Seeking new markets in the West

Neither Europe nor the USA are going to do us any trading favours. It is all about self-interest

In recent weeks I have been exploring and writing about some of the challenges in finding new markets that would allow New Zealand to stem its increasing reliance on China. My focus in the last three trade articles has been first on North East Asia, then the ASEAN countries of South East Asia, then South Asia and Iran. This week I look further west to Europe and the Americas before completing the circle. Continue reading

Posted in Market diversification | 7 Comments

Quantitative easing floods capital markets

The New Zealand Government is driving interest rates down through massive quantitative easing. That means they are creating lots of additional money. Capital markets are consequently flooded with available money looking for a home. A debate is needed as to whether it is time for the Reserve Bank to reassess its forward-looking plans for massive ongoing quantitative easing.

Quantitative easing occurs when Governments create new money through Central Bank operations. Until recently, quantitative easing was called ‘unconventional monetary policy’. Nevertheless, many countries have used it in the past, particularly following the GFC.

Quantitative easing has now shifted to become mainstream as the dominant monetary response to COVID-19 economic conditions.  It has also led to capital markets being flooded with money searching for a home. Continue reading

Posted in macroeconomics | 6 Comments

The ongoing search for new markets – India and beyond

Finding new markets for NZ exports is challenging. Here, Keith Woodford looks at the Southern Asian countries of India, Bangladesh and Pakistan, and further west to Iran

In recent weeks I have been exploring opportunities for market diversification, given increasing concerns that New Zealand has become too dependant on China. I started by looking at China itself , with the key finding being that growth of two-way trade between New Zealand and China is a consequence of natural alignment for each other’s products, also facilitated by the 2008 Free Trade Agreement between the countries. Continue reading

Posted in China, Market diversification | 4 Comments

Rugby’s role in a greater South Pacific strategic reset

In a COVID-affected world we need to think outside the square. Here is one idea as to how New Zealand can both help itself and its South Pacific neighbours, linking sport, tourism and the economy.

This article is about rugby, but it is also about a greater South Pacific strategic reset that goes far beyond rugby. The underlying notion is that in a COVID-affected world, a ‘strategic reset’ for Pacific countries – including New Zealand, Australia and the Pacific Islands – is ‘only words’ until we get down to the specifics of how it might happen. And where better to start than rugby?

A starting point is to recognise that the chances of a rugby competition in 2021 that spans the existing super rugby nations is close to zero. The idea that either Argentina or South Africa could be part of a quarantine-free bubble is fanciful. It will not happen.

An alternative starting point is to recognise that the South Pacific is where many of our key strategic political and economic interests lie. This goes well beyond rugby.   Related to this, the South Pacific is the only part of the world where New Zealand’s influence counts for much. Continue reading

Posted in The economy, Uncategorized | 8 Comments

A1 milk predisposes to asthma and lung inflammation

New findings published by Nature Research, demonstrating how A1 milk predisposes for asthma and lung inflammation, should bring the A1 milk issue back into focus for both consumers and farmers

Until May 15 of this year, there had been a lack of new scientific evidence about A1 milk for almost a year. The reason it was quiet is because no-one had been funding the next studies that needed to be undertaken. However, new evidence has now come forward from India, somewhat out of left field.

Prior to this, there had been multiple strands of evidence demonstrating that A1 beta-casein and hence A1 milk is pro-inflammatory and linked to auto-immune conditions. However, the new research published by Nature Research in the journal ‘Scientific Reports’ is the first to explore these pro-inflammatory and immune-related effects of A1 beta-casein in the airway and lungs. Continue reading

Posted in A1 and A2 milk, Dairy | 12 Comments

COVID-19 scenarios are becoming increasingly evident

Despite the uncertainties, there is emerging evidence as to how COVID-19 is now likely to play out, both in New Zealand and across the globe. Identifying these scenarios is fundamental to subsequent response strategies for economic recovery

There are two big uncertainties with COVID-19. The first is whether there will be a vaccine and if so, when it will be rolled out. The second is the proportion of asymptomatic cases for each confirmed case. This second issue will have a fundamental influence on how long will it take, both with and without a vaccine, before some level of population immunity can be reached across the globe.

Despite the huge uncertainties in relation to both a vaccine and asymptomatic infections, there is newly emerging empirical evidence in relation to each of them. I will look at each in turn.

There are also some other issues where the evidence is now more sustained and increasingly compelling. First, it is increasingly likely that genuine elimination of the disease within New Zealand can be achieved and kept that way, as long as border control remains tight. Getting it wrong at the border risks everything.

Second, there is very high likelihood that Europe and the USA will have at least one more devastating wave of COVID-19, with that wave much more devastating than the current one. It is going to be a big mess.

Third, in much of the less-developed world, including middle-income countries such as Brazil, COVID-19 is out of control and unstoppable.

More on all of those also.

There is good news with vaccines
Just this last week, American-based Moderna announced early stage success with its revolutionary messenger RNA (mRNA) vaccine trials. Many in the global media, parroting off each other, misunderstood what it was about and provided a flawed commentary, including the mistake that results were based on only eight people. Continue reading

Posted in China, COVID-19, Uncategorized | 18 Comments

Searching for markets within Asean

If New Zealand wants to diversify its trade away from China, then the ten ASEAN countries will be important markets. However, the commercial realities, particularly for value-add products, will be challenging.

In recent years, New Zealand has become increasingly dependent on China as its most important market. The key reason, which I wrote about last month, has been the natural alignment of trading interests. New Zealand had what China wanted and vice versa. However, the extent of dependence is now causing unease.

There is irony in that New Zealand’s trade alignment with China was influenced by a perceived need to diversify away from traditional markets. Few people foresaw that the solution might become a new problem.

Now, in once again seeking more diversity, where should the new path lead? Continue reading

Posted in Dairy, Market diversification, Meat Industry | 4 Comments

COVID-19 is a science of uncertainty and an art of probability

COVID-19 illustrates the difficulties society has in dealing with uncertainties and the stresses this creates

No one can say with confidence what our COVID-9 world is going to look like over the next 12 to 24 months. The rules and models of the old world no longer hold. It is this uncertainty itself that adds great stress, overlaying the fear of specific scenarios.

Times like these can bring out true leaders but also false prophets. Trying to distinguish between them is much easier in retrospect than at the time.

All great leaders instil confidence in the chosen path but there is a fine balance between confidence and false confidence. The troops do need belief in their leaders, but the leaders also have to be willing to change course in the face of evidence.

There are two quotations from American President and Allied Commander Dwight Eisenhower that I rather like. In fact, there are many of Eisenhower’s sayings that I like, but two seem particularly relevant right now. Continue reading

Posted in COVID-19 | 11 Comments

North-East Asian markets as alternatives to China

In a recent article, I explained the ‘what, how and why’ of China becoming dominant as New Zealand’s key trading partner. Primarily, it was about the emergence in China of new consumers with increasing spending power and an increased desire for high-protein animal-based food, with the consequent trade facilitated by a free trade agreement.

In that article, I acknowledged an increasing wave of public opinion saying that New Zealand needs to diversify away from China. I also suggested that finding alternative markets would be more than a little challenging, but I did not analyse any of those alternative markets. I left that for this article.

The topic of new market opportunities is huge, so this is just a start, just scratching the surface, and focusing on just one region. The focus here is North East-Asia because it is there – Japan, Korea, Taiwan, and Hong Kong – where incomes are higher than most other parts of Asia. Continue reading

Posted in Agribusiness, China, Dairy, Market diversification | 7 Comments

Why and how did China markets become so important for New Zealand?

Keith Woodford explain how New Zealand exporters went to China because that was where the markets were. In many cases, it was the Chinese who came to us seeking our products

It is just four weeks since I wrote how China was going to become even more important as a market for New Zealand’s exports as we work our way through COVID-19. I subsequently took some flak from a few keyboard warriors, on the grounds that I was supposedly ignoring both human-rights issues and also the blame for COVID-19, both of which it was said, should preclude New Zealand trading with China.

My response is that I have not taken a public stance on those other matters and I do not intend to. Whether or not we should trade with China is something for others to debate. I prefer to focus here on how it occurred that we have become so dependent on China, together with what the future might hold and where alternative markets might lie. Continue reading

Posted in China, Market diversification, Meat Industry | 3 Comments