Free Trade Deal and Its Impact on Food Pricings

October 27, 2021

Recently, a trade deal has commenced between the UK and New Zealand. Though it is a huge step in strengthening the friendly relation between both countries, not everyone favours this deal.

Despite the long run benefits this deal might bring, we have to look for what short-term goals it is fulfilling in regard to the UK economy, its food sector and food costs:

Pros of the Deal

According to the report prepared by the UK's Department of International Trade, this deal between the UK and New Zealand comes with ten key benefits. Due to the nature of this article, we will be focusing only on those that affect the food sector:

No Tariff for British Products

Because of this free trade deal, UK exporters will not have to pay any tariff on their goods, including food and beverages. This step expects to grow the market to 30% by 2030.

Huge Investment Opportunities

This deal will allow big investments from each country in the other country. Hence, it will enhance the market and economic growth.

High-Quality Products at lower costs

The products that Britain love such as Kiwi, Manuka Honey and Marlborough Sauvignon Blanc, could be available at lower costs but in high quality.

Benefit for Small Businesses

The free trade deal will help small businesses transgress the red-tape system and quickly export their goods to other countries providing significant growth opportunities for producers and manufacturers.

Cons of the Deal

Where this deal between the UK and New Zealand is beneficial for the economy and businesses, we must look at the other side and the impacts on the food sector:

Effect on Farmers

Emily Thornberry states that the government's facts show that this deal will cut employment from farming communities and produce no growth in the local food sector.

Total Business Value

Because of this, the total business value will be "less than half the cost of Boris Johnson's new yacht". Moreover, the additional export for the UK will only be £112 million compared to the pre-pandemic growth.

Extra Volumes of Imported Food

Because of this deal, there will be extra volumes of imported food, which will not only affect the local farmers but also raise questions about whether that food will be as per the UK's standard or not.

Impact on Dairy and Meat Industry

While easing trade restrictions will allow the UK to import large volumes of products more quickly and easily, this will negatively impact the demand for produce from British farmers who are likely to receive very little to nothing in return.