Quota Allocation Mechanism Review 2023-2024
Background
At intervals not greater than five years s.29 of the Meat Board Act 2004 (the Act) requires the New Zealand Meat Board (NZMB) to review each unrevoked allocation mechanism.
Access for beef and sheepmeat has increased recently with the advent of the UK and EU Free Trade Agreement tariff rate quotas (FTAs). This is additional opportunity to New Zealand’s long standing access via World Trade Organisation (WTO) quotas. New Zealand now has nearly 300,000 tonnes c.w.e. sheepmeat and goatmeat with tariff free access to the UK and EU, while shipped exports globally are 392,000 p.w. tonnes of lamb and mutton.
Beef access has increased by 18,313 tonnes (14,980 tonnes p.w. and 3,333 tonnes c.w.e. (pro-rated in the first year)) to EU/UK with scheduled (2,980 tonnes p.w. and 953 tonnes c.w.e.) increases on an annual basis.
More Quotas
NZMB now has responsibility for the administration of ten quotas (WTO – EU and UK Sheepmeat and & Goatmeat, EU and UK High Quality Beef, US Beef &Veal, FTA - EU and UK Beef, UK Sheepmeat, EU Sheepmeat and Goatmeat chilled and frozen).
To support this quota allocation mechanism review NZMB commissioned an economic study of allocation mechanisms by Castalia Limited focused on determining which allocation mechanisms (if any) would best assist the NZMB in achieving its object.
Proposals for Consultation
NZMB is proposing to maintain a production history allocation mechanism for the WTO quotas where volumes are fixed and a modification to the transitional allocation mechanism for the new FTA quotas which increase in volume year on year.
UK and EU FTA sheepmeat1 and beef Quotas
For the new FTA quotas, which have annual increments in quota volumes, NZMB is proposing a modification to the transitional Production History/Export History hybrid system in place, to one in which quota allowances are allocated based on Export History alone.
This is because the hybrid system can result in exporters receiving less than their previous year’s exports, while some that do not export to the market concerned receive quota even though they have not been active in the market. Allocation mechanisms should ensure that historical trade can continue while making appropriate allowance for new entrants.
The allocation mechanism proposed would be to allocate EU/UK FTA quotas based on the previous year’s or previous three year’s2 exports. Allocation would not be proportional, i.e. it would be allocated on a volume basis; e.g. an entity with an export history of 600 tonnes would receive an allowance (GQA) of 600 tonnes. The remainder, once all previous exporters have received their GQA, would be available to new entrants, defined as anyone not eligible to receive a general quota allowance (GQA). New Entrants would have access on a first come first served basis (FCFS), (i.e. shipment by shipment). Any individual new entrant would be limited to receiving a total of 30% of the new entrant tranche (RQA).
To provide access for expansion of trade for general quota holders, once a GQA holder has used >80%3 of their GQA, they are also eligible to access the RQA on a FCFS basis.
Another consultation element is whether quota be “handed back” to the Board in October, that quota is available first to GQA holders and then to RQA holders, at which point the 30% limit no longer applies.
A full explanation of the proposed mechanism can be found here.
For WTO (EU and UK sheepmeat and goatmeat, HQB and US beef and veal) Quotas
The NZMB proposes no change to the existing allocation mechanism, i.e. three year average of production history.
Changes are proposed to the new entrant provisions however.
It is proposed that any registered meat exporter be eligible to be a new entrant, that new entrants have access to the 2% new entrant tranche (RQA) on a first come first served basis, with a limit of 30% for any single entity. New entrants may access any handed back quota after GQA holders have done so.
Next Steps
Consultation concluded on 15 March 2024. NZMB is analysing feedback and will update.
Alternatively queries can be emailed
Supplementary material
Links to documents below are:
- Castalia Report
- Consultation document
1 Certain limits apply to FTA sheepmeat access. GQA holders of WTO sheepmeat quota may not access the FTA sheepmeat quota until 90% of the quota has been used (UK) or the GQA holder has utilised 80% of their GQA (EU).
2 Subject to what is preferred in this consultation.
3 Also subject to consultation views.