The Government intends to review the dairy quota allocation system to maximise export returns for New Zealand’s dairy industry, announced Agriculture Minister Damien O’Connor.
“The new dairy quotas, which will become available under the recent FTAs, mean it’s timely and prudent to take a fresh look at how we allocate dairy export quota.
“I want to ensure the quota system is working well for everyone, that the value of quota is being maximised, and that opportunity is not being missed.”
O’Conner explained that New Zealand’s free trade agreements with the United Kingdom and European Union present new opportunities for New Zealand exporters.
“We’ve fought hard for our dairy exporters and secured improved access through these FTAs. I know our dairy industry is looking to take up the benefits under these agreements as soon as possible.”
Access into a number of dairy export markets is controlled through tariff quotas, which provide access into a market for set volumes at a lower or zero tariff.
Dairy export quota allocations are set each year by the Ministry for Primary Industries, and allocated to eligible processors proportional to the milk they collect from farmers. To be eligible processors must collect at least 0.1 percent of New Zealand’s total milk solids.
New Zealand and the United Kingdom are currently completing processes for the UK-NZ FTA to be ratified. The dairy quotas available under the UK-NZ FTA will initially be allocated under the current quota allocation mechanism outlined in the Dairy Industry Restructuring Act (DIRA) 2001.
It’s expected that New Zealand and the European Union could sign the NZ-EU FTA in 2023, with entry into force possible as early as 2024.
The Government expects to consult on the review of the dairy export quota allocation system in late 2022, with any prospective legislative change being initiated following consultation. The review will cover all dairy export quotas that are allocated by New Zealand under the DIRA, not only the new quotas under the UK-NZ and NZ-EU FTAs.
“A key aim of the Government and sector roadmap Fit for a Better World is boosting export returns,” continued O’Connor.
“The dairy sector continues to be a mainstay for New Zealand with dairy export revenue reaching a record $22.1 billion in the year to June 2022.
“The recent FTAs are going to provide new opportunities for our exporters to grow export revenue even more, boosting New Zealand’s economic security as we recover from COVID-19.”