Danial Taylor, Customer Director and former New Zealand Trade Commissioner (UK and Ireland), NZTE: Good morning ladies and gentlemen, welcome to this Brexit seminar - a new era for partnership - here at the International Business Pavilion. It's wonderful to have you all here. We've got a great panel that we've put together today. Just a few housekeeping matters before we pass over to them. Obviously this is a no smoking facility, as if you need to be told. The bathrooms are just out the door you came in through and to your right, so sort of behind us here. In the event of an emergency follow the Fieldays staff instructions. They know what they need to do. The exit is the main door that you came through and we just congregate on the other side of the footpath I am told.
We've got about an hour for this session, but then there will be some morning tea just outside afterwards. We'd love you all to stay with us so that we can continue what I'm sure will be a fascinating discussion. We are going to be filming this session today and it will involve a Q&A, and that filming and the Q&A will go up on public websites. So if you don't want to be identified, that's absolutely your right. Just wave to one of the NZTE team in the room and they can collect a handwritten question which will anonymise it for you. So be warned there is a Q&A so make sure you start thinking about all of your questions for our fantastic panel.
So without further ado it's my great pleasure to introduce our first speaker. The British High Commissioner to New Zealand, Laura Clarke. It's lovely to have you here Laura. Obviously Brexit is a key part of your role and you're going to talk to us a little bit about it today. Laura's been in the role since January but has extensive experience in the UK foreign service across a range of fascinating roles and markets, and is, as I understand it, enjoying being in New Zealand with the family and has a great couple of days at Fieldays. We're going to hear a little bit from Laura about the political context that Brexit's operating in and the timelines as they currently sit, going forward. Laura the floor is yours.
Laura Clarke, British High Commissioner to New Zealand: Lovely, thank you very much. So let me talk, first of all often … do I need a microphone, or can you hear me?
Dan: Loud enough.
Laura: Ok, I'll try and just project well, is probably easier than using a microphone. I think the first thing I'll do is try and set a little bit behind the background to the vote, because I often get asked by New Zealanders: how did the UK end up voting for Brexit against all expectations? And of course there were multiple different reasons why people voted Brexit. But the way I often try and explain it to a New Zealand audience, is about the process by which countries joined the European Union. So for most continental Europeans joining the European Union was part of their route to democracy. It was part of their route out of conflict or out of totalitarianism. And so for them joining the European Union was a huge part of this never again, and it became a huge identity issue. For the UK by contrast in 1973 it wasn't about our route to democratisation, it was really much more a rational economic decision that was weighed up quite carefully and then the decision was to enter the EEC in 1973. And because therefore for lots of people in the UK, it wasn't such an identity issue, I think the sovereignty sacrifice that comes with being part of the EU sat less well.
So for example not being able to do your own trade policy and your own trade negotiations, having the final Court of Appeal not in your own country. Having directives that constrain what you can do for example in terms of providing housing provision for your country. So a whole range of things which just sat less easily with the UK compared with Europeans for whom it was much more of an identity issue. So that's a little bit about the context to it.
But where are we now? We are almost two years since the vote and I'm not letting out any State secrets when I say it's still quite a contested and divisive issue in the UK, and it is a little bit bumpy. But my overall headline is that despite the rhetoric, despite the reporting in the press, there is a fundamental commitment both in the UK and in the European Union to reaching an arrangement that is a success and that is a success for all of us. Because quite frankly there's too much at stake for that not to be the case. And the UK's starting point is that we are not leaving Europe, we're leaving the European Union. We want to have as close a possible trading relationship with Europe, as frictionless as possible, and we want to have incredibly close security corporation. And our view is that we do need a bespoke arrangement and that will be possible but it is going to take some time to work through.
In terms of the process where are we now? I don't want to go into it in too much detail, because we don't have all that much time, but the headlines are in March I think, we made significant progress not least in agreeing a implementation period which will kick in. So we leave the European Union, we Brexit at the end of March next year. But that's not a cliff edge, because the implementation period that we agreed essentially provides continuity in terms of UK membership of the single market, of the customs union, continued ECJ jurisdiction. All of that provides continuity and confidence for British businesses up until December 2020, which is the end of that implementation period. And that really buys us time to work through in detail the future relationship, the future arrangements, between the UK and the EU.
And where we are now is we are working through the detail of the withdrawal agreements, which is essentially the terms of the split, and we're working on the future relationship. And the UK has put out a number of proposals, they will be discussed at the June European Council, which is next week. They probably won't get agreed on but then the October European Council, which is again where all Heads of State meet together, that is when we really should be getting to points of agreement on these issues.
So there's a lot still to resolve. Probably the biggest sticking point remains the border in Ireland, between Northern Ireland and the Republic of Ireland. And everyone is clear, the Irish government, the European Union, the UK, we are all clear, that can't be a hard border, so we need to find a way to make that work. I'll stop there. I'm happy to talk a bit later on if there's appetite about opportunities for UK and New Zealand in that context, but I'll probably stop there in terms of the …
Audience: [unintelligible 00:07:34]
Laura: No, that's fine.
Dan: No problem. Can I grab that mic off you. Thank you. I'm very sure Laura there will be questions about the opportunities for New Zealand. But we'll pick that up later. Thank you for your opening comments.
Laura: No worries.
Dan: Our second speaker will be a face known to many of you. Mike Peterson, New Zealand Special Agricultural Trade Envoy. A role appointed by the New Zealand government to bring a farmer's perspective to our trade development in agriculture and food. Mike's a farmer himself and has recently returned from a trip to Europe that included visiting the UK. So we're going to get some instant feedback on Mike's views on what he saw while he was in the UK, and how he sees it developing from a farmer's perspective. So Mike, over to you.
Mike Peterson, New Zealand Special Agricultural Trade Envoy: Thank Dan, and thank you High Commissioner for that very nice and succinct outline of the process of Brexit. And I have to say, I think sometimes in the UK many of the UK citizens would like to see it articulated that clearly as well. But well done. I think having just been in the UK and Europe this is still quite a challenging time for what I will call EU27 and then the UK. I'm not surprised that there hasn't been too much agreement to date. I always look at this as a negotiation and I think we need to recognise that generally negotiations are done at the eleventh hour. So I'm not really surprised that there hasn't been agreement at this early stage. But I think New Zealand companies are looking to Europe and the UK and for business opportunities in the future. I think we should take comfort from the fact that I think that Brexit will happen and again I hear some companies over here saying of course it won't happen, and there'll be another vote. Look, in my view Brexit will happen and there will be a transition period where the current terms of trade will be allowed to continue. And I think that's quite important because while the UK remains in the customs union to December 2020 for New Zealand companies the current access arrangements and ability to do business with the UK and EU27 remains in its current form. So that's an important point to note.
So yes there are complications, there are challenges and there is talk in the UK and Europe at the moment about maybe an extended transition period beyond 2020. So I know none of the politicians or officials will be talking about that but there is just such a mountain of work to work their way through that they are talking about the possibility of an extended transition period beyond December 2020. So I would suggest for New Zealand companies looking to that part of the world just keep a close eye on that. But be assured that current opportunities remain and are there and in tact while the UK is still a part of the customs union up in that part of the world.
The second point I wanted to just touch on Dan was just to refer to what's happening around the domestic policy around agriculture because there is a huge amount of interest in New Zealand's experiences of the reforms back in the 1980s and a lot of interest around how we went about it, what happened during the transition, how difficult it was. And I keep encouraging people in the UK by saying: look it was difficult in New Zealand but we had a very, very different scenario to what you have. We had a very sudden pace of reform where New Zealand was effectively broke as a country and we removed subsidies overnight. The effects took about 5 years and there was a lot of disruption but you actually have the privilege of having time to work your way through and transition for the domestic reforms in agriculture that you're looking to put in place.
And Michael Gove, Secretary of State Michael Gove, I've met with him a number of times. He's very fascinated about the New Zealand experience, he's wanting to learn about the New Zealand experience and there are a number of very clear signals that he's giving out. The Health & Harmony consultation document at the moment is a very live discussion in the UK, and they are looking at how they can reward farmers - they're saying public money for public goods as being a core principle of what they're looking to do when they support their farmers in producing food within the UK. They are looking for more efficient farming, they are looking at labour and the needs of the labour force in the farming sector. A lot of discussion, a lot of area for corporation from New Zealand where we can help. As I keep saying up in the UK, we don't have all the answers but some of our experiences may be of some value to you up here as you undertake these reforms, and there is a lot of interest in New Zealand helping in that regard.
Finally if I could just touch on Dan, I think it's important, I keep talking to companies here around risk management, and companies in the UK are deciding to manage their risk, they are planning and putting plans aside in case there is not a transition period beyond March 2019. Now look, I think that's highly unlikely but I think any responsible company should also put in the bottom drawer some thinking just in case there is a crash out scenario in March next year. As I say, highly unlikely in my view but certainly companies in the UK are starting to think about that in the eventuality that there isn't agreement around issues like the Irish border.
And just secondly I would say there's a lot of agencies up there and NZTE and MFAT are working up there. Any of you that have an interest in understanding more closely what's happening on the ground, I know the agencies are very active and very involved, and so I'd take the time to get involved and ask for information where you'd like it, because the last thing I want to see happen is people exit this part of the world. Interestingly, if we look at the focus on our trade agreements around Asia, right now, if I look at the trade agenda, it's almost solely focused on the European region. With Brexit a European trade agreement under negotiation and then a new agreement with the UK, that'll come following the UK's exit from Europe. So this is a very, very important part of the world. These are affluent consumers, discerning consumers, that value what New Zealand produces, and if we're going to get high value returns from our high value products then in my view Europe and the UK, I say EU27 and the UK, are a critically important part of our future. Thanks Dan, happy to take questions later.
Dan: Fabulous, thank you Mike. Great to get those immediate on the ground reflections. You mentioned New Zealand's trade agenda there, that provides a perfect segue to our third speaker - Rob Taylor from the Ministry of Foreign Affairs and Trade. Rob's currently the Director for Europe Division. Immediately prior to that role he was the Deputy High Commissioner for New Zealand in London so has great experience in this space, and he and his team are currently working very hard on exactly those points that Mike raised. Rob's going to talk us through a little bit how that is progressing and how he sees things playing out in the near future. Rob?
Robert Taylor, Europe Divisional Manager, Ministry of Foreign Affairs and Trade: Kia ora tatou everyone, and thanks Dan for that introduction. Lovely to be back in the Waikato, I'm a Waikato boy having been raised just outside of Te Aroha, and Fieldays in Winter as a child was a welcome relief from the drudgeries of playing football with bare feet. That aside, I just wanted to reflect a little bit about yes where we are with the UK FTA process. So Laura mentioned the transition which will go beyond March of next year for 2 years. One important thing out of that for New Zealand was that the UK isn't bound by EU trade policy directives, so that gives the UK the right to negotiate or begin negotiating FTAs with countries like New Zealand ourselves. The only thing about that though is of course they can't actually sign up to one until they have actually physically left the European Union itself, and that will also depend on what their own trade arrangements will be going forward with the EU.
So we've actually had an ongoing process with the UK since about, just immediately after Brexit itself, a thing called a trade policy dialogue. So under that dialogue we've actually been doing a number of things. We've actually been supporting and assisting UK agencies in terms of their own, the Brexit process itself, particularly in the trade policy sector where there's been a good relationship built up and quite a lot of numbers, meetings, exchanges of officials, ministers etc, going forward.
The other work stream there has been looking at the regulatory environment. So a lot of our trade policy is of course bound up with the EU, so under Brexit we have to renegotiate quite a bit of that actually with the UK. So for example the vet [SL 00:17:14] agreement that New Zealand currently has with the EU, we will have to do a separate vet arrangement with the UK. Now that might sound challenging but in fact it might be rather easy if we can just get the UK to rollover the existing agreement and we just sign up to that. Which is probably going to be the easiest way forward for that.
The other big issue is around the FTA, so we have started some work on that. And so we've had some very good meetings with UK officials. These have primarily been scoping meetings at this stage, areas that an FTA will cover. The new government here of course has got some new policies, progressive trade agenda which takes account of sustainability and environment. But that's actually a really good fit with what we want to do with the UK and also with our European partners as well. So FDA discussions are now underway, we've had about four rounds but as I said, just to re-emphasise one point, nothing will happen until the UK actually leaves the EU itself.
I probably will say a few words about where we are with the EU FTA, just … it's already been publicly announced, but the EU Trade Commissioner, Cecilia Malmström will be here next week and we will then formally launch the FTA negotiations with the European Union. This is just a huge, huge milestone that we have reached for New Zealand. And look, this is something not just officials have achieved but I think every New Zealander has contributed to this. The industry, the various sectors, people lobbying here, farmers talking to one another. It's been a real collective effort to get to where we are today. So the first round of negotiations will take place in July. Dan I can't really say how long that may take - Canada took 6 to 7 years. But we're telling the Europeans that we can produce a really top rate trade agreement and we can do it quickly, because a lot of it is already agreed. Except for one particular area of sensitivity, and you will know what that is, it's agriculture of course. And that's the same with the UK FTA. But we believe that we've got a really good story to tell in agriculture. Our story is we're not a threat to the EU, nor are we a threat to the UK. There is a lot we can do together, there is a lot that we can help them in achieving, particularly here in the Asia Pacific market. So I think it's a win/win for both EU and also for the UK.
One real challenge though in the trade policy area for us though is going to be around our existing quotas under the WTO. So this covers things like beef, lamb and dairying, that is currently going into the EU including the UK. So at this point in time there has been this notion of just splitting them, spilt them in half based on the last 3-4 years of trade between New Zealand and UK, and New Zealand and Europe. We don't think that's acceptable because we think that's going to deprive us of a market share. It also removes the flexibility that our exporters have enjoyed into both the EU and the UK since those quotas were first established under the Uruguay Round. So there are obligations that Europe and the UK has actually entered into which we believe have to be fully honoured. So we are prepared to negotiate a way forward from this.
Unfortunately the EU has just promulgated a thing called article 29 where they want to work out the split. Again, referencing back to what Laura had said, we believe there's no hurry. The transition period is there, we've got plenty of time. If we can get these FTAs negotiated that would take care of the problem because that would incorporate agriculture, hopefully within that.
The other little sensitivity around agriculture relates to some of the European countries and particularly France, where they're a bit concerned about the agenda currently on EU's trade policy agenda overall. Negotiations with [unintelligible 00:21:53] which again includes agriculture products has got them worried. So they're sort of thinking about a collective cap on what can be imported in terms of agriculture into the EU. So that again is a little bit of a challenge which we need to work through. But as I said we believe we've got a really good case to tell the Europeans that we are not a threat to them in agriculture.
If I have a little bit of time can I just turn to agri-tech, because I just think this is a really exciting opportunity for New Zealand exporters. So Mike referenced the work that Defra is doing about this wonderful thing called Health & Harmony. To be frank they're behind us and they're going to look to New Zealand to quickly get their production systems up and running. So they've got a labour shortage so how can technology help that labour shortage? They've got quite a lot of on-farm issues. They need our technology, our innovations, to bring them quickly up to speed so that they can be competitive globally for that. And so they are looking to us, they're looking to engage with us, they're looking to invest in New Zealand companies and work with us closely to help that all happen.
In Europe, I think there's some really good examples in Europe already, of investment coming in to New Zealand from European companies. The Germans for example, the Germans are the third largest importer globally of agriculture products. They have the largest R&D budget of any country globally. So they themselves are looking to invest, they themselves in the new global trade environment are looking to basically upgrade their agriculture system very, very quickly. And I'm sure that might be something Mike will come back to, because he's visited there a number of times. So again, looking to New Zealand.
The Irish - the Irish, when quotas came off in 2015 on the dairy industry they started to significantly invest. So they set themselves a goal over 5 years of increasing dairy production by something like about 80%. Well in fact they've reached that now after 3 years. So they've done that by actually looking to places like New Zealand to invest here, to buy our products in the agri-tech sector, and to begin marketing into this part of the world, but also to establish some very good joint ventures with New Zealand companies. So lots of potential in the agri-tech sector. Please, if you have an opportunity, go and visit the Irish Plough, sign up with NZTE. It's similar to Fieldays, it's one of the greatest events you'll ever go and see. Thanks.
Dan: Thank you Rob, thank you all three of our speakers, who have done a remarkably good job at sticking to time. So well done and thank you. What that means is that we've got about half an hour left for questions. So I'm sure given the rich content that we've heard there's lots of questions burning away. If you could just raise your hand and let us know where you're from before directing your question to the panel, that'd be great. Who's happy to kick us off? Have we got a roving mic? No, just the one.
Charles Finny, Board Member, NZTE: Hi my name's Charles Finny from the NZTE Board. Thank you to the three panellists for your comments, and it's great initiative having the seminar here today. Rob, very pleased to hear what you were saying about the quotas because these are a legally binding commitment entered into by the EU. Not only should they be maintained but we need compensation because the UK is leaving the EU and it's now less valuable as a concession. So no way I'd [unintelligible 00:25:46] those quotas. High Commissioner, thank you for your comments. You are about to embark upon a whole lot of potentially bilateral free trade agreements to try and sort of catch up to what might have been lost from leaving the EU, and also opening negotiations with countries that don't have negotiations finalised with the EU. A number of our existing free trade agreements have got open accession clauses, for example the comprehensive progressive transpacific partnership. Is the UK considering the possibility of signing onto something such as CPTPP?
Dan: Thank you Charles.
Laura: Thank you Mike.
Mike: I'll be the mic runner, that's my name: Mike.
Laura: So thanks Charles. Lots of interesting questions. Would you like me to comment on the TRQ point first? Our fundamental position on the TRQs issue is we know it's an issue, we know it's complex, and our starting point is that New Zealand should not be worse off as a result of this, and there are discussions ongoing in Geneva about that, and to that end. On free trade agreements as the UK looks to its future post Brexit, yes absolutely we are, as Rob said, preparing very much for bilateral FTAs, but we are also looking at the option of plurilateral deals such as CPTPP. That is not … there have been no conclusions made yet and our starting point is with New Zealand and with Australia, we want to focus on getting those deals done and of course there are other EU deals that we want to be replicating. But then we are looking at all possible options for our future trade ... the Prime Minister's here.
Dan: Welcome Prime Minister.
Laura: Only in New Zealand.
Dan: Exactly. Thank you Laura. Come on in.
Laura: Shall we get her to come in and say a few words? Prime Minister they'd much rather hear from you than about Brexit.
Prime Minster: No, I just came in to check in on the team.
Dan: Prime Minster, how are you today?
Prime Minster: I'm well.
Dan: You're looking wonderful.
Prime Minster: I won't interrupt, I've just came for a little wander and I saw it was so well attended I wanted to see what was going on, and lo and behold.
Laura: Nice to see you.
Prime Minister: Go well, enjoy the Fieldays.
Dan: Thank you, lovely to have you here.
Laura: Thank you.
Dan: After that brief interlude there Laura …
Laura: Did I answer your question?
Charles: Yeah, no that's good. And I'd encourage you to [unintelligible 00:28:35].
Laura: Absolutely. And sorry one other thing I would say if I can, about the value to us of the New Zealand free trade agreement is of course about the economic benefit to both our countries, but for us it's also about really setting the tone. So what we want with New Zealand is a really high ambition, really high quality trade agreement that's as comprehensive as possible and also includes wider things. So trade for all I think is a New Zealand term or it used to be inclusive and progressive. Whatever you call it, we're committed to having a trade deal that really speaks also to the values and makes sure that trade is not just a bottom line thing but actually the benefits are felt by all.
Dan: Great point. Mike would you like to add to that?
Mike: Just something briefly. Look just something briefly, and I've actually stopped talking about free trade agreements, I just talk about new trade agreements, because New Zealand always has the ambition of making everything free and open, and generally it never happens. So I talk about new trade agreements. The important thing for me is that trade agreements actually are more often about opening minds rather than opening markets, and I say this because when I look to our companies they will go and invest in markets once there's a framework that gives them some assurance of the future relationship. And a trade agreement, a new trade agreement in my view provides a really, really important framework for confidence to invest and to partner and to join with others in those markets. So that's the first point.
The second point, I think just to clarify because I think the UK under the agreement is allowed to negotiate, agree and sign any trade agreements through the transition period but they can not enter into force. So just to clarify …
Laura: So come April next year we can start negotiating proper and we should make good progress because we're doing all this legwork now.
Mike: Exactly. So in theory, if we could come to a relatively quick agreement with the UK, which I'm confident we can, then that agreement could come into effect the day after the UK leaves Europe. So that's very, very important.
Dan: Thanks Mike. Rob, anything you'd like to add to Charles' question?
Rob: Just to Charles' point, the UK as Laura's referenced, has already expressed some interest in these plurilateral type arrangements. I recall when Boris Johnson was here last year he actually asked about the CPTPP and under our trade policy dialogue process we've provided that information, just so it's there.
Dan: Thanks Rob. Thank you Charles. Who's got our next question? Down the front here? That's easy, don't have to take the microphone too far.
Audience 1: Hi [unintelligible 00:31:15] from ANZ. So how do you see farmer support programmes in the UK changing post 2020?
Dan: So a question around farmer support programmes. Laura and then we'll come to Mike.
Laura: I'll say a bit … this is probably more Mike's special area. But I think the fundamental point is that we are very clear in the UK on the need of agricultural reform which is partly why we're so keen to learn from New Zealand both in terms of what went well in agricultural reform but also what pitfalls to avoid. I think as you were saying, we've got more time than New Zealand had at the time. And so we've had a lot of delegations out already. And for me the fundamental point I think is we almost need a mindset shift between farmers in different countries thinking in a sort of way about protecting their markets, and we need to think about the whole world and this sort of striking fact that by 2050 the world is going to need 60% more food. So we all need to have a little recalibration of the mind and think about the global market and how we cooperate rather than compete on more narrow terms. But Mike, do you want to talk more?
Mike: Thank you Laura, and I think Secretary of State Michael Gove has been quite clear in stating that current levels of support will remain in place until … well he says until 2021 but then he also says to me privately, he says until the end of the current term of government. So I'm not sure whether he means that might be shorter or longer, but we'll see. So I think that's very important and it's where they transition from here, but I think the widely accepted view amongst the farmers and farming leaders con is that in the future there will be less money available for farmers and it will be directed towards public money for public goods. And there will much more onerous, much more requirement around making sure that the farmers are being provided with support from the tax payer. It will be in return for some goods that the public can expect to receive. Now the Health & Harmony consultation that's underway right now, in fact submissions have closed, 45,000 submissions to that document 3 weeks ago. I think about 35,000 of those were campaign submissions but there's about 10,000 others. They're now considering those and they're going to put up an options paper shortly.
Dan: Rob, anything you'd like to add to that?
Rob: Just having gone to several national farming union conferences and dairy conferences in the UK, it's something Mike said before, it's about the mindset and the shift that's been. So the shift I've noticed in the UK is the one from just simple farm management to business management, so they're increasingly looking at a business just not simply management of farm.
Mike: And actually, one thing I think that New Zealand can learn from there, farmers over there are not just farming livestock. They're mixed enterprises with cropping and livestock. I've got enough of my farming colleagues over there that are farming eggs and chicken farming now, that are doing pork farming, they're trying to integrate the farming system. On-farm tourism is huge. I was on a farm in Wales where they have accommodation for 20 people and they charge £2,000 a night over the new year, that hot tub in a container over looking the countryside. People are prepared to pay the earth to go out and experience some time in the countryside. On-farm tourism, farming clover, growing clover for honey production, growing and shutting up pastures for birds and bio…diversity, I was thinking biosecurity [unintelligible 00:35:02] … biodiversity. It is actually really interesting to look at farms in the UK and I actually do think they think more broadly about income generation and how they can use their asset really well. And it's something I think we can learn off the UK.
Dan: It's a fascinating observation Mike. Laura mentioned in your opening comments that you saw opportunities for New Zealand companies going that way. Can you talk to us a little more about that?
Laura: Yeah, the UK … I would first of all say go and see our stall in the pavilion. There we are, I should've got that in earlier, my team will be pleased I've said that. We are PC22, if you go in the pavilion you can see we've got a great big great banner up so we're easy to find. Purely in terms of agri-tech, let me talk about that, I think the UK is a really good place if companies are thinking about expanding their business. In the UK we've got a huge amount of support, we've got very low rate corporate tax and our agri-tech business, although in lots of ways we're playing catch up, actually we're doing a huge amount in terms of investing and research and development. We've recently announced that we're going to be spending 2.4% of GDP on R&D by 2027, that's pretty huge. And we're spending a lot of money on agri-tech and we've got 4 agricultural innovation centres around the UK. And in fact I've got some colleagues here from Invest in Cornwall where the agri-tech sector is growing twice as fast as it is in the rest of the UK. And the climate is wonderful, and we've got great English sparkling wine, and I think my colleagues here would say if you're thinking about setting up in the UK Cornwall is a very good place to start. I would second that but I also wouldn't discount the rest of it, or I'll get in trouble from the other parts of the UK that I represent. But it is, there are loads of opportunities there and there are opportunities also I think for collaboration in terms of research and innovation in this area. So there we are, a plug: PC22.
Dan: Thank you Laura. Next question.
Rob: Can I just add a comment?
Dan: Oh Rob, sorry.
Rob: Just one thing, like any market that face to face contact is very, very important. But particularly through this transition phase when New Zealand's got a story to tell, not just at the diplomacy level, but also at the sector level, at the farmer level as well. And it's very important that we all get over there to tell that story. But it's also very important that you get out to the regions. The reason why I say that is because under the devolved administration in the UK agriculture doesn't just rest with Westminster in fact it actually rests with Scotland, it rests with Wales, it rests with Northern Ireland. So their decisions in the future going forward with agriculture will be about what those administrations in Wales, Scotland and Northern Ireland think. So it's very important that you actually go out there and connect with the various people out in those particular countries as well.
Dan: That's a really good point, and Mike you told us about your recent hot tub experience in Wales.
Mike: It wasn't [unintelligible 00:38:27].
Dan: That's what I heard anyway. What are those devolved administrations telling you about their thinking?
Mike: Well it's a very important point about the ability of the devolved administrations to determine a lot of their own policy, and agriculture is one of the areas where that's been agreed. They are expecting to have a very big input and say around what happens with agriculture in the UK. I back up the point from Rob here as well, it's very important to get out. Not just spend your time in London, get out into Wales, go to Scotland, go to Northern Ireland. It's a very, very important part of the jigsaw.
Dan: Thanks. Another question down the front. Oh I like these ones down the front.
Audience 2: You talk about collaboration and I think probably it's around where we can agree to have some collaboration. The reality in the marketplace already is Brexit's actually having an impact [unintelligible 00:39:22] New Zealand. So to give you an example of [unintelligible 00:39:25], so European Commission bought a huge amount of skim milk powder in the second half of 2016, China entered the market, New Zealand had a bad Spring. Those are the 3 catalysts that took us from a $4 to $6 milk price. And that took the dairy industry probably a difference between a lot of financial stress and pain and basically it came at the right time. Then we saw just this year, pretty much that stockpile is sitting there, weighing on the market. New Zealand has lost massive market share in milk powder in [unintelligible 00:40:01] and North Africa, because of those decisions. But then we saw the intervention scheme and the terms around that change this year. And so we saw milk processes in Europe reduce their farm gap price, probably more aggressively [unintelligible 00:40:16], and the weather wasn't so favourable. So it actually help up milk powder pricing and along with the New Zealand dollar coming down, probably has been a net benefit. But the reality is there's still that competitive tension because New Zealand's lost market share into some of those key markets. Now the same thing I suppose applies for infant formula into China at the moment. There's a big market share challenge between the European names which have got probably 80% market share in New Zealand, Australia, which is about 15-20%. So I suppose those competitive tensions, how do you see those kind of playing out?
Dan: So how the competitive tensions play out and where those opportunities for collaboration are. Laura any comments on that?
Laura: Do you want to start Mike?
Mike: Yes, I think it's an interesting observation more than a question, but look I think the intervention stocks is obviously a big one that's hanging on the market, and of course that is all of Europe at the moment, EU28. That's now down to 300,000 tonnes, they've managed to sell about 80,000 tonnes, but of course it's a price that's well below the market.
Audience 2: At the expense of our market share.
Mike: Exactly, that's right. And of course then we shouldn't forget the Canadians that are also exporting powder into North Africa and to Algeria for example which until recently was New Zealand's third largest dairy export market. So that's always a good trivial pursuit question that one. So look Colin [SL 00:41:49] I think you've really summed it up, but I think that as we move forward there's definitely … and certainly Commissioner Hogan's been very strong on this, he wants to align production more with demand and he does not like that intervention scheme, and he wants to knock it on the head. And so I think that's a positive.
Dan: Thanks Mike. Any other questions? One over here.
Audience 3: Just going back to what you were saying about opportunities for New Zealand companies in the UK and the importance of getting out into the market and meeting people, could you talk about what sort of help is available from the government to help companies to make the most of those opportunities?
Mike: Well we know where this is going.
Dan: Mike mentioned earlier, there is a cross-government press on this one, and that is both in New Zealand and in market. NZTE, MFAT, MPI, Customs, they're all part of this intergovernmental work that support New Zealand exporters as they go into either enter or grow into those markets. So I would say use those channels that you've got. If you don't have them make those relationships, build those channels. There is a real desire obviously to see New Zealand succeed in this market. It's a market that we've been in for a very long time but it's a changing market, so we need to be aware of those dynamics, and the infrastructure that's been built around that or exists around that is there primarily to support New Zealand exporters. Rob anything you'd like to add?
Rob: Only just to say, we've got this really key objective of getting two of the most highest quality free trade arrangements both with the UK and with the EU. So they open the doors. And we're obviously working with NZTE very closely in supporting the sector, both business, farmers, whatever, when they come to the UK or to Europe in terms of building contacts. I've mentioned a couple of things already. The National Farming Union Conference is one of the biggest conferences you can go to. The Irish Plough, another very important showpiece in Ireland that you can visit as well. But it's very much a collective and a joined up effort that the government is behind, and we are investing a good deal of time into assisting. It's just, we need to hear from you so we can take your message out as well.
Can I just add something else, and it comes back to the point that was just sort of raised here, we're also very much focused on opportunity not just in UK and in Europe, but also in the Asia Pacific region. And so as the Irish dairy industry develops, as does other industries in the farming sector in Europe develop, we need to join up with them. We need to show them where those opportunities are in the Asia Pacific region. And there's some really good examples of that actually happening already, and one of those I think is just Fonterra itself, which is actually taking more product than they export into Europe out of Europe to sell into the Asian region. So that's a very good relationship going forward and one that all in the agricultural sector can develop because it's all about innovation and it's all about lifting productivity in both the UK and Europe.
Laura: Can I just add?
Dan: Yeah absolutely.
Laura: And I'd just like to add from the UK government perspective, again if you go to PC22, you will be able to talk to … we've got some of my international trade team there who are based up in Auckland, Paul Wilkinson who's the head of our investment team, and the UK can also provide support and guidance and connections. And we've got a number of really great success stories, so Zero for example, that went over with just a handful of people and is now in … I think they've got 200. It's a massive success in the UK. Or more even. Sorry? 400, Colin says. I got my numbers wrong. So yeah, there's support really from both sides, and I think between us there's quite a good package. So no one's just arriving cold.
Please join me in thanking our fantastic panel this morning. Her Excellency Laura Clarke, Mike Peterson, Rob Taylor.