29 minute read
Better health lowers livestock gas profile
FARMERS WEEKLY – farmersweekly.co.nz – August 22, 2022 7 Better health lowers livestock gas profile
Richard Rennie richard.rennie@globalhq.co.nz
A UNITED Nations report on the role animal health improvements can play in lowering agriculture’s greenhouse gas emissions highlights the opportunities New Zealand farming has to deliver a win-win-win for the environment, farmers and livestock.
Released last month, the UN report was partially funded by the Global Dairy Platform and received financial support from the NZ government.
Unproductive emissions from livestock are typically associated with animals that are sub-par, resulting in increased culling, discarded product, prolonged calving intervals and lower per head production per tonne of greenhouse gases (GHG) emitted.
The report’s authors note the impact of improvements in animal health are not currently included in most national GHG measurements, and call for this to change.
Zoetis global sustainability manager and veterinarian Kristen Baxter is calling for a closer look at how the report’s recommendations could play into better dealing with clinical and sub-clinical diseases present in many NZ dairy and dry stock herds.
Baxter recently completed a master’s research project on the carbon footprint of internal teat sealant intervention to prevent mastitis in NZ dairy cows.
“Working with AgResearch, we looked at North Canterbury dairy herds that already had relatively low levels of mastitis infection,” Baxter said.
“We found they achieved approximately a 1% reduction in whole farm emissions over the entire year just from using teat sealants to prevent early season mastitis. This is a significant amount when put across the national herd, and the gains are even greater in herds with higher levels of mastitis infection.”
The UN report cited the Oceania region as one that could achieve 14%-17% reductions in GHG emissions through mitigation packages focused on animal health.
Some of the recommended improvements included dietary adjustments to better meet nutrient requirements at certain times of year, reducing emissions and improving animal productivity.
It cites how parasites in livestock can affect feed efficiency and increase the methane yield per kilogram of dry matter eaten by as much as 33%.
It mentions one problematic disease found in NZ, bovine viral diarrhoea (BVD) as a particular opportunity, given its sub-clinical nature and corrosive effect on herd productivity.
In NZ BVD has been estimated to cost the dairy sector alone $150 million in animal health costs and lost production every year. Experts have said that a focused campaign similar to that applied to M bovis could eliminate the disease in a matter of months.
“It would be easier to get rid of than M bovis in the sense we have good tests for it, and it is particularly easy to test for in dairy herds now. But in order to eradicate the disease, we need a focused, co-ordinated national programme, which Massey has been working on,” Baxter said.
Another disease that could be targeted is Johne’s disease, which has a similar impact on eroding herd productivity and is endemic in NZ cattle, sheep, deer and goat populations.
Baxter said higher replacement rates in dairy herds due to infertility or disease in adult herd members mean replacement heifers represent a significant contributor to dairy’s GHG profile, with about 25% of dairy cattle being held as replacements nationally.
“Cow longevity in a herd is a big one. If you can get them in, and keep them there healthy and productive for longer, that has the biggest impact on lowering replacement rates.”
Some of the countries covered in the UN report may not have good statistics and data on their herds, but NZ is well placed to work on a farm level to incorporate improvements in animal health into national GHG accounting.
“We have the numbers on herd sizes [and] production and could put a measurable figure on improvements to GHG losses if some of these diseases were addressed nationally,” Baxter said.
With He Waka Eke Noa (HWEN) now requiring farmers to “know your numbers” when it comes to GHG emissions, Baxter said the government has a role to play in ensuring improvements to herd health are measured in terms of their impact on individual farm emissions profiles.
In the near future she would like to see farmers able to connect specific animal health actions to lowering a farm’s GHG profiles, possibly by running “what if” scenarios on disease control and outcome.
“This would all play into HWEN calculations and New Zealand’s international climate commitments. For farmers, many of the reductions they will have to make to meet GHG emissions targets will be upfront costs, without necessarily any great income gains.
“Recognised improvements to animal health in herds delivers a win for everyone.”
Kristen Baxter Zoetis
HEALTHY OUTCOME: Recognised improvements to animal health in herds deliver a win for everyone, Kristen Baxter of Zoetis says.
BRING IT DOWN: Kristen Baxter says in future she would like to see farmers able to connect specific animal health actions to lowering a farm’s GHG profiles.
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News New accord for spring sowing
Gerald Piddock gerald.piddock@globalhq.co.nz
A NEW accord between rural contractors and landowners that accounts for input cost volatility should be ready in time for spring sowing.
The contract was created as a way to more fairly allocate the costs of fuel, fertiliser and other inputs after they skyrocketed last season from when crops went in the ground to when they were harvested.
It saw many contractors struggle to break even by the time the crop was ready for harvesting.
The accord was created by Rural Contractors New Zealand (RCNZ) and Federated Farmers after a meeting in Hamilton in May this year, when Waikato contractors said their costs had risen by 25%.
RCNZ chief executive Andrew Olsen updated contractors on the progress at a roadshow meeting in Hamilton.
“The opportunity is to ensure that it’s not only contractors that do well in their business but making sure their customers do as well. We have to keep the farmers alongside this,” Olsen said.
“It started with farmers saying it can’t be a race to the bottom. We need to find a way make sure that costs entering the system are dealt with appropriately.”
The roadshows have confirmed that costs are a big issue for rural contractors and contracts are needed to reflect scalability in how costs are being treated by contractors and farmers, he said.
“That’s our focus in the next weeks and months – Federated Farmers and RCNZ wrapping education around this issue.”
The roadshow was one of three held in the North Island, with the other two having taken place in Palmerston North and Whangarei.
NZX Head of Insights Julia Jones told contractors they needed to know the numbers that drive their business and share them with their farmer clients.
Jones said they need to know the margin they are making. “What revenue do you get from a job? No one wins if you are not making money.’’
As a lifestyle block owner in the Waikato, Jones said, she is herself a user of the services provided by the $2 billion rural contracting industry.
“I tell my rural contractor to charge me more,” she said.
Jones said rural contractors need to develop an ethos about charging appropriately and realise that “you don’t have to do business with everyone”.
World food prices are going through the roof and no matter how global tensions play out, people will always need to eat. Rural contractors are key to that happening, she said.
“Your role isn’t going to go away but you do need to evolve and stay relevant.”
NZX is being contracted to deliver a cost reference point to RCNZ and Federated Farmers.
Olsen said it will be available to RCNZ members via the organisation’s website. It will allow them to track fuel and fertiliser costs and help them with their planning. “Other cost reference points may be added in time if we can get meaningful independent data.”
They will also be regularly updated and monitored to reflect the farming environment.
Waikato Federated Farmers arable chair Keith Holmes, who was part of initial meetings earlier this year on cost issues, told the Hamilton meeting he fully endorsed the accord being developed. “Farmers and rural contractors need each other,” he said.
“My plea is that you take on board what Julia and Andrew are saying and do your numbers and don’t get yourself into a situation where you put yourself at risk by having a handshake deal, particularly when you are trading maize.
“Make sure it’s a legal document through Federated Farmers or Rural Contractors.”
The North Island roadshows will be followed by meetings in Gore and Christchurch before the end of the month.
They also include presentations from the Ministry for Primary Industries and Growsafe’s Dean Bowden, who provided a welcome update to spraying contractors on the requirements of new standards for the storage, transport and use of agrichemicals.
“Chemical storage and labelling is a key area for our members,” Olsen said.
“It’s in transition and there are some hard-stop deadlines in 2025 which we and Growsafe will continue to emphasise.”
NUMBERS GAME: NZX Head of Insights Julia Jones says contractors need to have a clear idea of their costs and margins.
TEAMWORK: Australia’s Minister for Agriculture, Fisheries and Forestry, Senator Murray Watt, says he and Damien O’Connor affirmed their commitment to maintaining stringent arrangements to protect Australia and New Zealand from biosecurity threats like foot-and-mouth.
Trans-Tasman effort against FMD
Staff reporter
A TRANS-Tasman effort is underway to ensure foot-and-mouth disease is kept out of Australia and New Zealand.
Australia’s Minister for Agriculture, Fisheries and Forestry, Senator Murray Watt, met with his NZ counterpart, Damien O’Connor, Minister of Agriculture, Biosecurity and Rural Communities, last week.
Watt said biosecurity is a central component of Australia’s close and productive relationship with NZ amid a range of common risks, especially the FMD outbreak in Indonesia.
“Minister O’Connor and I had a very good meeting and reaffirmed our commitment to maintaining stringent arrangements to protect our countries’ respective biosecurity status,” Watt said.
“We discussed ongoing work by senior biosecurity officials to harmonise approaches where possible, primarily focusing on how we are managing the risks of FMD.
“Both countries are signatories to the International Animal Health Emergency Reserve, which would afford us additional human resources in the event of an emergency animal disease outbreak, allowing for faster control and increased chances of eradication.”
O’Connor said greater co-operation is integral to reducing biosecurity risks in the region as threats from FMD and fruit fly loom over Australasia.
“I am very pleased to have discussed joint efforts to strengthen preparedness and response capabilities with Minister Watt today and evolve our biosecurity interventions, so we stay in step with each other” O’Connor said.
“Since 2018, Australia and New Zealand have collaborated on developing world-first digital technology as part of the transTasman co-operation on biosecurity risk detection.
“We continue to work together on a range of biosecurity initiatives, such as increasing our intelligence capacity to ensure our biosecurity systems are world’s best.”
Restoring the mauri of the Waiau Uwha River
John Faulkner is working to restore an 18km stretch of the Waiau Uwha River, after realising that some farming systems are not as friendly to the environment as they could be. Watch the video now at youtube.com/OnFarmStory This episode was made possible with support from
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Effluent proving a problem in Waikato
Gerald Piddock gerald.piddock@globalhq.co.nz
A STUBBORN minority of Waikato dairy farmers are refusing to make efforts to change their farming practices to become fully compliant around effluent management.
Of the 789 farms inspected by the Waikato Regional Council for the 2021-22 season, 54, or 7%, were significantly non-compliant.
That percentage is unchanged from the previous season, Waikato Regional Council regional compliance manager Patrick Lynch said.
Many of these farms would have had previous visits from council inspectors, he said.
However, full compliance rates had lifted from 37% to 49%, with 379 farms being fully compliant.
“We’re finding the bad stuff at the same rate. However, at the other end of the spectrum, there are more people improving,” Lynch said.
Those fully compliant farmers know the rules and are following them. But at the bottom end, a minority of farmers are resistant to change, he said.
“It feels like for us, that when we find the bad stuff, these are people who simply don’t want to change.
“They have had all of the warnings and guidance from their own industry – supply companies, DairyNZ, the wider community and us as the regulator and yet there is this realm of around that 7% and we’re having to engage with them one at a time and use our harsher regulatory tools to get them to change.”
Though 7% may seem like a small component of the industry, the scale of the dairy industry in the Waikato means there are as many as 300 dairy farms with inadequate infrastructure, posing a threat to the environment, he said.
“The good farmers are doing the right thing and there are more people trending towards doing the right thing, but the real issue is what appears to be this core of poor performers who are absolutely resistant to change.”
There were 117 enforcement actions resulting from those inspections including 35 abatement notices, 12 infringement notices and 69 formal warnings.
The remaining 356 farms had degrees of non-compliance that sat between the two ends of the spectrum.
Being fully compliant came down to having proper infrastructure and that infrastructure being properly managed.
Those 356 farms had issues relating to those factors, he said.
“They may have the infrastructure but have let themselves down with the management, or the infrastructure is not quite there yet,” he said.
The number of farmers being taken to court has fallen over the past 12 months as the judicial system struggles to cope with delays due to covid-19. It has resulted in delays in trials, he said.
In one case, the council initiated court proceedings against a recidivist farmer 18 months ago. The case is set to be heard only in February 2024, he said.
“All of the court cases have really slowed down. That’s not a criticism of the court, but a reflection of how challenged they are.”
They have had all of the warnings and guidance from their own industry and yet there is this realm of around that 7% and we’re having to ... use our harsher regulatory tools to get them to change.
Patrick Lynch Waikato Regional Council
UP TO SCRATCH? The Waikato Regional Council inspected 789 farms last season and judged 379 as fully compliant with their effluent management.
Investors seek inflation-proof assets
RURAL APPEAL: Rural investments are lining up well against urban opportunities, MyFarm head of investment Con Williams says. Hugh Stringleman hugh.stringleman@globalhq.co.nz
INVESTORS in rural syndicates are placing more emphasis on inflation resilience and the potential of their investment to deliver if interest rates rise, MyFarm head of investment Con Williams says.
MyFarm called a nationwide series of winter gatherings of its investors and drew more than 250 attendees, from whom Williams gathered feedback on what investors are seeking in the current economic climate.
They are still keen on productive, land-based assets delivering a steady income in uncertain times, investments with strong fundamentals and some tax efficiencies.
Over the past three months MyFarm has signed up $47 million worth of syndicate units, supplemented with $24m of borrowing, to purchase $71m of assets.
Williams used the recent Bristol Properties poultry production facility in Taranaki as an example of investors’ needs being met (Farmers Weekly, July 4).
“It is in a critical supply chain infrastructure with rentals adjusted by the consumer price index to deliver fixed income growth,” he said.
“The company that is leasing your property has a strong market position in food production with good operating margins and buffers against rising costs.”
MyFarm investments carrying 30% to 40% debt will be more resilient than more heavily indebted businesses if interest rates rise.
The budgets for its propositions include 5.5% to 6% interest rates, and actual rates charged are currently lower but expected to rise.
Williams said rural investments are lining up well against urban opportunities, offering real assets in primary industries with inflation resilience in contrast to falling property values.
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News PGG Wrightson posts record result
Gerald Piddock gerald.piddock@globalhq.co.nz
PGG Wrightson has announced a record result for the financial year ending June 30.
It reported net profit after tax of $24.3 million – up $1.6m or 7% on the previous year – and revenue of $952.7m, up $104.9m or 12%.
Its operating EBITDA was $67.2m, which was up $11.1m or 20%, and it declared a dividend of 16 cents per share.
PGW chair Joo Hai Lee said it is a result the PGW team is very proud of, after a year that was challenging on many levels.
“Like all businesses we have had to navigate managing covid-19 protocols, dealing with a high proportion of health-related staff absences, responding to supply chain challenges, and resourcing the business in an extremely tight labour market.”
These results were achieved as a consequence of significantly higher revenue growth (up $105m or 12%) with margins broadly in line with last year.
Lee said the dividend will be paid to shareholders on October 3, bringing the total fully imputed dividends for the year up to 30 cents per share.
PGW chief executive Stephen Guerin credited a combination of factors, ranging from high returns in the primary sector to capital development in the industry – particularly in horticulture – and rising prices, which had lifted revenue, as well as an increased market share.
Guerin said the company had handled covid-19 disruptions including staffing and supply chain issues well.
To help mitigate supply chain risks, PGW sourced product earlier and carried more inventory that it had historically. It, like other sectors, is struggling to find staff in various areas of the business, he said.
Its retail and water businesses performed extremely well, reporting an operating EBITDA of $52.5m, up $15m on the prior year.
Fruitfed supplies also had an excellent year and its wholesale business division, NZ agritrade, performed well over the year.
PGW’s agency group – consisting of its livestock, wool and real estate businesses – had an operating EBITDA of $21.8m, down $3.3m on the prior year’s strong result.
He said PGW’s real estate has enjoyed another successful year. While returns in the residential and lifestyle channels have been challenging, sale volumes of rural properties were strong.
“We anticipate continued solid performance in the rural property market segment with favourable spring appraisals and listings due to continued horticulture growth and carbon/forestry interest in sheep and beef properties,” Guerin said.
Its capital expenditure of $8.8m was $2m million higher than June 30, 2021, which was impacted by a slowing in the implementation of projects as a consequence of covid-related disruption.
Its net interest-bearing debt was $32.8m as of June 30 2022.
Looking ahead, Guerin said the profitable run for most New Zealand agri sectors looks likely to continue through the remainder of 2022 and into the coming year.
However, inflationary pressure on input costs will likely translate into reduced on-farm profits, and exporters will still need to navigate high shipping costs and challenging logistics.
For PGW, while the commodity outlook is positive, some clients are showing caution as they attempt to manage their costs, he said.
“We are seeing some cautiousness in this space. While dairy prices are at $9/kg MS-plus, the cost of production is up to $8,” he said.
Guerin said the business is conscious of the impacts of inflationary pressure.
“Our margins have been stable and we have managed to absorb freight costs and have passed on freight costs so we haven’t pricegouged in this space.”
Clients are showing caution when it comes to purchasing decisions around inputs such as fertiliser.
However, in the horticulture sector, where crops tend to be long-term investments that need to be looked after, growers are still placing orders for inputs, he said.
But they are also wanting to ensure they have enough supplementary feed and so far there has been good forward demand for maize seed ahead of spring sowing.
“Forward orders are up slightly on last year. That suggests positivity and they need to ensure they have feed available for their animals,” he said.
“There is a degree of certainty here alongside some cautiousness around the discretionary spend.”
Further out, Guerin sees the emergence of biological products that will eventually replace agrichemicals usage on farms.
“This is an area of real significant change in the agricultural sector here in New Zealand.
“PGW is well placed in this space, we have good relationships with the multinational companies, we’re doing lots of research on these products in New Zealand, and they are probably two to three years away from commercialisation.”
PGW’s board will update expectations for the 2023 financial year at its annual meeting in October.
RESULT: PGG Wrightson chief executive Stephen Guerin says the profitable run for most New Zealand agri sectors looks likely to continue through the remainder of 2022 and into the coming year.
Skellerup boosts annual profit by 19% to $47.8m
BusinessDesk
SKELLERUP breezed past its previous guidance and lifted annual net profit by 19%, attributing the growth to the rubber manufacturer’s “unwavering focus” on its customers and products.
Net profit for the year ended June 30 jumped to a record $47.8 million compared with $40.2m in the previous year.
Skellerup forecast full-year net profit between $44m and $47m back in February when the company revealed its half-year earnings had jumped by 19% to $23.2m.
Chief executive David Mair said the company’s continuing investment in systems and people was key for the company to deliver financial returns.
“We regard investment in systems, process and people as critical to our future success,” he said.
“This requires not only investing in systems but ensuring we carefully evaluate our performance, injecting new people into our businesses to challenge and improve what we do.”
The company’s earnings before interest and tax (EBIT) of $66.8m were up 18% from the previous period, with Skellerup’s industrial division lifting its EBIT 20% to $39.1m, and the agri division’s EBIT up 10% to $33.6m.
Mair said the company’s agri division is a “world leader” in the design and manufacture of essential items for the global dairy and farming industries, which include fire, forestry and electricity.
He said sales of dairy rubberware and footwear in the US and New Zealand markets had increased in the 2022 financial year, and the company’s productivity gains from its NZ and China manufacturing facilities had helped offset the “significant impact” of increased raw material prices and freight costs.
Skellerup’s chair, Liz Coutts – who is stepping down from her role in late October – said the company will pay a final dividend of 13 cents per share (cps), 50% imputed, bringing the total payout for the year to 20.5cps – up 21% from the previous year.
THE ALL NEW COOPER RUGGED TREK®
Hard work pays off – on both kinds of fields
Staff reporter
HE’S INSTINCTIVELY working the Colin “Pinetree” Meads model, only in an entirely different context. And Fijian international rugby star Seremaia Bai is making a real success of it – not just for himself.
For while Meads trained in his King Country paddocks for his superlative rugby feats back in the day, and went back to farming after active rugby playing, Bai is operating in the new world of professional sport. Which is not all rosy, and which has its own attendant challenges.
“The average professional career of a Fiji rugby player is approximately 10 years. But while so many young players have dreams, only 2% make it to the professional level. What happens to the other 98%?” Bai said.
To address this question, Bai started the Agro-Rugby Programme. Its vision: Through rugby, to educate young players, through discipline and by holding on to cultural values. To use agriculture as a vehicle for rugby preparation – mental and physical. This is underpinned with entrepreneurial training and coaching for a pre- and post-rugby career, and for the challenges faced during the rugby years.
In Bai’s programme, rugby training takes place twice a week for one and a half hours, with additional weight training. Farming takes place for three half days a week, with physical work in the fields for half that time, and half taken up with education in financial skills and entrepreneurship.
To this end, Bai bought a substantial farm block in rural Nausori, just outside Suva. The young participants are helping to plant 2,000 taro plants per month. They’ll be ready for harvesting in October-November this year. “We also need to clear more land to prepare for planting more taro, cassava and ginger.”
It’s hard yards as evidenced by the sweating young men wielding machetes and other agricultural tools. It’s living testimony to Bai’s belief in instilling self-discipline. And it’s a tight ship: foul language is not permitted.
Bai met up with Pacific Trade Invest’s New Zealand Trade Commissioner Glynis Miller at the Agro-Rugby farm. He and his rugby-playing learner farmers will soon be looking at export markets for their produce, and for further investment in the project – and that’s where Pacific Trade Invest can help, with its offices in Australia, China, New Zealand and Switzerland promoting entrepreneurial exports from the Blue Pacific, and investment into the region.
Rugby has taught Bai everything: “That there is life after a successful rugby career if you have the vision and passion to pursue your dreams other than rugby. To start a business, for example.”
He learnt the hard way. He played professional rugby for 16 years. He made his international debut for Fiji in 2000, in a famous match against Japan which Fiji won 47-22. In that same year, he was also capped for playing test matches against Canada, Italy, Samoa, and the US. In 2001 he played Samoa and Tonga (twice). In that second match against Tonga he broke his ankle, which was a setback he could ill afford. The injury normally takes three to four months to recover from, but this took 10 months of gruelling rehab that was all on Bai’s own bat, without financial support. But he had the sheer determination to get back into the game; and in 2002, he joined Southland for the New Zealand National Provincial Championship, and toured the Northern Hemisphere with the Fiji national team.
The thing with professional rugby careers – if they can be achieved at all – is that they have a boom-and-bust cycle. Which Bai is determined to break.
“Rugby players can go from nil income to an annual average of US$90,000 [about $140,000]. The contract fee income for professional Fijian rugby players is on average around US$10,000 per month.
“In France there are around 400 Fijian rugby players playing club level. They can earn US$1.2M annually, yet they have next to nothing to show for it,” Bai said.
“But post-rugby employment opportunities for our players do not exist. We end up back in the village with nothing to show for our rugby fame and legendary status. Professional Fijian rugby players return home broke – financially, mentally and spiritually.
“I intend to change that for the next generation of rugby players.”
Bai’s Agro-Rugby operation was successfully registered as Eastern Saints co-operative in May 2022. There’s also a mobile rugby academy, Kids Club, for children 5-13 years, juniors 14-18 years, girls 16-18 years – and of course the “open division” for the really serious players under the Eastern Saints Rugby Club.
The mobile academy includes a Wellness Breakfast programme, which is held fortnightly at Albert Park. Participants bring produce and contributions to a basket, which is then sold. Those funds go to buying taro crops, organic liquid fertiliser, spray tanks, farm implements and power tools like chainsaws.
Bai has sent a small cohort of players to New Zealand and to Japan on rugby scholarships, the average age of the players being 17 years.
Bai knows where he’s come from. He was born in Nausori, Fiji, to a single mom. He dropped out of school at 15, with no real formal education. He’s married, with five children. And he got to play international rugby for Fiji. But most importantly, he knows where the young people he’s mentoring can go.
With the Agro-Rugby Academy, Bai is committed to creating a safe environment for the young players. Of those who signed up at the academy, 15 remain as a committed core group. “The majority of youth in Fiji have no formal education,” Bai said. “Hence they look to rugby as a way out of poverty.
“Farming is seen as a poor man’s job. Everyone wants an office job. No one wants to do farming.”
Except for Bai, with his vision for Agro-Rugby. He’s merging three complimentary skill sets – agricultural work, rugby and entrepreneurship – and turning that into a lasting legacy. One of financial security.
As Bai said: “Success is when opportunities and hard work converge.”
Just like it did for that towering figure of world rugby, Colin Pinetree Meads.
We end up back in the village with nothing to show for our rugby fame. I intend to change that for the next generation of rugby players.
Seremaia Bai Retired Fijian back
WAY OUT: Young Fijians look to rugby as a way out of poverty, Seremaia Bai says, but are often left with little to show for an international career.
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Available to assist with resolving rural disputes, or for appointment as a Sharemilking Conciliator, Rural Arbitrator or Farm Debt Mediator throughout New Zealand.
News Farming is still NZ’s primary industry
BusinessDesk
NEW Zealand faces an uphill battle if it wants to diversify exports away from primary industries, says research published by the Ministry for Business, Innovation, and Employment (MBIE).
The report, “NZ’s Export Advantage”, says the number of product categories in which the economy is competitive narrowed from a peak of 809 in 2006 to 531 in 2018, with the primary sector dominating those that remained.
It said the economy had gone down a path of developing strong capabilities in primary exports, firstly to the UK and then to China, and it would take a deliberate and concerted effort to shift into different kinds of goods production.
On climate pressures, the report suggests policymaking should focus on how goods are made rather than which goods are made.
The research identified product categories that had a “comparative advantage”, meaning their share of NZ export value exceeded that of the same product’s share of world trade.
For example, global exports of apples make up 0.04% of world trade, but they account for 1.4% of the value of NZ exports of goods, showing that our industry is 34.7 times more productive than the average country in exporting apples.
MBIE found NZ had a competitive advantage in 214 categories (5.4% of the total), from 1995-2018, and those products are mostly linked to farming, forestry and food production.
The 214 categories accounted for 74% of the value of merchandise exports in 2018, up from 70% in 1995, suggesting most growth came from adding scale or variety to existing products.
A further 4.6% of the value of merchandise exports came from fast-growing categories that had developed a comparative advantage over the previous decade.
These categories were also mainly linked to the primary sector, which suggested the evolution of comparative advantage was first concentrated in the primary sector and continued to follow “path-dependent” rather than “path-defying” trajectories.
For example, within the machinery and electrical categories, emerging advantages included industrial machinery for food and drink preparation, harvesting machinery, straw balers, manure spreaders, wood and paper dryers, and machines for manufacturing cocoa or chocolate.
Outside merchandise trade, only tourism appears to show a comparative advantage, but some services had sustained high rates of annual export growth, including insurance and pension services (16.4%), financial services (8.7%), and use of intellectual property (14.1%).
These growth rates greatly outpaced growth in the world markets for these services and, if this continues, these services could emerge as future comparative advantages.
POTENTIAL: NZ has a competitive advantage in 214 areas, mostly linked to farming, forestry and food.
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