Hon Jim Sutton
Speech Notes

16 July 2002

Riverside field day
Wairarapa

Ladies and Gentlemen: I'm delighted to be here on such a fine Wairarapa day.

The Government I am proud to be a member of is committed to promoting the rural economy.

We've been lucky during the past three years. Generally speaking, New Zealand's farmers have never had it so good. A unique combination of good climatic conditions, a low dollar, and good international prices have resulted in record incomes for farmers. It's something I've not seen the like of in all the 40-odd years I've been associated with farming.

Good things, of course, do not last forever.

This forthcoming season does not appear to be anything like the past few.

According to agricultural economists, gross farm revenues on East Coast ? that's from Cape Palliser to East Cape - sheep and beef farms are forecast to be driven down 12 percent in the current year by a combination of lower production and lower prices.

But while farms in this region will experience a drop of twice that -- 24 percent -- in farm profits before tax -- the average farm will still earn a profit of $110,900.

In inflation-adjusted terms, this will be the third highest profit for East Coast and Hawke's Bay farms since 1979-80, according to Economic Service executive director Rob Davison.

This region has 22 percent of the nation's sheep flock, 26 percent of the beef herd and 5 per cent of the dairy herd. Sheep production generates 60 per cent of the gross revenue on sheep and beef farms in the region, beef cattle generate 35 percent of revenue while other sectors such as deer, and cash crops account for the remaining 5 per cent of revenue.

For the past farming year which just ended on June 30, the average cattle weights for the region were down 2.3 percent on the previous season, while those for lamb and mutton remained similar down 0.8 percent and 0.2 percent respectively.

Mr Davison said the economic outlook for the region in 2002-03 was for gross farm revenue to fall 12 per cent through a combination of lower prices and lower production. Revenue slumps would be seen in wool (10 percent) and sheepmeat (15 percent) respectively due to reductions in both price and volume, while cattle revenue would drop 8 per cent as a price reduction offset a production increase.

On-farm spending would slip 2 percent as fertiliser spending dropped 11 percent.

So, the consensus is that while things are going to be worse than the previous few seasons, they're going to be a lot better than most years in the past.

The Government recognises the vital importance of the rural community to the New Zealand economy as a whole.

Primary production earns about two-thirds of all export income. When processing is included, primary production accounts for about 17 per cent of gross domestic product.

At the core of Labour's rural policy is the conviction that vibrant rural communities, thriving land-based industries, and a healthy rural environment are profoundly interdependent. Unless each of these is sustained, the others will not be sustainable in the long term.

Labour has and will continue to work in partnership with rural communities and land-based industry to ensure the best outcomes for all.

There are many issues affecting rural people, but three key ones are: market access internationally, so that farmers and growers can sell their products; access to services so that communities are maintained and strengthened; and growth and innovation.

Labour has a good record on this.

In trade, we:

* influenced the launching of the Doha round of multilateral trade negotiations and advocated strongly for the phasing out of agricultural export subsidies, enhancing market access, and reducing trade-distorting domestic subsidies by industrial economies; and

· established the Closer Economic Partnership trade agreement with Singapore, begun negotiating a similar partnership with Hong Kong, and actively explored and advanced further initiatives; · and surely I and my colleagues must have led more trade missions of New Zealand business people abroad than any previous government in a single term. This has worked as our export performance has soared, including in non-traditional sectors.

For rural communities, we: · established the Heartland Service Centres, restoring face to face access to government services and providing support to local voluntary groups. We will open more of these in our next term; · kept open courts in several provincial centres when they were scheduled to close, and increased police presence in rural areas; · started a $32 million premium to attract medical practitioners to rural and provincial areas, as well as introducing the Rural Locum Support Scheme and the Rural Practice Support Scheme to help GPs in isolated areas; and · funded mobile surgical units to provide services in rural areas.

To help rural people grow and be innovative, we:

· set up the Sustainable Farming Fund, which has driven innovation in rural communities, helping to make them economically, socially, and environmentally sustainable. I will be asking for more money for this in our next term; · implemented industry development strategies in sectors such as wood processing and biotechnology; and · revitalised provincial economies and boosted employment through the Regional Partnership Programme, launched in 2000.

You should know that these programmes are making a difference for rural New Zealand. Good Government does not depend on good luck, which is the pathetic complaint of our National Party opponents.

The Sustainable Farming Fund is not a new thing to you here, I know.

There are four projects being worked on in the Wairarapa region, and one here at Riverside in particular.

I hope to hear firsthand how that is going while I'm here.

Ladies and Gentlemen: innovation, creativity, and the adoption of technology is nothing new to rural people. I know there are some excellent projects at work in your region. Today, I'm getting to see some of them firsthand. I'm delighted to be here and to have this opportunity to learn from you how you are making our country more productive and efficient.

Thank you.

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