UK sheep sector braces for tariff-free imports from NZ and Australia

The UK’s sheep sector could be in for a bumpy year post-Brexit as experts warn tariffs will not apply to major lamb exporting countries such as New Zealand and Australia.

The National Sheep Association (NSA) said it “remains concerned” that a ‘no-deal’ will still result in far higher volumes of lamb onto our domestic market than we have historically catered.

Last night MPs backed a motion that the UK would not leave the EU without a deal. However, it should be noted that while the vote is an expression of the will of Parliament, it is not legally binding.

As it stands, the only way to avoid the default of a no-deal exit is for an alternative deal to be agreed or for Article 50 to be revoked.

It puts the Prime Minister in a difficult position as just 24 hours earlier MPs overwhelmingly knocked down the latest version of her Withdrawal Agreement, with the EU warning that there will be no further negotiations.

With just 15 days left until ‘B-Day’ it doesn’t give a lot of time for businesses to prepare.

NSA chief executive Phil Stocker said: “The NSA is extremely pleased to see the Government recognising the importance and sensitivity of our sheep farming industry, and we welcome the release of the schedule which provides us with some security.

Our understanding is that it would mean any new country importing sheepmeat into the UK, or any volumes exceeding existing quotas with preferred nation agreements, would have to do so at the stated tariffs – effectively WTO tariff rates.

However, Stocker added that he does not believe this schedule will apply to existing quota volumes with countries such as New Zealand and Australia, the biggest importers of lamb into the UK.

“While the recognition of our vulnerability by the Government must be welcomed, we are still facing the same issue,” he said.

“With a no-deal Brexit, sheepmeat will still be imported as it is, while we may face a period when we lose our export access to the EU, and potentially regain it with high WTO tariff rates.

This means we may still be in the situation in a few months’ time, where our domestic markets may become flooded driving the price of lamb down.

“This would be very bad news for our producers, but for retailers and processors too as many will have forward purchased lamb for the spring and early summer period and may face a challenging retail market.”

However, while New Zealand and Australia are able to continue exporting lamb tariff-free into the UK, they will not be able to increase their input.

Stocker added: “The UK will still have to accept lamb from New Zealand as part of its tariff-rate quotas, and the Government and the EU have agreed a 50:50 share of the EU’s quota (which is roughly equivalent to our current position).

This will mean that New Zealand will be restricted to 114,000t, and Australia to 4,500t of sheepmeat tariff-free into the UK annually.

The NSA and other farming lobby bodies have long been warning about the risks of free trade deals with countries with big sheep producing nations, such as New Zealand and Australia.

Stocker added: “In a roundabout way, if British producers are able to hold on tight and brace for a few months as lamb prices deflate, eventually importers will switch their supply towards other markets and may reduce the amount they import into the UK.

“At this point, it would likely lead to the UK focusing on our domestic market. However, to do this well we still need longer-term plans and assurances.

We are still lacking a coherent food strategy for the UK that would give confidence for the industry to adapt and invest in order to even out the supply of British product throughout the year.

“It is frustrating that these tariffs cant be applied to our existing importers; however, it is a step in the right direction and shows the Government recognises the vulnerability and importance of our sector.”