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The impact of losing farm support on New Zealand agriculture. Mike Petersen NZ Special Agricultural Trade Envoy UK Onion and Carrot Conference East Midlands Conference Centre 14 November 2017 Before everything else There is no


  1. The impact of losing farm support on New Zealand agriculture. Mike Petersen – NZ Special Agricultural Trade Envoy UK Onion and Carrot Conference East Midlands Conference Centre 14 November 2017

  2. Before everything else … • There is no recipe of reform from the New Zealand example. – Only lessons and experiences learned. • New Zealand was in a unique position in 1985 that necessitated action. – An imperative is a powerful incentive. • No-one in New Zealand wants to go back to where we were before reform.

  3. New Zealand has a history of domestic support Producer Support Estimate New Zealand Agriculture 50 45 40 35 Percentage 30 25 20 15 10 5 0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

  4. … so what happened?? • 1985 reform of the agricultural sector saw all subsidies removed from farming. • Huge challenge and upheaval. • Also wider economic reforms. – Labour market, imports, financial markets. • Set scene for unprecedented drive for efficiency and innovation.

  5. So where is New Zealand today??

  6. Land use in New Zealand 27 million hectares 4.6 million people Natural forest Planted 6.5 m ha (24%) Other non- Production forested land forest 18% 1.8 m ha (7%) Pasture & arable land 51%

  7. Very Low Levels of Government Support for Farmers OECD Producer Support Estimates for New Zealand Agriculture

  8. Some sector numbers… • Pastoral farming dominates – Sheep: 28.5 mill. – Beef cattle: 3.8 mill. – Dairy cattle: 6.5 mill. (4.5 mill. of which are in calf or in milk) – Deer: 1.1 mill. • Horticulture is increasingly important – Apples: 9500 ha – Kiwifruit: 15000 ha – Wine grapes: 35000 ha • Arable farming – Barley: 65,700 ha. – Wheat: 54,800 ha. • Fisheries – Commercial fish catch: 418,307 tonnes

  9. Agriculture remains the key driver for our economy Agriculture is one of NZ’s largest • employers (11%). Annual agriculture exports £22 • billion, 70% total goods exports. New Zealand has population of • 4.8m but produces enough food for about 40 million. Dairy is NZ’s largest single • export sector worth £7 billion and 27% of total goods exports. .

  10. Horticulture sector Fastest growing sector – now £3 billion • export earnings. Kiwifruit, wine and apples 75% of exports. • Innovative research with ongoing • development of new varieties and new technologies. Disease and pest management key. • Sophisticated cool store technology to • ensure produce quality from afar.

  11. Did you know – The New Zealand province of Canterbury grows: 50% of world requirements for radish seeds • 35% of world requirements for white clover • seeds 33% of world requirements for carrot seeds. • 30% of world requirements for Bok Choi • seeds.

  12. Modern farmers/growers post reforms in New Zealand is business driven… • Farm businesses. • Production decisions and market returns are dictated by the domestic and overseas markets , not the government. • Sales depend on meeting customers’ expectations of price and quality. • Production is efficient, profitable and sustainable. • Farms bigger - but fewer of them. • Family ownership still dominates, but professional management and governance.

  13. Success not just due to growers and farmers Strong ecosystem of professional, service • and support industries. – Business management advice. – Crop inputs and care. – Crop health and quality control. – A strong banking and finance sector. – Strong focus on development of new varieties and cultivars. – Fertility and irrigation advice. – Tools and software.

  14. New Zealand in context Product % World % Share of domestic Production World trade production exported Dairy 3% 33% 90-95% Beef 1% 8% 82% Sheep meat 3% 49% 87% Wool 14% 27% 98% Venison n/a 50% 65% Kiwifruit 21% 32% 93% Pipfruit 1% 5% 65% Wine 0.5% 2% 70% Fish 0.3% 1% 73% Roundwood 2.3% 14% 75% (coniferous)

  15. So what did New Zealand learn from losing farm support for agriculture?

  16. Lessons from New Zealand • The pace of reform is important. – Urgency encourages faster adaptation. • Reforms must be all encompassing. – Avoids artificial distortions and false incentives. • Independence is a wonderful thing. – Regulatory and policy making becomes more collaborative once the Government no longer pays your wages.

  17. Lessons from New Zealand • Increased diversity through land use change. – Dictated by market returns. • An unprecedented drive for efficiency and innovation by farmers, growers and support sectors. • Financial and banking sector that works with farmers through volatile times.

  18. Lessons from New Zealand • The imperative in New Zealand drove overnight reform. – Greater planning and transition could have been helpful. • Rural communities take time to adapt. – But are very resilient and bounce back. • Change is stressful and a strong support network is required.

  19. An example - the sheep industry 1985 sheep population was nearly 70 • million. Incentives promoted numbers instead of • productivity. – Numbers versus quality. – Production irrespective of market demand. – Farm practices that compromised the environment. – Sheep farming on land best suited for other uses. –

  20. An example - the sheep industry • 1985 removal of subsidies. – Sheep flock down from 70m to 28m. • Same amount of sheep meat from 53% less sheep. • Per head performance gains • Lower emissions – climate change. • Producing product suited to market demand. • Land use optimised.

  21. Other important elements to successful reforms of agriculture in New Zealand.

  22. The importance of trade and market access • New Zealand’s success relies heavily on food and beverage export sector. • An active and enthusiastic participant in international trade talks. • New product development, new markets and global value chains fast moving. • Need diversity and reduced reliance on individual markets • Barriers to markets are barriers to innovation, progress and prosperity.

  23. Bilateral and plurilateral FTAs have been important for New Zealand FTAs or EPAs concluded with: Australia (1983) Singapore (2001) P4-Singapore, Chile, Brunei • Darussalam (2005) Thailand (2005) China (2008) ASEAN & Australia (2010) Malaysia (2010) Hong Kong (2011) Chinese Taipei (2013) Korea (2015), Pacific Islands Pacer Plus (2017) Negotiations concluded, awaiting ratification: Gulf Cooperation Council (Kuwait, Oman, UAE, Bahrain, • Qatar, Saudi Arabia,) Negotiating with : India, RCEP (Japan, India, Korea, China, Australia, ASEAN), • and.... Immediate priority: TPP Future priorities: EU, UK (following Brexit), Pacific Alliance. •

  24. Strong and visionary farm leaders • Leadership through reform is vitally important. • A tough and bruising place to be. • Accept change is coming and drive the agenda. – Help develop and deliver the solutions. – An opportunity to gain more than lose. – Defending status quo untenable in a time of considerable change.

  25. Summary

  26. Summary • New Zealand reforms in agriculture have delivered efficiency and innovation. • Strong growth in horticulture sector to continue. • But – plenty of opportunity for the UK. – New Zealand is a small producer and can only feed 40 million people in an increasingly hungry world

  27. Summary There is no recipe from the New Zealand • experience of reform. – But there are some lessons learned. Change is stressful. Planning and support • is required. Trade drives innovation and prosperity. • Strong farmer leadership is vital. • And finally – There is no appetite in New • Zealand to go back .

  28. The impact of losing farm support on New Zealand agriculture. Mike Petersen – NZ Special Agricultural Trade Envoy UK Onion and Carrot Conference East Midlands Conference Centre 14 November 2017

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