Jim Sutton speech to Meat and Wool NZ

Meat and Wool NZ conference Whangarei

Chairmen Jeff Grant and Mike Petersen, chief executive Mark Jefferies, Ladies and Gentlemen: I am delighted to be here for the first annual general meeting of the new Meat and Wool NZ organisation and now this scene-setting meeting.

I think the theme of the "next sunrise" is an appropriate one.

The old structures for your industry have had their day, new ones have been formed, and are about to have their time in the sun.

Labour Government policy on producer board reform is very clear: restructuring must be supported by a majority of industry participants; it must be fair to minority interests; and it must be in the national interest.

The Meat NZ-SheepCo merger fits those critieria.

When I stood in Parliament to speak during the first reading of the Meat Board Restructuring Bill, which will give legal force to the new Meat and Wool NZ, I said that the impetus for this reform arises from the meat and wool industries' desire to combine their industry-good functions into one entity.

It is often said that success has many fathers, but the first heavyweight support for the move, of which I was aware, came from the then-chair of the NZ Meat Board John Acland. John's unassuming style and transparent motive of serving the industry resonated with his fellow farmers.

The support for a single meat and wool organisation was demonstrated in a referendum of meat and wool farmers in August 2003, in which farmers overwhelmingly voted for the proposal to bring the meat and wool industry-good functions into one entity funded under the Commodity Levies Act.

Bringing together meat and wool industry-good activities will assist the

two industries to achieve synergies and cost efficiencies. The

industries will also benefit from the better accountability provisions

in the Commodity Levies Act, particularly the requirement to seek a

levy-payer mandate every six years for the continuation of a levy.

The Government is demonstrating its commitment to your industry, one of the biggest contributors to our economy. The legislation will be passed in time to ensure the proper birth of Meat and Wool NZ.

We are also demonstrating commitment to the rural sector by the package announced last week to help the communities affected by floods in the North Island and Marlborough get back on their feet.

Since we were elected in December 1999, the Labour-led Government has worked to return services to rural and provincial areas. This has seen the Heartland Services centres set up, extra funding for rural nurses and GP retention, mobile surgical buses, and the extension of paid parental leave to seasonal workers who have been in work for at least 6 months. I am hopeful that we can ultimately extend that to the self-employed, so that farming families will be able to get assistance as well.

On the business side, we're helping extend broadband internet access to people wherever they live, something that will improve rural young people's education, but also the efficiency of farm businesses. ACC is developing programmes specifically for rural customers, and is promoting the Farmsafe education scheme in order to reduce the number of farm bike accidents.

Ever since subsidies and other supports were removed in the mid-1980s, agriculture has gained significantly more productivity that the rest of the New Zealand economy. Farmers and other agricultural producers have seized opportunities, adapted new technology, and been highly innovative.

For our country, and our economy, to achieve the way we want it to, innovation must happen across the board. The Government has highlighted three "horizontal enablers" ? information technology, arts and creative design, and biotechnology ? as areas that, if they attain their growth potential, can have a significant influence on the broad scope of the New Zealand economy.

A report from MAF to the Growth and Innovation Advisory Board last year assessed the importance of primary industries to New Zealand's economic wellbeing and highlighted that while primary production has been extremely innovative, there is plenty more potential remaining.

It said that New Zealand needs to drive off its existing agribusiness and forestry sectors, including the wider cluster businesses around them. The scale of the agribusiness and forestry sectors provide much of the platform and the critical mass of competencies for New Zealand's future economic growth, for the seeding and spinning off of new entrepreneurial ventures, and for the exploitation of new biotechnology opportunities.

GIAB has recognised that, has taken the report on board, and is doing further work in the area. I hope to see your organisation involved in that.

Ladies and Gentlemen: these are important things, and the changes they bring could benefit our industry hugely.

But the changes possible in the domestic arena are small compared to those in the international arena ? our global marketplace.

Since being elected, this Government has made it clear that its main international trade priority is the World Trade Organisation's multilateral round of negotiations. We worked hard to ensure the Doha Round was started three years ago, and we worked hard, albeit unrewarded, for a result at the Cancun meeting last year.

We have maintained that effort this year. That necessitated my leaving the country in the aftermath of the recent floods that have affected a large part of the North Island and Marlborough.

One of my parliamentary opponents attacked me, personally, for that. I resented that attack. I think it was one of the more witless remarks I have encountered in the 20 years since I first arrived in Parliament.

I thank your organisation and Federated Farmers for both publicly recognising the importance of the recent Cairns Group meeting in Costa Rica. It used to be that trade negotiations was something supported by all parties in Parliament, but times change.

Last month's meeting was an excellent one, because the Cairns Group of agricultural exporting nations now has a renewed determination to fight for an ambitious outcome for agriculture in the new phase of the World Trade Organisation's Doha Round of negotiations.

The Cairns Group is united in its resolve to keep other countries honest on agriculture.

WTO Ministers all signed a declaration in Doha in 2001 which set the path to substantial reform. We saw in the leadup to the WTO Conference in Cancun, Mexico last September that some countries were weakening in their resolve, even trying to wriggle out of that commitment, and shortchange the world's farmers.

That won't be allowed to happen if Team NZ has anything to do with it And despite the relatively small size of our economy, we are one of the small number of countries that contribute real leadership to the cause of reform.

In Costa Rica, the Cairns Group reaffirmed that increased market access for all products, in all markets ? including developing-country markets ? is central to our objectives. That said, the Group is prepared to take political realities into account in deciding how that access should be provided. We also agreed that developing countries have genuine food security and rural income concerns, and we need to elaborate on targeted measures to address those specific issues.

On export subsidies, the Group remains adamant: these measures must go. They stultify development and harm efficient, unsubsidised producers like New Zealand dairy farmers. They undermine the domestic markets of developing country farmers. The Cairns Group is not prepared to enter into tactical games which could ultimately let some export subsidies off the hook.

This is important because the Cairns Group has the potential to be a significant driver within the WTO negotiations. So it was important for New Zealand to be there to make sure our interests are taken care of.

And I can assure you we have significant interests at stake in the WTO negotiations.

Sometimes trade negotiations seem quite remote to real life back here in New Zealand. Change seems to happen at a glacial rate, and it's not obvious the effect it has on people here, in Northland, in South Canterbury, and other parts of our country.

But I can assure you that nothing else has quite the same impact on your livelihoods as progress in international trade.

Research carried out by MAF on the quantitative benefits of the last big round of international trade negotiations, the Uruguay Round, showed in the single year of 2000 (the year that many of the gains of the Uruguay Round kicked in) the beef, sheepmeat, and dairy sectors gained about $590 million from product price and volume increases in the major markets of the United States and European Union.

That works out to an average increase in earnings for each sheep, beef, or dairy farmer of $11,500 a year. And that was from changes in our trade with just two of the 146 members of the WTO.

Combined MAF and MFAT research assessed the overall benefits from the Uruguay Round as at least $9 billion over the 10-year implementation period of Uruguay Round changes, and about 17,600 jobs throughout our economy, including 2000 in agriculture in particular.

That research focused on what are seen to be the key outcomes from the Uruguay Round for New Zealand ? tariff reductions for all sectors, tariff quota access for beef exports to the United States, and butter and sheepmeat exports to the European Union, and commitments to reduce the level of export subsidy use in the diary sector. Through these outcomes, New Zealand exporters have received, in various forms, benefits through an increased ability to export higher volumes of product at lower tariff rates, and an increased ability to access high-value markets and higher world prices.

Officials tell me that due to data limitations and that their analysis has concentrated solely on tariff reductions, tariff quota expansion, and export subsidy reductions, it is possible that the total gains to New Zealand are underestimated.

In addition to the $9 billion of gains from those measures, New Zealand exporters have also gained from firmer trade rules, a strengthened disputes settlement system, and the dynamic effects of a world economy stronger than it would have been without the Uruguay Round.

But the Uruguay Round was only a toe in the door, for agriculture, which is still one of the most heavily protected sectors in the world.

The Doha Development Round has even greater potential.

So that's our main priority. However, it's not our only priority.

The Government is also putting significant effort into bilateral trade negotiations.

We are making good progress with Thailand, and I hope that the feasibility study will be completed shortly, in time for a trade agreement to be negotiated this year. Remember that Australia, our main competitor in key product areas and a much larger and more attractive market, is ahead of us in Thailand. If we cannot keep up, we stand to lose significant market share.

We are continuing to work with Mexico on a bilateral agreement, and with Singapore and Chile for a "Pacific 3" trade agreement.

We are continuing to lobby for a trade agreement with the United States, and talks are still pending with Hong Kong. Other partners are still in the wings.

The biggest possibility on the horizon is China.

We are currently negotiating a trade and economic co-operation framework, which sets in place a structure for official discussions on various topics, and I am hopeful this will lead quickly to a feasibility study and potentially negotiating a trade or closer economic partnership agreement.

To my mind, there is no more important trade and economic relationship for New Zealand across the scope of this century than that with China. That doesn't mean our relationships with other countries, especially those of Australia and the United States, aren't important ? they are.

But the potential for growth with China is enormous, and not just for our agricultural producers.

However, talks are still at an early stage, and there is still water to go under the bridge there. We will be engaging intensively with New Zealand stakeholders on the subject over the next year or so.

Ladies and Gentlemen: the meat and wool industries have faced a lot of issues separately in the past 100 or so years; from now on, we're facing them together. Congratulations on the formation of Meat and Wool NZ, and I wish you every success in the future.

Thank you.

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