Nelson Marlborough Farming - Resilient economy

Saturday, August 1, 2015

A successful primary sector is a key part of the Government’s plan to create jobs, raise incomes, and build a more productive and competitive economy.

Previous generations built innovative and varied primary industries. As a Member of Parliament and Deputy Chair of the Government’s Primary Production Select Committee I’m committed to keeping these industries at the top of the global game.

New Zealand farmers have developed some of the most forward-thinking farming practises in the world. Decades of farming excellence and continued improvement has shaped the quality Nelson-Marlborough products we export today. We have a strong international brand and it’s well deserved.

There are always risks with international trade and I have no doubt it will be a tight year ahead for the dairy sector with reduced commodity prices.

Nonetheless, dairy exports will be strong again. While global dairy markets look to be volatile for most of 2015, MPI expects dairy export revenue to recover in by June 2016, reaching $14.8 billion and rising to $18.4 billion by June 2019.

We’ve shown by the way we recovered from the global financial crisis and how we’re rebuilding Christchurch, that as a country we’re resilient.

What matters is that we manage the factors within our own control with care so we can strengthen our nation’s resilience and best protect our people.

We have multiple market options and that helps lessen the impact of uncertainties in the Eurozone and volatility in China.

While dairy is significant, it’s only one piece of New Zealand’s economic puzzle. It’s important to acknowledge other Kiwi industry is performing well.

Meat and wool prices are expected to increase by 8.2 per cent this year to $8.8 billion.

Horticulture had a record year, with earnings for 2014 topping $7.5 billion for the first time, and wine benefiting from significant growth.

There are factors at play supporting our economy. The Kiwi dollar is down 25 per cent against the US dollar compared to this time last year. Lower interest rates help investors and businesses carrying debt.

We also recently signed the Korean Free Trade Agreement (FTA) . Under the Korean FTA, tariffs will be progressively eliminated on 98 percent of New Zealand’s current exports. This will save New Zealand exporters an estimated $65 million in duties in the first year alone.

The medium to long-term outlook for all primary sectors is very positive.

As the Asian countries on our doorstep become increasingly wealthy, their demand for our protein and other primary products is only going to increase.

There is no question that we need to be mindful of global risks but it’s important not to overstate them. The economy is more resilient than it was six or seven years ago. Much of the credit for this can be attributed to the primary sector and those involved in it.