Editorial: Fonterra's blunder will cost New Zealand exporters

OPINION: 

Helped by the Kiwi dollar's decline against the greenback, the United States is on the verge of becoming the New Zealand wine industry's biggest export market.

In the year to November 2014 53.9 million litres of New Zealand product was shipped to Britain, 51m litres to Australia and 50.7m litres to the US. The US market's growth was an impressive 15 per cent. A Rabobank analyst said this growth trend is set to continue.

While the US is NZ's third biggest market for total exports it has long been our biggest beef market.

The deer industry has been growing its business there, too, and the US last year displaced Germany as the biggest destination for our chilled-venison exports.

Businesses don't have to be big to make their mark in America. Sean Boyd, from Central Otago, spent five years developing a carbon-fibre sled, testing it on the Old Man Range, near Alexandra, then established Snolo Sleds Ltd. When the business was judged third-equal in the national ANZ Flying Start business plan competition last year he had sold about 20 at more than $3000 apiece. The US was his biggest market. Trade barriers make the US market awkward for dairy exporters, however.

NZ's free trade agreement with China has resulted in dairy export income from that country being eight times greater than receipts from the US. But our trade negotiators have worked hard to secure the trading arrangements now in place in Washington (and are striving to win a better deal through the Trans Pacific Partnership negotiations). American dairy receipts consequently amounted to $543m last year, including cheese returns of $33.7m. That's not to be sneezed at.

Alas, someone has sneezed. At a time when the worsening drought and lower world prices are shrinking farmers' incomes, Fonterra's American subsidiary, Fonterra USA, failed to renew licences to import cheese from NZ plants this year. The company has been inexcusably coy, saying only that "human error" resulted in its missing a deadline to apply for the licences. Fonterra can continue selling to the US, but only through other companies which do have licences.

More bothersome, this is not the only blunder at Fonterra in recent years. DairyNZ chairman John Luxton said this latest one is a bad look for the industry. He's right. Heads should roll.

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 - Waikato Times

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