China No Longer Just A Commodity Story - Luxon
China remains New Zealand’s biggest market, taking $23 billion of our exports, but it’s no longer a commodity story, says Prime Minister Christopher Luxon.
This isn’t just another trade deal – it’s a strategic masterpiece that positions New Zealand at the doorstep of one of the world’s most dynamic (and growing) regions.
The numbers tell a compelling story. With the CEPA eliminating duties on 98.5% of New Zealand’s exports immediately – rising to 99 per cent within three years – NZ’s agricultural products will gain unprecedented access to not just the UAE’s affluent market of 10 million people, but potentially to the broader Middle East region of 400 million consumers.
This is particularly significant for the dairy and horticultural sectors, which have long sought reliable, high-value markets for their premium products and also offsets potential trouble on the horizon with East Asian markets.
But here’s why the agricultural sector needs to act decisively and quickly: the UAE isn’t just a destination market – it’s a springboard. With its world-class logistics infrastructure and strategic location (see DP World HQ), Dubai and Abu Dhabi serve as vital re-export hubs connecting Europe, Asia, and Africa. For New Zealand’s farmers and dairy producers, this means their products could reach previously challenging markets with greater ease and efficiency (see Iran, Iraq and potentially even calorie deficit Afghanistan).
Consider the current context. New Zealand’s economy recently faced headwinds, with technical recession in the third quarter of 2024. Yet, as Prime Minister Luxon pointed out, business confidence is at a 10-year high, and farmer confidence is the strongest it’s been since 2017. This combination of optimistic sentiment and new market access creates the perfect storm for agricultural expansion.
The opportunity is particularly golden for the dairy industry. The UAE’s growing population, increasing tourism, and role as a regional food distribution hub make it an ideal market for New Zealand’s dairy expertise. With immediate dutyfree access, dairy products – from milk powder to specialty cheeses – can compete more effectively against global competitors (see Kalleh in Iraq and Iran).
Seizing the opportunity requires more than just shipping products. New Zealand’s Agricultural sector must consider several crucial strategies for success. The development of UAE-specific product lines that cater to local tastes and preferences should be a priority.
Just as important is the establishment of distribution partnerships with UAE-based logistics companies to leverage their regional networks and to do that fast. Investment in halal certification and compliance will ensure seamless market access, whilst creating value-added products specifically for the luxury market, where the UAE excels, will help capture premium pricing.
The government’s ambitious goal to double export values in 10 years suddenly seems more achievable with this agreement. As Luxon noted, “We don’t get rich just selling stuff to each other in the South Pacific.” This deal provides the platform for New Zealand to demonstrate its agricultural prowess on a larger stage.
Meanwhile, for farmers and dairy producers, the message is clear; the door to the Middle East has been thrown wide open, and the timing couldn’t be better (see post Assad Syria now open to trade again).
The CEPA isn’t just a trade agreement – it’s a vote of confidence in New Zealand’s agricultural capabilities and an invitation to play a larger role in global food supply chains. For farming and dairy sectors, the question isn’t whether to engage with this opportunity, but how quickly and effectively they can scale up to meet it.
Daniel Rad is a rural and geopolitical studies expert based in the UK.
