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14 February 2007
In his first public address of the year, Ministry of Agriculture and Forestry (MAF) Director-General Murray Sherwin has painted a challenging, but ultimately optimistic picture of the future for the country’s primary sector.
Speaking to delegates attending the Australian Agricultural and Resource Economics Society’s annual conference in Queenstown, Mr Sherwin outlined a successful future for farmers and growers, but not without overcoming some daunting challenges.
“The trick,” Mr Sherwin said, “will be to pay real concern to a range of values that are becoming increasingly important to our customers and to meet those market demands more efficiently than our competitors.”
The challenges to primary producers he outlined as broadly coming in the areas of a rise in discerning global consumers; the emergence of new forms of trade protection; increasing competition from low cost producers; and growing pressure on New Zealand’s natural resources.
At the top end of the market, Mr Sherwin said consumers are looking for food products that are safe, trusted, and produced in a sustainable manner.
“Increasingly, though, our consumers will be seeking a more subliminal, even emotional sense that the product is ‘right’ for them. This sense of being ‘right’ might have a strong ethical dimension encompassing such matters as animal welfare, the impact of the production, processing and distribution processes on the environment, and even religious dimensions. Already we see these trends emerging in the food miles debate. Expect to see more of this in the future.”
Mr Sherwin also speculated that New Zealand will increasingly encounter new forms of non-tariff protectionism as multilateral and bilateral agreements reduce the traditional barriers to trade. “The prime candidates here are likely to be technical barriers to trade erected under the guise of protecting markets from pests and diseases,” Mr Sherwin said.
Growing competition from low cost international producers is another concern the Director-General sees Kiwi producers facing.
“In the past fifteen years, the rate of growth in exports of many dairy, meat, horticulture and forestry products from China has been double that of New Zealand’s.” Likewise Mr Sherwin pointed out a similar story comparing South American dairy, meat and forestry exports to that of New Zealand over the same period.
“While we can often claim quality advantage over our emerging competitors, it will require constant innovation and effort to maintain that gap.”
In the search for productivity growth and profitability, Mr Sherwin said our agricultural systems are becoming more intensive, and in doing so, their supporting ecosystems are being pushed harder. Concurrently, as already noted, our international consumers are looking for something extra in their purchases. “They want an assurance that the products they purchase embody the values they regard as important – including high environmental standards.”
“Through smart positioning of innovative and high quality products, embodying high standards of environmental integrity, food safety and animal health and welfare, we should be able to maintain the quality gap and bank the profits,” Mr Sherwin said.
“I’m optimistic about the future of New Zealand’s agricultural sectors. They remain a core driver of New Zealanders’ well being and national identity. Our focus in the past has been on driving production efficiency to sustain financial returns. It seems clear to me that the 21st century paradigm will be a broader set of interrelated concerns centred on sustainability – economic, environmental and social.”
For further information or to arrange an interview with Murray Sherwin, please contact:
Richard Lynch, MAF Policy Director, Innovation and Research Policy
Phone: 029 894 0628