Waitomo News : NKC Farmer 11 March 2014
20 Tuesday, March 11, 2014 NEW Zealand’s economy, described as a “rock star” by HSBC economist for Aus- tralia and New Zealand Paul Bloxham, is set to ‘outpace most of its developed market peers’. Driver number one is the Canterbury rebuild; number two is the housing boom ‘fuelled by low interest rates and net immi- gration’ and number three is dairy prices, driven by strong demand from China. The first isn’t expected to peak until 2017. The second will stall if interest prices increase as predicted. The third – dairy – is the only driver based on renewable resources. It will take careful management in order to ensure that returns actually build a future for further growth in the way that the first two drivers, relying on insurance companies and banks, might not. FILLING THE GAP The ‘strong demand from China’ is pre- dicted to last while China builds up its own dairy capability. NZ Treasury estimated last year that Chi- nese dairy consumption growth will outstrip production until about 2021, and that net importation of dairy products would have increased 60% by then. Treasury also estimated that with Fonter- ra’s projection of 3% growth in milk pro- duction, NZ could fill China’s gap. It isn’t only dairy produc- ers that are benefitting from China’s growth, foresters and drystock farms are also expe- riencing growth in exports of logs, lamb and beef. Treasury predicted the in- crease in demand for logs last year, filling the housing and infrastructure investment as urbanisation and industriali- sation continues. The Ministry for Primary Industries has revised its fore- cast of the value of forestry ex- ports for this year upwards by 14.1% to more than $5 billion, and expects another increase in the 2014/2015 year to $5.284 billion. Suggestions that NZ should be adding- value by making, for instance, furniture, miss the point that that is not what China needs or wants. (In addition such suggestions overlook the cost of adding value in NZ which, al- ready high, will escalate with the promised increase in the minimum wage.) MEAT TO CHINA Meat is also featuring in exports to China. Only Australia, Uruguay and NZ are legally allowed to export meat to China. Meat and Livestock Australia has re- ported that China has moved from being number eight as an export market for Australia to number three in under a year. MPI predicts little change in meat export value for the rest of the year for NZ, but a 6% increase to more than $7 billion for 2014/15. In contrast, MPI is forecast- ing a decrease in value for dairy products for the 2014/15 season, from about $16.7 bil- lion this year to just under $15 billion. The drop is in response to the Northern Hemisphere’s milk production increasing as quotas are relaxed. However, the bad weather being experi- enced at the moment could impact on grain availability, reducing ability to ‘ramp up’. NO1 TRADING PARTNER China overtook the United States in 2008 to become our second most significant trad- ing partner. Now it is number one. The change in rankings is a reflection of market forces and adaptability in the industry. It also reflects political efforts in achieving Free Trade Agreements. China’s domestic productivity is however, increasing, supported by 25% subsidy for milk, 14% for sheep meat and 13% for beef and veal. Although China has achieved remarkable dominance, the 2013 export data published in New Zealand at a Glance in mid-February indicated that a considerable number of countries were involved. China did take almost half of the milk powder exports, but in total accounted for only about $10 billion of the nearly $62 billion of ‘goods and service’ bill to other countries. New Zealand’s food futures continue to depend on commitment to quality, ever- improved marketing and responding to market forces. By Jacqueline Rowarth Professor, AgriBusiness Waikato Management School University of Waikato Responding to market forces Ahuwhenua finalists chosen THE 2014 Ahuwhenua Trophy BNZ Maori Excellence in Farming award finalists are Putauki Trust’s Himoana Farm in the Bay of Plenty, Ngati Awa Farms Ltd’s Ngakauroa Farm (BOP), Te Rua o Te Moko Ltd (Taranaki). The winner will be announced on June 13.
4 March 2014
13 March 2014