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Sutton -Meat and Wool NZ annual meeting

22 March 2005

Hon Jim Sutton Speech Meat and Wool NZ annual meeting Christchurch

Chairman Jeff Grant, chief executive Mark Jeffries, special guest Tim Bennett, Ladies and Gentlemen, thank you for the invitation to speak today.

Last year, you were bringing together a new organization - combining parts of the old Meat Board and the old Wool Board to form a new entity covering two very important parts of our economy, meat and wool production.

At this conference, you are concentrating on “growing the future”.

For an industry stretching back to the founding of our country, it is important to continue to grow and to innovate.

The meat industry has demonstrated that it can do this - grasping new technology as it developed, from refrigeration to vacuum packing.

Meat and Wool NZ is continuing this tradition of adaptation by its investment in research and development. It is involved in groups as diverse as the Pastoral Greenhouse Gas Research Consortium and the Pasture Genomics Consortia, to name just two.

An interesting development that I endorse is the partnership in research and development that Meat and Wool NZ is working on with Australian counterparts.

While Australia are often our direct competitors in many areas, there is significant room for collaboration. The reality is that they are a larger and richer country, and if we can leverage off their R&D investment with the addition of some of our own funding, this is to be encouraged.

Some of the work I’ve read about has real potential for gains: the research into guaranteeing the eating quality of beef, for example, or the project aimed at reducing the costs of wool harvesting.

We - as an industry, and as a nation - have to keep looking for new ways to do things, ways to improve quality, and stay at that leading edge, if we are to “grow the future”. The Government is also trying to “grow the future”.

For me, the key way of doing this is through our work in trade negotiations. We may produce the best sheep and beef in the world, but it’s all to waste if we can’t sell it to the world. We need that market access in other countries.

Our key priority is the World Trade Organisation’s Doha Round multilateral negotiations.

The 148 WTO members are working hard at the moment to make sure we come up with the bones of an agreement that could be signed off by ministers at the Hong Kong ministerial meeting in December.

This will give us one year of intensive negotiations to “fill in the square brackets” (as they say) - that is, the numbers, the percentages, the time frames - and have it ratified by Congress before the Trade Promotion Authority (the authority of the president to negotiate trade agreements) expires in the United States in the first half of 2007.

That is the real, drop-dead deadline of the Doha Round.

If we miss it, we will be left with a creaking, ageing world trade system and whatever we can gather up in the form of regional trade agreements and bilateral trade agreements.

It’s getting to crunch time.

New Zealand’s goals are quite clear.

We want the rules for our manufactured goods including forestry and seafood products, agricultural goods, and services to be fair. We want to have greater market access, reduced domestic subsidization of our competitors, and the elimination of export subsidies. The world trading system will work better for all if this is achieved, especially developing countries which like us are heavily reliant on agricultural trade, which is the most distorted of all.

We’re working hard in other theatres of trade as well, with a trade deal with Thailand to come into force in June, and negotiations with Chile, China, and the Association of South East Asian Nations underway. Other prospects such as Malaysia and Egypt are still in the wings.

While it is exciting and satisfying to begin - and conclude! - any trade agreement, I must say that beginning trade negotiations with China has been exhilarating and a career highlight.

It is the fruition of a lot of diplomatic, political, and cultural links over many, many years. The work of such philanthropists such as Rewi Alley and the Christian missionaries from New Zealand who spent time in China and returned home with what has become the kiwifruit should not be underestimated.

Norman Kirk, as Prime Minister, was one of New Zealand’s leaders who was prepared to get ahead of Western world opinion in advancing our engagement with China.

My counterpart in China, Minister Bo Xilai, describes the New Zealand-China relationship as one of “the three firsts” - those being New Zealand’s promotion of China’s accession to the WTO, our recognition of their emergent status as a market economy, and now, the first developed country to begin a bilateral trade agreement.

A historical footnote: my officials tell me New Zealand also had another first in its relationship with China - our Communist Party was apparently the first to recognize publicly that the world centre of communism had moved from Moscow to Beijing.

The proposed trade agreement with China could be a real winner for New Zealand.

As the Prime Minister said at last week’s Inside China seminar, removal of tariffs on our exports to China would provide significant benefits.

China's average tariff rate last year was 9.5 per cent and we pay average duties of more than 15 per cent on agricultural exports, including a 10 per cent tariff on milk powder, a 15 per cent tariff on sheep meat and a 20 per cent tariff on kiwifruit.

But China's non-tariff barriers probably have an even more significant effect on our trade. Import licensing, customs evaluation, pre-shipment inspection, technical regulations, and sanitary and phyto-sanitary measures all cause problems for our exporters in accessing the Chinese market.

The second round of our negotiations with China took place earlier this month in Beijing. Those went fairly well, though obviously it is still early days and we’ve yet to get to the real nitty-gritty. We look forward to the next round here in New Zealand in May.

While good progress is being made, one can't predict how long the negotiations will take. I do believe, however, that at the highest political levels China both wants an exemplary outcome and knows that New Zealand requires that outcome to be comprehensive, forward looking, and of a high standard.

Your industry has already benefited from the warm relationship between New Zealand and China, with the registering of meat plants for export being sorted out relatively smoothly. I am grateful to my Chinese colleagues who have worked hard to ensure that our trade has not been disrupted unduly. I think the results we’re coming up with now are good ones.

I’d like to thank the Meat and Wool NZ officials who have been involved in this and other trade issues, and I trust you will continue to work closely with the Government to achieve our trade negotiations goals.

Ladies and Gentlemen: The Doha Round and the plethora of bilateral, plurilateral, and regional trade agreements we are negotiating take up the limelight.

But the day-to-day work is just as important.

There arise on a regular basis various trade access issues which often require considerable response from officials - and often ministers - to ensure that trade is not hampered or made more costly. The importance of this maintenance-type role in ensuring continued access for our meat and other products to vital overseas markets should not be underestimated.

For example: last year the European Union introduced a waste products directive which introduced new requirements on rendering facilities and laid down new processes for dealing with slaughterhouse byproducts. If the New Zealand industry had been forced to comply with these European regulations, it would have cost our producers an estimated $200 million. However, NZ Food Safety Authority officials were able to convince the EU that our existing system is equivalent, it produces the same outcome, thereby saving the meat industry about $200 million in compliance costs.

Yes, those bureaucrats do have their uses after all!

The Government is also trying to work in partnership with industry, most recently with the food and beverage sector.

I don’t need to remind you, the Food and Beverage sector, of which you are all part, already makes a huge contribution to New Zealand’s economic performance. There are again some who have commented that it is a breakthrough to have government officials recognize this - which is a bit harsh. This government has always seen the primary industry sector as critical to the future of our nation.

The Government also believes your sector has huge potential for further growth and this is one of the reasons why we have decided to launch a whole-of-government engagement with the Food and Beverage sector.

A Taskforce of twenty leaders from the food and beverage sectors, representing the full array of food and beverage interests - including meat - has been set up.

The Taskforce is still in the process of determining how it intends to tackle its mission although it is likely that it will establish working groups (comprising sector representatives and officials) to tackle the key issues it has identified. For example, some of the issues or topics that the Taskforce may address include:

- Skills and labour - Improving collaboration and coordination across the sector - Making the most of the opportunities presented by new free-trade agreements - sometimes the window of advantage is quite short - or we need urgent catch-up. - Business compliance costs - Developing strategic alliances - A New Zealand Food Week? - Making the most of the New Zealand brand - (can we get beyond clean and green?) - Which mind-numbingly dull jobs can be eliminated by new technology, so we can prosper by raising our productivity - and move beyond trying to compete by screwing wages down.

I would like to encourage all of you to monitor developments and take advantage of every opportunity that you have to contribute to or comment on the taskforce’s activities because the engagement process presents a unique opportunity for industry and government to work together in order to realize the sector’s full economic potential.

For example, one of the key challenges facing all parts of the food and beverage sector is how to attract and retain skilled workers.

Meat and Wool NZ are playing a key role here, in partnership with the Government. I understand your skills and education portfolio is assisted by MAF’s Sustainable Farming Fund, and that you are committing resources to address skill shortages in agriculture and striving to encourage more workers into the sector.

Ladies and Gentlemen: in this busy world of ours, it is very easy to get bogged down in everyday detail, so that our focus narrows down to just that which affects us on our individual farms, in our individual homes. Maintaining a broader focus, and raising our eyes to the future, is hard.

But it is something your organization, and its board, is doing very well.

I would like to use this forum to thank in particular your chairman Jeff Grant chief executive Mark Jeffries, and director Mike Petersen. Both have a vision for the industry’s future, and the skills to achieve that. And in our current environment, where people are always looking for tall poppies to chop, that’s a big ask.

They have ensured that your organization has the ear of Government ministers and officials. They don’t mess about playing party-political silly buggers. We know that when Meat and Wool NZ wants to say something, it’s worth listening to.

The meat and wool industries are hugely important - contributing more than $5 billion in export earnings.

For many people overseas, cuts of sheepmeat are the first thing they think of when they think “New Zealand”.

As Minister of Agriculture and Minister for Trade Negotiations, I’m keen to see the products of our pastoral agriculture maintain and grow their prominence in the international marketplace. I need strong organizations such as Meat and Wool NZ to help me in my work - we need to work in partnership to achieve such a goal. I think we’re working well now, and I hope your organization continues to go from strength to strength.

ENDS

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