The Government’s new food and fibre reset document is PR aspirational fluff. The hard work remains to be done
On July 7 Prime Minister Jacinda Ardern released the Government’s document “Fit for a Better World – Accelerating our Economic Potential”. The associated press release from the Beehive says that it provides a 10-year roadmap for the food and fibre industries’.
At the same function where this report was released, Agriculture Minister Damien O’Connor released a companion document from his Primary Sector Council of chosen industry leaders. That document is also titled “Fit for a Better World” but lacks the title extension about ‘accelerating our economic potential’. This second document is indeed a different document, singing from the same song-sheet, but with considerably different material. Very confusing indeed!
My focus here is on the Government’s version of the report because this is the one that has been signed off by Cabinet. Minsters in attendance at the release also included Stuart Nash and Shane Jones.
I downloaded the document and worked my way through the first 24 pages, but my computer refused to proceed any further. My initial thought and frustration, now that I had worked my way through all the introductory fluff together with six historical case studies, was that I was ready to get into the core of the supposed roadmap. Then it dawned on me that I had indeed read the full document. This was it!
Before I take up some resultant criticisms, I first need to state that there is good news in the document for all of those who believe in the importance of the food and fibre industries. The Government is indeed acknowledging that the food and fibre sector is “vital to New Zealand’s economic recovery”. The Prime Minster also stated that the primary sector is “a huge part of our economy and our brand”.
Minister O’Connor stated that he would also soon be releasing another new report that “sets the path for future growth of our strong-wool sector [ and that “this will also be a key part of delivering our Roadmap”. Really? The wool report was indeed released three days later and it was the same aspirational high-level fluff.
If strong wool does have a future it will be as building insulation, but I saw no specific mention of that. Mainstream adoption requires new technology yet to be developed.
Getting back to the ‘Fit for a Better World’ report, Minister Nash stated that “sustainable aquaculture presents massive growth potential”, and that the sector would grow five-fold to $3 billion by 2035. Minister Jones added that forestry had opportunities to develop domestic and export markets for more sustainable products.
In terms of the overall theme of the song-sheet, it was all good news. There were lots of words about sustainability but there was no mention of any specific new environmental regulations. The TV soundbites indicate that the assembled industry leaders were supportive even if not necessarily enthused.
The stated intent is that export earnings will increase by a cumulative $44 billion by 2030. What was less clear in media reports is that this is the aggregate additional income over the 10-year period, with the additional annual income having grown by $10 billion by 2030. That represents an annual growth rate of just over 2% per annum, although the communication spin doctors did not actually say that.
I reckon that growth of around 2% per annum may well prove to be realistic. But if we want to grow at that rate in real terms after allowing for inflation, then some hard work is going to be needed. On a per capita basis, that will still be close to a gain of zero if New Zealand goes back to pre-COVID population growth rates.
In another five years when we look back and can see the first two decades of this 21st Century in better perspective, we are likely to recognise the extent to which food and fibre industries have underpinned the New Zealand economy for the last 20 years. During this period there was a strong upward trend in global prices, measured in US$, for most of the products that New Zealand produces.
Much of the urban community does not understand the reasons that living standards increased, at least as experienced by middle and upper-income demographic groups. Rising export prices plus increasing volumes led to much stronger foreign exchange rates than in the prior two decades. All consumers benefitted from this one way or another.
Back in 2015 when I was writing for the Sunday Star Times, I wrote a series of articles exploring where New Zealand’s future food and fibre income might come from. My thinking was that some of the big gains we had made in dairy, wine, kiwifruit and seafood, with much of this stimulated by growing trade with China, would be challenging to replicate. These articles are archived at my own website https://keithwoodford.wordpress.com.
I have been positive about kiwifruit for many years and I remain positive. Kiwifruit has to be one of the greatest New Zealand success stories, built on breeding and consequent ownership of new varieties. There may well be bumps along the way but the future continues to look bright.
I have also been intrigued for a long time by the prospects for mussels and other shellfish. It is clear that further development now depends on the success of offshore fisheries. The environmental limits have largely been reached in relation to enclosed waters.
I also remain positive about the future for dairy, but considerable transformation of that industry will be needed. I am sure the industry of the future is going to look very different to the current industry and I remain of the perspective that major parts of the industry are locked in the past. I will have more to say about that going forward.
I am cautious about forestry. The current Government policy allowing foreign investment for forestry is distortionary. It results in New Zealand earning up-front income from the sale of the land, but the subsequent income flows from sale of carbon credits will flow straight back to the foreign owners. It really is a case of selling out the future.
As for new uses of timber in building and consumer products, that could be exciting. However, New Zealand cost structures are such that the value-adding will be done overseas except for any products used in New Zealand. Also, once China’s big infrastructure projects eventually slow down, the need for New Zealand logs to be used in formwork over there will reduce. How will New Zealand’s timber then be used?
What I had hoped for in the documents proclaiming a roadmap towards industries ‘fit for a better world’ was genuine strategic leadership. Instead, the documents are full of aspirational fluff. It’s largely spin-doctor stuff. The hard work of finding the new technologies and associated pathways is all for the future.
However, it is always nice to leave with a positive message, and so I will do that. The good news is that with tourism in big trouble and the aluminium smelter apparently heading for closure, there does seem to be increasing recognition from Government as to the role that the food and fibre industries must continue to play as the backbone of the New Zealand economy. That seems to be a step forward.