The horticulture industry’s 2010 Trade Barriers Report shows tariffs imposed by other countries on our products cost growers on average $34,000 each, which is an increase of $6000 on the 2008 figures, according to Foodworks.co.nz.
New Zealand horticultural produce exporters paid an estimated $235 million in tariffs to importing countries, an increase of 19% on the 2008 figure of $197 million. At the same time export earnings increased by 8%, according to a recent study.
The New Zealand Horticulture Export Authority and Horticulture New Zealand commission the report ‘New Zealand Horticulture – Barriers to Our Export Trade’ every two years, with funding support from the Ministry of Foreign Affairs and Trade and New Zealand Trade & Enterprise.
The report, prepared by Wellington-based company Market Access Solutionz, is used extensively by both industry and government agencies for monitoring and negotiating international trade access and helping exporters to develop new markets.
About 60% of New Zealand’s total horticultural production of fruit and vegetables is exported, valued at just under $2.2 billion.
“Obviously as we sell more products in markets that have tariffs we pay more tariffs. We see some fantastic market opportunities in Asia but some of those markets have very high barriers to trade. That’s why we need to continue our efforts on developing and signing free trade agreements,” HortNZ chief executive Peter Silcock says.
This edition of the report highlights the continuation of a disturbing trend, the increasing use by other countries of non-tariff trade barriers, known as ‘SPS’ – sanitary and phytosanitary barriers.
“These are the types of barriers that have either blocked our entry to markets or added to the costs of supply based on biosecurity or product health concerns that are not always based on good science,” HEA chief executive Simon Hegarty says.
“The SPS compliance issues have been highlighted but the costs are not calculated in this study. It is always difficult to calculate the full costs of the additional compliance required or how much we lose by not having access to a market but it is very significant and in reality probably higher than the costs of the tariffs...
“Other costs faced by our exporters include compliance with non-SPS technical barriers, like quotas, grade standards and labelling rules, often driven by politics at the expense of sound science,” Hegarty says.
The European Union (EU), Japan, Australia, and the United States of America are New Zealand's top four horticultural export markets.
The EU market is worth $603 million, Japan is $445 million, Australia $337 million and the USA is worth $126 million.
Taiwan ($105 million) has replaced the Republic of Korea in fifth place, a reversal of their 2008 positions. The report says this indicates the very high tariffs applied by the Republic of Korea to a variety of products are putting growers and exporters off developing that market.
The Republic of Korea applies an average tariff rate of almost 41%, meaning New Zealand paid $34 million in tariffs in this one market.
The value of exports to China has more than tripled in the past two years. Kiwifruit exports have been largely responsible for this increase – from $20 million in 2008 but reached $75 million in 2010.
The average tariff on all horticultural exports to all major markets is estimated to be 6.83% of exports by FOB (free on board) value, a slight increase on the 6.49% reported in 2008.