairy sector

Wednesday 22 February 2017 01:05 PM

A rising tide of protectionism could hit NZ dairy sector hard: NZIER

By Rebecca Howard

Feb. 22 (BusinessDesk) - New Zealand's economy would be hard hit if there is a retreat to protectionism in the global dairy sector, a report from the New Zealand Institute of Economic Research has found.

"In the current global trading system, the tide of protectionism is rising. Brexit and the initial trade policy proclamations by Donald Trump both point to a challenging environment for further trade liberalisation, at least in the short term," said NZIER in the report for the Dairy Companies Association of New Zealand. Against this backdrop there is an increasing risk that tariffs could be lifted rather than reduced, it added.

NZIER used a series of models to explore what would happen if average global dairy tariffs increased from their current applied rates to their potential bound rates, and determined it would equate to a 28 percentage point increase in average global dairy tariffs.

Based on that modelling, increased tariffs would push up global dairy prices by around 0.5 percent making them relatively less attractive to global consumers and leading to a fall in global demand.

"The demand for New Zealand’s dairy exports drops sharply, which pushes export prices down. The result is a 7.4 percent decrease in dairy export volumes and a 10.2 percent drop in export prices, leading to an overall drop in dairy export revenue of $2.3 billion," it said.

Based on that scenario, nominal GDP would fall by $1.66 billion, and nominal household consumption would fall by $958 million.

"These results outline how important previous tariff reductions have been for the New Zealand economy, and hence the potential costs of moving backwards from the status quo," it said.

On the flip side, if all global dairy tariffs were eliminated, and New Zealand’s milk production is held constant, the value of New Zealand’s dairy exports would increase by $1.3 billion, generating a $1.03 billion increase in New Zealand’s nominal GDP, it said.

“Trade barriers are a significant cost to New Zealand. Tariffs alone are suppressing the value of our dairy products by around $1.3 billion annually,” said DCANZ chairman Malcolm Bailey. “On top of this, non-tariff measures add over $3 billion in costs to New Zealand dairy exports in the APEC region alone.”

The report also found the dairy sector contributes $7.8 billion, or 3.5 percent, to New Zealand’s total GDP. Despite the recent drop in global dairy prices it remains New Zealand's largest good export sector accounting for more than one in four goods export dollars coming into New Zealand and dairy export growth has averaged 7.2 percent per year over the past 26 years.

"The dairy sector exports twice as much as the meat sector, almost four times as much as the wood and wood products sector and nine times as much as the wine sector. It generates almost four times as much export revenue as export education," said NZIER.

(BusinessDesk)


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Frog Recruitment: Kiwi Workers Reluctant To Make Business Trips Across The Ditch Despite Trans-Tasman Bubble Opening

When the trans-Tasman travel bubble opens today, many Kiwi companies won't be rushing to buy an air ticket, reluctant to cross the ditch to do business. The latest survey conducted by leading recruitment agency, Frog Recruitment of nearly 1,000 New Zealand ... More>>

Tourism: Employers Welcome Back Working Holidaymakers

Tourism businesses gearing up for the return of Australian visitors from next week will be relieved to learn that they will also have access to an offshore pool of much-needed job candidates, Tourism Industry Aotearoa says. Tourism employers around ... More>>

Commerce Commission: Latest Broadband Report Confirms Improved Performance Of Premium Fibre Plans

The latest report from the Commerce Commission’s Measuring Broadband New Zealand programme shows that the performance of Fibre Max plans has improved substantially. This follows a collaboration between the Commission, its independent testing partner, ... More>>

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>


Stats NZ: Prices For Transport And Housing Rise In March 2021 Quarter

Higher prices for transport and housing led to a 0.8 percent lift in the consumers price index in the March 2021 quarter, Stats NZ said today. Prices for getting around rose in the March quarter. Transport prices rose 3.9 percent, the biggest quarterly ... More>>

Stats NZ: New Report Shows Impact Of Demands On Land In New Zealand

A new environmental report released today by the Ministry for the Environment and Stats NZ, presents new data on New Zealand’s land cover, soil quality, and land fragmentation. The land cover data in the report, Our land 2021 , provides the most ... More>>

ALSO:

Stats NZ: March Card Spending Rebounds Despite COVID

There was a lift in retail card spending in March following a fall in the lockdown-disrupted February month, Stats NZ said today. Seasonally adjusted retail card spending rose by $53 million (0.9 percent), compared with February 2021. Visit our website to read ... More>>