Hon Nathan Guy

Minister for Primary Industries

26 September 2015

Speech to Global Leaders Forum on Agriculture and Trade – Omaha, Nebraska

Introduction

Thank you for the invitation to be here today in the great state of Nebraska and to say a few words.

It’s very appropriate that we should be holding the 100th anniversary conference of the National Association of State Departments of Agriculture (NASDA) in a state where agriculture is so important, just as it is in my country of New Zealand. As a farmer myself, it makes me feel right at home.

This is my third visit to the USA in the last 12 months.

The first visit was more pleasure than pain as my wife and I took part in the New York marathon. My second visit was earlier this year to attend the Te Hono primary sector leaders bootcamp at Stanford University in California.

Before I got involved in central Government politics, I was fortunate to receive a Winston Churchill Scholarship which I used to travel to the USA in 2000. My study was called ‘Gate to Plate’ and I followed New Zealand beef exports – mainly bull beef – through the entire supply chain.

I’m proud to represent the Kapiti region in the New Zealand Parliament which also has historic links with the USA. During World War Two 15,000 US marines and troops were stationed in the region before they left for fierce battles in the Pacific, and this is commemorated with memorials.

Agricultural Leadership Chair

New Zealand and Nebraska have some important links.

Recently one of our main agricultural universities (Lincoln) created a new position of Professorial Chair in Global Value Chains and Trade, thanks to a generous endowment from Sir Graeme Harrison, who is a prominent agricultural business leader.

The associated Research Fellowship that accompanies the Chair has been named ‘the Clayton Yeutter Fellowship’ in recognition of former United States Trade Representative and Secretary of Agriculture, Clayton Yeutter from Nebraska.

This is in recognition of the important work Mr Yuetter achieved in the 1980s in opening market access to Japan.

Mr Yeutter was also made an Honorary Officer of the New Zealand Order of Merit in 2012 for his service to United States-New Zealand relations.

New Zealand and Agriculture

I thought I would start with a quick bit of background on my country. New Zealand is an island nation in the Southern Pacific, about a third larger than Nebraska and with a population of 4.7 million.

For a long time we have punched well above our weight in a number of areas, especially agriculture and the wider primary industries.

We became a global food producer in 1882 with the first ever shipment of frozen sheep carcasses to the United Kingdom – over 11,000 miles away.

We now export to over 130 countries around the world, and the rise of Asian nations like China have created major new markets for us.

Our farming is pastoral based – dairy and meat – with livestock kept outside year-round and grass-fed. About 50 percent of New Zealand’s land area is in pasture, with most of the rest in native forest or mountains.

We produce enough food to feed around 40 million people and almost 90 percent of what we produce is exported.

Although in saying that, we are still a relatively small player on the international stage producing 1 percent of world beef production, 3 percent of dairy and 6 percent of world sheep meat production.

We are very proud of our lamb in New Zealand and I’m proud to see this is becoming increasingly popular in American kitchens and restaurants.

The US is our biggest market for beef exports and a lot of that compliments American supply, especially for hamburger patties. We know you love your burgers! We are also sending more prime cuts into the West and East coasts of the US.

It’s been said before that agriculture is for New Zealand what the Silicon Valley is for California – or perhaps more appropriately, what beef is for the great state of Nebraska.

On that note we are looking forward to hosting the International Beef Alliance in Taupo next month.

International Trade

Today’s topic is “the importance of international trade for agriculture,” and it could not be more timely.

For New Zealand as a small and remote nation, international engagement and international trade are major priorities. We are committed to being at the forefront of global efforts to improve the global trading system for the benefit of everyone.

For us, having consistent, enforceable rules – and forums within which we can debate them – is not a “nice to have.” It is essential.

Of course, trade rules are a reflection of the balance of interest of the countries that set them – only those at the table reap the benefits they afford. This is particularly true for the international trade in agricultural products.

At the multilateral level we see that the negotiation functions of the World Trade Organization (WTO) remain as relevant as ever. The agreement reached last year to eliminate all export subsidies on agricultural products represents a momentous decision that will benefit producers around the world.

The WTO also provides the only avenue for negotiating rule in important areas not covered in FTAs, such as domestic support. Domestic subsidies are coming more into focus around the world – in both developing and developed countries.

The value to member countries of the WTO’s legally binding dispute settlement functions also cannot be overstated, as it provides for the resolution of market access, export competition and domestic support issues that would otherwise be unresolvable.

On global trade the world finds itself in a situation where the benefits trade liberalisation have never been more obvious, yet opposition is more apparent than ever.

In New Zealand, as in the United States, there is an ongoing tension between those who want to engage fully with the world, and those that oppose greater interconnectedness, including through preferential trade agreements.

Our experience is that open, rules based trade has made New Zealand richer, more innovative and more secure – with trading ties strengthening relationships with partners across all areas.

New Zealand’s farmers remain internationally competitive, despite having no tariffs of consequence, and receiving no trade distorting subsidies.

Let me give you one practical example of this. In the 1980s we had around 70 million sheep, now we have only 30 million. Yet importantly, we still produce the same amount of sheep meat thanks to advances in animal husbandry, genetics, and nutrition.

The removal of subsidies and support for domestic farmers in the 1980s was a painful time for many, but now I don’t believe you’ll find a single farmer in New Zealand who wants to go back to that old model.

The bottom line for New Zealand is that international trade has allowed us to develop new markets, create jobs, grow our economy, raise standards of living and stay competitive.

This is why we need international trade and common rules to reduce trade barriers and market distortions.

Trans-Pacific Partnership (TPP)

From this vantage point the Trans-Pacific Partnership is a major step in the right direction, and an opportunity for the United States, New Zealand and other TPP countries to ‘win’ through increased exports, investment, and security.

The Asia-Pacific region will be the major driver of economic growth for the foreseeable future, presenting enormous opportunities for both our countries.

TPP is not perfect and I think some agricultural industries, including both our dairy industries, are well aware that opportunities have been missed.

Overall though it will create jobs, raise standards of living and enable our agricultural businesses to capitalise on huge opportunities.

It will provide better access for goods and services to more than 800 million people across the TPP countries, which make up 36 per cent of global GDP.

United States membership of TPP is vital, and once in force, TPP will promote economic reform among other countries who wish to join.

It will be very important for states like Nebraska which is the second largest in the US in terms of head of cattle and calves with nearly 6.4 million.

The TPP will see tariffs drop significantly for other exports produced in states like Nebraska – goods like soybeans, corn, pork and veal.

Over time it will also see tariffs eliminated on a range of dairy products including ice cream, infant formula, skim and whole milk and cheese.

It will help farmers by tackling a range of non-tariff barriers they face in trade, such as eliminating agricultural export subsidies, ensuring trade rules are based on science, and minimising unpredictable export restrictions.

For example, countries can request an explanation of the rationale of sanitary and photosanitary measures and have access to a dispute resolution mechanism.

Earlier this week New Zealand Prime Minister John Key was at the United Nations chairing the Security Council. He also gave a hard-hitting speech in which he pointed out how important the TPP is for maintaining United States leadership and influence in the Asia Pacific region.

As he said, “the region will not wait for you. Asian countries are determined to grow and they realise to grow they need to remove trade barriers. This will happen with or without the United States.”

Conclusion

The bottom line for us is that if TPP does not come into force, it will disadvantage both New Zealand and United States producers.

It will mean that others will set the rules for trade in the Asia-Pacific region.

But if we can collectively get TPP over the line, it will benefit both our agriculture industries immensely.

We know there are growing and hungry markets for what we produce. The world population is expected to reach 9 billion by 2050, and some forecasts predict global food demand may increase by 40-45 percent in the next 10 years.

With all this at stake, international trade is vital - especially for agriculture.

ends

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