Direct trade impacts of Brexit on New Zealand's agricultural sector are likely to be relatively contained, Rabobank says.
The United Kingdom and the EU-27 (excluding the UK) now contributed only a relatively small share of New Zealand food and agricultural exports; 4.3% and 8.8% respectively, by value.
However, the direct export exposure for some sectors, particularly sheepmeat, wool, fruit and wine, was more significant, the bank's latest Agribusiness Monthly report said.
Those sectors, in particular, would be exposed to any sustained negative impact Brexit had on the UK economy and household incomes, as well as price inflation due to adverse currency moves senior analyst Marc Soccio said.
The EU, including the UK, was New Zealand's most important export market for sheepmeat by both volume and value.
As well as being a big importer of sheepmeat, the UK was also a significant exporter of sheepmeat into the EU, tariff free.
If that was to change, more product might remain in the UK market, which could result in high supplies and less demand for New Zealand sheepmeat, he said.
The UK had long been a major export market, by volume, for New Zealand's wine sector, taking one-quarter of all wine volume exported.
While the trade terms on which New Zealand exported wine to the UK would remain unchanged in the near term, any negative shock to the UK economy or sustained devaluation of the British pound would adversely affect the affordability of wine in the UK, Mr Soccio said
For dairy, any weakening of the euro resulting from the Brexit decision would help to stall the building of dairy inventory levels, but also place further pressure on international milk prices by increasing the international competitiveness of European dairy products.
It remained to be seen how trade tariffs, duties and quotas might change between the UK and the EU-27 and how elimination from the Common Agriculture Policy (CAP) affected UK food producers.
Any imposition of trade barriers and reduction in producer subsidies would act to raise the cost of food sourced domestically and from the EU-27, Mr Soccio said.
In an update to farmers, Beef + Lamb New Zealand chief executive Sam McIvor said he was confident the New Zealand Government understood how important Brexit was for the New Zealand sheep and beef industry.
He spoke recently on a panel about the potential implications of Brexit for New Zealand and EU agricultural trade.
Due to New Zealand's WTO rights, no erosion in New Zealand's overall quota access into the EU and the UK was expected when the UK eventually left, he said.
"I emphasised our long tradition of collaboration with EU and UK agricultural groups and that we had no interest in disruption in these markets as a result of Brexit.''
