Sutton Speech: Agriculture And Knowledge Economy
Jim Sutton Speech On Agriculture And Knowledge Economy
Primary Resources Forum, Lincoln University
Professor Jacqueline Rowarth, ladies and gentlemen: thank you for the invitation to speak with you today.
Now is the mid-point in the term of the first Labour-Alliance coalition government. I think it's appropriate therefore to look back at what has been achieved and to sum up the current situation.
The primary production sector is currrently in good heart. Confidence is at an all-time high. Earnings are up. The three variables governing farming - climate, prices, and the exchange rate - are all working in most farmers' favour most of the time. That's a circumstance unique in my 40 years of involvement in agriculture.
Export volumes have risen, and that has flowed through to improved balance of payments statistics.
For the year to March this year, the value of total pastoral exports is estimated by MAF to rise by 28 per cent to $12.1 billion. Over the same period, forestry exports are estimated to rise 21 per cent to $3.4 billion.
MAF has also estimated that for the year to March this year, the contribution of agriculture to gross domestic product will increase to about 6.1 per cent, due to higher production volumes - particularly in dairy - and higher farmgate prices. When associated manufacturing and processing industries reliant on agricultural production are included in those figures, the total contribution to GDP is about 15 per cent.
The agricultural, horticultural, and forestry sectors cover 57 per cent of New Zealand's land area, produce more than 60 per cent of our export earnings, and employ about 240,000 people.
The importance of the primary production sector is not being overlooked by this Government.
In contrast to previous governments during the past 20 years, which dubbed agriculture a "sunset industry", the Labour-Alliance government is well aware of how much New Zealand relies on the farmers, growers, foresters, scientists, and all the other people working in primary production.
From the Prime Minister Helen Clark and Treasurer Michael Cullen, as well as Deputy Prime Minister Jim Anderton, there is a recognition that agriculture is the backbone of the New Zealand economy.
The Government has had a busy agenda in the primary production sector since taking office in December 1999.
Structural reform has tended to be the priority, as long as it fit the three criteria set out in the Labour party's manifesto - the proposed change has to be supported by a majority of industry participants, it has to be fair to minority interests, and it has to be in the public good.
The Government has enabled the Kiwifruit industry to set up the ownership structure it wanted, as mandated by an overwhelming majority of growers.
The Government has facilitated a proposed merger of New Zealand Dairy Group and Kiwi Co-operative Dairies and subsequent absorption of the Dairy Board to form what is known as Global Dairy Company at the moment. Legislation to enable that merger and a regulatory package for it was debated by Parliament on Tuesday and has gone to select committee for consideration.
The Government has decided to deregulate the apple and pear export industry, following consultation with industry. Legislation to repeal previous legislation has been debated by Parliament and has gone to select committee for consideration.
As well as structural change, we've been looking at other ways to help the primary production sector.
That's included Government support for the new National Bovine TB Pest Management Strategy which proposes to make New Zealand officially free of the disease by 2013, and the new Rural Affairs portfolio.
As well as representing the economic sustainability, production side of the sector through the agriculture portfolio, I also represent the social and environmental sustainability issues of the rural communities of New Zealand. To have a healthy primary production sector, the needs of the people producing the goods must be addressed.
The new rural affairs unit in MAF has tackled telecommunications, electricity, transport, commerce, health and education issues - many of which are ongoing.
We've also contributed to the Heartland Services Initiative, which sees Government agencies co-ordinating their return to rural areas, as well as setting up the Sustainable Farming Fund with $25 million over three years for projects promoting economic, social, and environmental sustainability in rural communities.
The fund is focussed on producing high-quality results for rural people. The first project to demonstrate its results will do so late next week in Opotiki.
That's where we are now.
As for the future, there will be more change. New structures for the wool industry and for the wine industry are under consideration and there will be movement on both those later this year.
No doubt there will be other changes that come up throughout the rest of this Government's term.
Agriculture is a dynamic sector. It is at the leading edge of innovation and technology adaption. When we talk about a knowledge-driven society or the knowledge economy - we're talking about agriculture. Over the past 15 years or so, since farm subsidies and price supports were abolished, the average annual gain in productivity in agriculture has been 3.9 per cent. For our economy as a whole, 1.1 per cent.
Despite some of the efforts of our best advertising creatives and the mythic images New Zealanders have of themselves, ours is a very urban society. Only about 15 per cent of the population is rural, and increasingly, our children don't get to spend time on farms as they grow up.
It's led to a disturbing situation where kids think milk comes from supermarkets, not cows. A situation where they don't know what primary production is all about - a classic case of out of mind, out of sight.
So now, we seem to have a society where a lot of people - and unfortunately some politicians, though not in this government, I hasten to add - think farmers and other people in the primary production sector are bumpkins, some kind of peasantry, working in a way that people did thousands of years ago.
In New Zealand, that couldn't be further from the truth.
People in agriculture, horticulture, and forestry have been the people quickest to take up new technology, the fastest to adapt developments to their needs, and the swiftest to innovate to develop things that no-one else has come up with.
Here, I presume I'm preaching to the converted. You know how innovative the New Zealand primary production sector is.
Now, it's time to talk about it - to tell everyone else in the country - and to inspire them to get their sectors to develop the same way.
Prime Minister Helen Clark has talked about this - the need to transform our society, to "catch the knowledge wave".
The Government is doing more than just talk about it.
The Government in partnership with the University of Auckland is working on the Catching the Knowledge Wave project and in August, is hosting an associated international conference.
The Prime Minister will co-host this conference. 450 people from across the social spectrum have been invited to participate to create a working conference with the potential to generate a new consensus on paths to a New Zealand version of a knowledge society.
Whether you're invited to the conference or not, it's an excellent opportunity to tell people about what you do, about how innovative our sector is.
Our traditional industries will always remain our strength. Peter Drucker, who came up with the phrase "knowledge economy", said that agriculture is one of the most knowledge-intensive sectors there is.
Sometimes we need to remind our fellow citizens of this.
In closing, New Zealand's first world living standards are threatened by decades of poor economic performance. We must raise our sights and find new ways of creating Kiwi prosperity.
The pursuit and application of knowledge in all its forms is replacing land and machinery as the key factor of global economic and social success.
Innovation and creativity are the hallmarks of knowledge-based industries and their workforces whether engaged in industry, artistic or cultural endeavours - or the primary production sector.
All of us in New Zealand must urgently identify the economic, educational and social barriers and opportunities to encourage active engagement in the knowledge society.
You are leaders - I encourage you to help the rest of the country find the way.