Tariff costs rising for NZ horticultural exporters

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Tariff costs rising for NZ horticultural exporters

Higher earnings have meant New Zealand's horticultural exporters are paying more in tariffs, giving rise to industry calls for better trade deals in growing Asian markets.

The 2012 Trade Barriers Report shows annual tariff payments have risen by 2.5% to US$198 million since two years ago, but the average tariff rate has actually dropped slightly to 6.78% of freight on board (FOB) values.

However, a declining number of farmers has meant the average cost per grower has risen by 29% to US$36,000.

The report was commissioned by the Horticulture Export Authority and Horticulture New Zealand, who warn of the implications of tougher restrictions in the Asian markets where growers have become increasingly focused.

"The catch for horticulture is that we are now reaping the benefit of great opportunities for trading in Asian countries, but there is a downside with that, because their tariffs can be considerably higher," HortNZ chief executive Peter Silcock said in a release.

"That’s why we need to continue our efforts on developing and signing free trade agreements."

Japan has overtaken the European Union as the top buyer of New Zealand's horticultural goods, with a value of US$424 million compared to the latter's US$399 million. Australia comes in close behind with US$394 million in purchases, followed by the U.S. (US$90 million) and China (US$86 million).

China displaced Taiwan to take the fifth spot, while South Korea dropped to seventh place despite its total trade increasing.

With a tariff rate of almost 41%, South Korea accounted for 17.6% of New Zealand's total tariff payments at around US$35 million. For kiwifruit tariffs alone, South Korea received US$29 million, compared to the European Union which received US$20.8 million despite buying four times more.

The report cites other examples such as a 50% tariff in South Korea for New Zealand onions as well as a 27% tariff for butternut squash.

Non-tariff barriers

Horticulture Export Authority chief executive Simon Hegarty highlighted sanitary and phytosanitary (SPS) barriers were an important issue, but were not included in the report's calculations.

"We know difficult international trading conditions have put pressure on some countries to resort to these technical entry barriers for imported products," he said.

"This is a huge concern to our horticulture export sectors.  Unfortunately, reality tells us sound science does not always prevail where SPS barriers are concerned.

"It is important that exporters and Government jointly recognise this risk to their business and appropriately resource it to deal with the importing country requirements."

HortNZ and HEA are confident the costs of SPS barriers are higher than the tariff costs included in the report.

"Technical barrier costs faced by our exporters include compliance with quota restrictions, grade standards, fumigation requirements, additional product testing, plus labelling and packaging rules," Hegarty said.

"Food security and self sufficiency are emotive topics and vulnerable to political interference."

The report was prepared by Wellington-based company Market Access Solutionz with funding support from the Ministry of Foreign Affairs and Trade.

Photo: Fotolia, MF


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