Speech to Fieldays stakeholder engagement function
Hon Nathan Guy
Minister for Primary Industries
17 October 2014
Speech to Fieldays stakeholder engagement function
It’s great to be here tonight, talking to everyone involved in Fieldays. This is the biggest event of its kind in the southern hemisphere, attracting nearly 120,000 visitors this year including a large number of international visitors and delegations.
I’ve been coming for a number of years and I’m always blown away by the technology and innovation on display. Fieldays also plays a big part in helping connect rural and urban kiwis, showing off what’s best about the primary industries.
It was a great honour to be reappointed as Primary Industries Minister by the Prime Minister less than two weeks ago.
This is a role I’m really passionate about that suits my background.
The primary industries are the backbone of New Zealand’s economy. They make up around 73% of our merchandise exports, helping pay for things like schools, hospitals and roads.
Recently I’ve had a Briefing to the Incoming Minister, prepared by MPI. The full report will be publicly released soon, but it’s worth quoting the second paragraph in full:
“At a high level, New Zealand’s primary producers face a bright future. By the year 2025, some forecasts predict global food demand may increase by 40-45 percent, driven by a rising global population and the emerging middle classes of Asia. Demand for wool and fibre is also expected to increase.”
Over the last two years I’ve talked a lot about our goal to double the value of our primary sector exports by 2025.
Tonight I want to go into a bit of detail on how we’re going to progress that vision, and the challenges and opportunities it presents.
Already New Zealand produces enough food to feed 40 million people, and exports to around 200 countries.
To achieve the Export Double, we will need a strong focus on growing value. Just increasing volume isn’t going to be anywhere near good enough, or even desirable.
The goal is based around the 2012 export figure of $32 billion for the primary sector. Last year we hit a new record of $38 billion, thanks to a sweet spot of commodity prices.
However, in the coming years we won’t be able to rely on this. Commodity prices will always fluctuate – they always have and always will. It’s part and parcel of farming.
We’ve seen this with the recent positive returns for the meat industry. Just a few days ago we heard from Beef + Lamb NZ that our meat exports reached a record high of $5.3 billion in 2013-14.
These are the best beef prices in six years, and prices are looking to stay strong for the next few years, partly because of drought in the US and Australia and herds needing to be rebuilt.
Recently with dairy we’ve seen a lot of volatility in world prices, in part due to political uncertainty in Russia and the Ukraine.
The good news is that last year was a record payout and farmers are still in a strong financial position because of that. Farming is a long term game, and the mid to long term outlook for dairy prices remains positive.
It’s great to see the global dairy trade auction stabilised last night, with a 1.4 percent increase. This is the first increase since June of this year.
We can insulate ourselves to a degree from these fluctuations by adding value and focusing on premium products.
Of course, adding value is easier said than done. I heard this phrase many times on the campaign trail from opposition parties, but very little detail on how it could actually be achieved.
Tonight I want to give you a few examples of how as a Government we can support this.
Investing in research and development will be crucial. Our flagship programme in recent years has been the Primary Growth Partnership, with 16 current programmes underway.
A total of just over $700 million is being co-invested by industry and Government, working together.
A recent report by NZIER shows the potential prize is around $6.4 billion by 2025 – with the possibility of up to $11.1b if the aspirational stretch of some of the programmes is realised.
It’s hard to process what numbers that big mean, so let me break it down to the farm gate level.
The report estimates there could be extra returns per year of $270 per hectare for hill country farming, $600 per cow for dairy, $370 per tonne of exported seafood, and $190 per hectare for forestry.
In the red meat sector, the Government and industry are investing some $326 million through Primary Growth Partnership programmes to support innovation.
This includes work across the value chain, supporting value-add products, and on-farm practice.
The Red Meat Profit Partnership involves participants across the sector, including meat processors, Beef + Lamb NZ and banks. This is the first time the sector has come together in such a comprehensive way.
And the Precision Seafood Harvesting project involves new technology that can select fish by size and species before even leaving the water.
Last night this programme won the Supreme Innovator award at the New Zealand Innovators Awards. In June it was also awarded the People’s Choice Award at the KiwiNet Awards.
The PGP is about cutting edge research, kickstarting projects and growth that wouldn’t otherwise happen without the Government’s support.
It’s worth noting these projects will have major environmental as well as economic benefits.
Over the next three years I will be pushing hard for these programmes to deliver results on the ground from this significant investment by Government and industry.
Increasing trade access is going to be another big priority for this Government.
We all know what an outstanding success the Free Trade Agreement with China has been. Two-way trade with has now exceeded $20 billion.
We are extremely well placed compared to the rest of the world when it comes to access for our primary products into China.
Of course we can’t rely on one market. That’s why we have a busy trade agenda and are at various stages of negotiation with other nations – including the Trans-Pacific Partnership, South Korea, and the Gulf States in the Middle East.
There are also major opportunities for our agribusiness expertise in emerging markets like Latin America. In October last year it was great to host a delegation of 170 farmers from Colombia who came here to Mystery Creek to learn more about New Zealand farming methods and the Fieldays Event.
I’ve made several trips to these regions to promote New Zealand and I will keep promoting our industries in these new markets.
This term I’m also looking forward to seeing more progress on irrigation and water storage projects.
After two severe droughts in the last two summers, especially here in the Waikato, the need for better water storage is obvious. We only capture around 2 per cent of rainfall in New Zealand, with the rest roaring out to sea.
The Government has created Crown Irrigations Investment Limited (CIIL) to make independent decisions on which projects to invest in. Their role is as a minority investor – early in, early out to kickstart projects.
So far we have allocated $120 million out of a potential $400 million in funding.
We have potential for an extra 420,000 hectares of land to be irrigated by 2025, creating thousands of new jobs and boosting exports by $4 billion a year.
I’ve seen for myself what a difference irrigation makes to rural communities, revitalising schools and entire towns, creating jobs for locals.
Crown Irrigation Investments has made its first investment, agreeing the terms for a $6.5m investment into the Central Plains Water scheme on the Canterbury Plains.
Over the next three years I’m looking forward to seeing more investments like this announced and progressing.
It’s worth noting it is not just dairy that benefits from irrigation, but industries like horticulture, and viticulture as well.
Projects must be environmentally balanced, and there are high standards for new dairy farm conversions.
We know that irrigation can deliver real environmental benefits as more consistent river flows improve the habitats for fish and birdlife, while taking pressure off groundwater aquifiers.
Achieving our export double goal has to be done sustainably. It’s important to New Zealanders, and it’s important to our overseas customers as part of Brand New Zealand.
Technology transfer from projects like PGP and the Sustainable Farming Fund will be important. Lifting the performance of all farms to the highest performing level will mean increased production within environmental limits.
As a Government we are investing hundreds of millions of dollars towards freshwater clean-up projects on lakes and rivers around the country.
During the campaign we announced we’ll invest an additional $100 million over 10 years to voluntarily buy and retire selected areas of farmland next to important waterways.
We’ll also introduce a requirement to exclude dairy cattle from waterways by 1 July 2017, and will work with industry to exclude other cattle from waterways over time on intensively farmed lowland properties.
I want to recognise and salute the dairy industry for the enormous progress they have made in voluntarily fencing off around 90% of waterways on their farms. But it’s important we send a clear message to international markets how importantly we take environmental issues.
The other crucial area for our primary industries is a strong and effective biosecurity system.
Last term I made biosecurity my number one priority and it is this term as well.
We have a world class system that has been beefed up a lot in the last few years. Around 125 new quarantine inspectors have joined MPI in the last 18 months, and we have 12 new x-ray machines at our international airports.
Last year I announced a new $65 million high-security biocontainment laboratory in Upper Hutt. This new replacement lab will play a major role in responding to disease outbreaks, protecting public health and providing international trade assurances about New Zealand’s animal disease status.
We also have a major programme of work underway on foot and mouth prevention and preparedness, including an agreement with Australia and sending veterinarians overseas to gain first-hand experience with this disease.
You can expect to see more Government Industry Agreements (GIAs) signed in the next few years, following the lead of the kiwifruit and pork industries. These involve industry and the Government working together on preparation and response to biosecurity threats.
Maori agribusiness and
I also will be pushing MPI to work closely with other Government agencies to develop the potential of Māori agribusiness. There is enormous potential with around 1.5 million hectares of land in collective ownership but most of it under-achieving.
MPI will be working with regions like Northland, Bay of Plenty and the East Coast to help them identify and realise their potential.
We also know the challenge ahead of us in attracting the best and brightest young people into the primary industries.
To reach our export double target we will need an additional 50,000 workers by 2025 and over half of these workers will need a Tertiary or Level 4 Qualification.
Industry and Government need to work together on this challenge, of which a big part is raising awareness of the opportunities out there.
Some of you of you would have seen Mike McRoberts’ story on 3rd Degreerecently about the young Aucklander Luke Chivers who made a major career change and moved to a dairy farm to work. It featured three outstanding young people who are superb ambassadors for the industry.
Another great story is young Patrick Roskam, a 13 year old student from Matamata who the Prime Minister and I met last year. Patrick has invented a gate tool used to quickly and accurately hang gates which won him the Young Innovator of the Year Award at this year's Fieldays.
It’s great stories like these we need to keep telling to the rest of New Zealand.
So as you can see, I have a busy programme ahead with some ambitious goals. But none of them will be achieved without the buy-in and cooperation of industry.
I’m looking forward to working closely with you all over the next few years to build that future.