Hon Jim Sutton

Speech Notes

18 August 2004

Meat Industry Association annual meeting, Christchurch

Chairman Bill Falconer, chief executive Caryll Shailer, Ladies and Gentlemen, thank you for the opportunity to speak today. It's a pleasure to be here.

Now is a fairly buoyant time for the red meat industry. Rabobank reports that farmer confidence is about 90 per cent, and farmers plan to invest in their farms and equipment. Meat companies are also investing, with new plants springing up around the country.

Feed might be short in some regions, but on the whole, the situation is positive.

MAF is expecting that over the next three years, - dairy cattle numbers will rise by 4.9%; a much more moderate rate than earlier years; - sheep numbers will rise by 1.1% on the back of improved lamb to beef price ratios; - beef cattle numbers will fall by 11.7%; largely because of a carryover of slaughter cattle in June 2003; and - deer numbers will fall by 2.4%.

On-going productivity is expected in lambing percentages and carcass weights, particularly for lamb. Lamb carcass weights are heading for a record 17.3 kg for September year 2004. The latter reflects a good growing season and the cumulative impact of genetic and sheep husbandry improvements.

Autumn 2004 was excellent for tupping and scanning results across the country indicate a bumper 2004 lamb crop. The recent cold spell and delay in the start of Spring pasture growth may reduce normal lamb survival. Nevertheless a significant increase in lamb slaughter numbers is expected in the year to 30 September 2005.

Beef production is estimated to be up 9% in the year to 30 September 2004. The cow kill in particular has increased markedly over the last two years. It is not clear whether this reflects a permanent increase culling from the national dairy herd or is a temporary phenomenon related to the droughts in autumn 2003 and drier than average conditions in late Spring/ early Summer of this year or a combination of both.

And what of the Government's role?

Well, for me, it is twofold.

There is the domestic side of things, and I think it is fair to say that the Government has listened to your industry and what you have had to say. The meat industry is a major reason why the Holidays Act has been changed to clarify responsibilities of workers and employers.

There certainly was a problem in your industry with the penal rates on sick leave, and Labour Minister Paul Swain was shown information on that, which I think had an impact on the subsequent law change.

For me, there is a real concern as to why so many of your workers seem to delight in rorting the system¡K.

The other important role the Government has in partnership with your industry is in the international arena.

One of the most important things the Government can do, in my opinion, is to work to maintain and enhance the level of access to overseas markets New Zealand exporters can have.

We are working hard at the World Trade Organisation on the Doha Development Round. Earlier this year, I was hopeful of a seismic shift in international trade, and last month's meeting in Geneva confirmed it: finally, we have a commitment to eliminate export subsidies, the most pernicious trade barrier.

Just when those subsidies will be eliminated is still up for negotiation, but that does not negate that fact that it will happen. I am confident that WTO members will not let them suffer a long, slow, agonizing death. Rather, a swift mercy killing is in prospect.

The Doha Development Round is our top trade priority, our Plan A. But we do have a Plan B - a network of comprehensive regional, plurilateral, and bilateral trade agreements. And we have quite a few on the go right now.

Our negotiators are about to begin shortly the third round of negotiations with Thailand. We are still aiming for signature at the APEC Leaders meeting in Chile in November this year.

Earlier this month, we hosted the latest round of Pacific Three negotiations with Chile and Singapore, after a break in the process from late last year. We are aiming to conclude negotiations by April next year.

I attended an ASEAN meeting in Jakarta last weekend, and economic ministers there have endorsed a recommendation for leaders to initiate a trade agreement between the ASEAN countries and Australia and New Zealand in November. I am extremely pleased with this as it's something New Zealand has been working towards for many years now.

On China, we are presently undertaking a joint study, which we hope to complete by mid-November. Both sides are still aiming to start negotiations in the new year.

Even closer to home, we have the prospects of negotiations with our Pacific Island neighbours. The Pacific Agreement on Closer Economic Relations (PACER) contains a provision under which we and Australia can enter into consultations leading to negotiations for a trade agreement, to match similar moves with other partners.

We are continuing to work with Mexico and South Korea on bilateral agreements, and talks with Hong Kong are still pending. Other partners are in the wings.

The United States is obviously top of our list of other possibilities. We have made clear our strong interest in negotiations on a trade agreement, and are continuing work to build our constituency in the US. But we recognise that any decisions on the part of the US Administration will have to await the elections in November.

New Zealand is a trading nation, and we are dependent on access to other countries' markets for our well-being. I can assure you that this Government is doing everything possible to ensure our producers continue to have that necessary access and that it is improved.

Contingent in that happening is a commitment by New Zealand producers to continue to produce safe, high quality products - in a mix continuously responding to the evolving tastes of the world's most discerning customers.

In the past few months, we've seen what happens to producers who can't demonstrate that commitment.

Lamb and beef prices rose significantly this year, because of livestock disease problems or their aftermath in the key markets of the European Union and North America - foot and mouth disease and BSE.

Korea and Japan have increased their imports of New Zealand beef as a result of the banning of North American beef following the discovery of BSE in those countries. Since Seoul banned Canadian and American beef late last year, Meat & Wool New Zealand advises that New Zealand's share of the Korean market has jumped to 40 percent from eight percent

The BSE situation in North America (and a foot and mouth disease outbreak) is an object lesson for New Zealand. If either BSE or foot and mouth disease occurred in New Zealand each would have a profound impact on beef farmers and the economy as a whole.

The Government's biosecurity policy is, therefore, profoundly significant and essential to NZ's primary industries. Freedom from exotic pests and diseases is the motivation for the current restructuring of government agencies responsible for biosecurity policy advise implementation. A new and expanded business group with MAF will be responsible for biosecurity.

I can assure you that this Government remains committed to strong and effective biosecurity measures. We've increased baseline biosecurity funding more than 57 per cent since we became Government, and I have no intention to stop asking for more. That extra funding has made sure of 100 per cent screening of all air passengers and of sea containers, significantly reducing vulnerabilities.

Another pressing issue for New Zealand is the Chinese approval of our meat plants for export to their market.

Many meat producers and exporters see great prospects in the Chinese market. We have undoubtedly been seeing good sales there in recent years, especially in lamb for re-processing. So, the latest issues are disappointing.

Officials and politicians at all levels are working in partnership with your association to regain access to the Chinese market.

It is too soon to know the outcome, but we remain hopeful that the New Zealand meat production and regulatory systems will get their well-deserved sign-off.

It is likely there will still be issues bedding down the new arrangements with China. There will be frustrations at the China end, as officials there sort out their import systems.

For our part, we still have to get them to accept that modern meat systems such as those operated in New Zealand can track product adequately from slaughter plants to off-site locations for processing and storage, for instance.

Officials tell me that the Chinese audit team which visited last month was prepared to listen to NZFSA explanations, officials have a good dialogue going on these issues, and they may respond as we would wish.

However, that may take time. The government is pursuing solutions in talks with Chinese counterparts, but there are bureaucratic procedures that also need to be followed. The market is one which, in the long run, will repay careful development now. Patience is required as officials work through the issues with the Chinese authorities.

NZFSA officials will be visiting China again soon, and they will be follow up the offer it made during its July visit for NZ to fund two AQSIQ officials to come to Wellington to learn about its e-cert system.

Ladies and Gentlemen: the red meat industry is a significant and important one for New Zealand.

Just over 100 years ago, you were the groundbreaking export industry for our young nation, and today you still define New Zealand in the minds of many people around the world - roast lamb has a special part of my heart too.

Thank you for your efforts, and may I encourage you to take up the export opportunities that are likely to open up in the coming years.

ENDS

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