With all the twists and turns that have been thrown at us over 2020, it’s hard to know what to focus on. A lot of “major” events don’t even get noticed because of all the other crazy stuff that’s happening.

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One thing that affects us in a big way is Brexit.

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Brexit doesn’t mean too much to most people in New Zealand, but if you’re exporting goods to the U.K or the EU, then it means a whole lot. The fact is, it’s a bit of a mess for our agriculture industry.

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For most of this year, the United Kingdom has been in the “transition phase” of getting out of the EU. They’ve been negotiating their political, trade, and security relationships for when they’re out of the union, and that includes farming exports from New Zealand. The transition phase will finish on the 31st of December, and as it stands right now, our farmers are getting the short end of the stick.

image credit genetic literacy project

The quota division and why it makes no sense…

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There are some minor problems that we’ve been told to expect. Things could get congested for a while because of new certificates, IT systems, and processes at the border. That’s the stuff you can expect with any big policy change like Brexit.

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The big problem that’s got a lot of our farmers worried is the quotas. I’m sure a lot of you know what I am talking about. The U.K and the EU are proposing that the quotas for New Zealand sheepmeat just get split down the middle, so the United Kingdom takes half and the European Union takes the other half.

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The reason this is unfair is that it limits the flexibility of our exporters. In the past if the United Kingdom’s sheepmeat market was underperforming, for example, then exports could be diverted to more vauable markets within the EU and still be within the quota. Now that it’s split down the middle, the tariffs on sheepmeat will start getting applied after 114,000 tonnes of sheepmeat, as against the old quota of 228,000 tonnes.

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There’s a similar sort of mess for beef and dairy exports. The main thing is this “split down the middle” approach hurts our exporters and doesn’t really help the EU or the United Kingdom.

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From what I can see, it doesn’t make a hell of a lot of sense...

image credit The Guardian

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Our farmers are getting caught in a tug-of-war between bureaucrats.

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Nobody is too sure what’s going to happen once January 1st comes around, and things can still change, but this Brexit situation highlights a big problem for New Zealand: In most cases we’re a price taker.

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We just have to roll with the punches.  

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This Brexit thing just goes to show what happens when bureaucrats make rash decisions about industries and people they’re not really invested in. We’re largely stuck on the side-lines, even though this is huge for us. Our representatives are still trying to get a better deal.

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The Larger Problem we’re facing is worldwide uncertainty.

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COVID-19 has accelerated a lot of the uncertainty worldwide. Whatever economic models’ people were using in 2019 are obsolete now, and there’s no telling what the future is going to look like for our farmers.

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There’s just a lot going on that could harm us, and at the same time, all that uncertainty can create a lot of opportunities for us. It’s just hard to know where everything is going to fall once the dust settles.

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Take what’s happening with Australia and China for example. The international tensions there are getting worse, and it’s already having a massive impact on Australia’s exports. New Zealand has stayed mostly out of it, but it just goes to show that things aren’t as steady as they used to be.

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Then there’s the massive political divide in the USA and across the world. One side is pulling towards nationalism and protectionism while other groups want fewer restrictions and more globalism. It can be hard when your income depends on whatever policies are made by these big bureaucracies, whose decisions can totally reverse depending on who gets in power.

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We don’t have any solutions for you. Just a bit of common sense.

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Times of upheaval and confusion are hard to deal with. The great thing about New Zealanders, especially our farmers, is our ability to adapt. Even if we get dealt a bad hand, we can find a way around it.

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Let’s just see how this all goes. Feel free to email me your thoughts.

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