Hon Jim Anderton

Minister of Agriculture, Minister for Biosecurity, Minister of Fisheries, Minister of Forestry
Associate Minister of Health,
Associate Minister for Tertiary Education,
Minister Responsible for Public Trust

Progressive Leader

20 June 2006 Speech

NZ Meat and Fibre Producers Annual Conference

You've asked me to talk about the future of the meat and wool industry in New Zealand. The starting point is the existing success of the pastoral industries in New Zealand. Collectively the pastoral industry is one of only industries where, as a nation, we have genuine global scale.

The earnings from your sector are crucial to our standard of living. If we want to keep enjoying the state of the art goods and services we import from overseas, we can only pay for them with our earnings overseas.

Two thirds of our foreign exchange comes from primary sector industries. And contrary to popular perception, the contribution of agribusiness to New Zealand’s economy has been rising. Over the last fifteen years agriculture, forestry, and related industries have increased their productivity at more than double the rate of the rest of the economy.

The performance of our primary industries has been a major contributor to our economy's success over the last six years. It's true that in the second half of last year – we saw the economic cycle enter a slower period. But our gross domestic product has grown by over 25 percent in the six years 2000 – 2005 and it has grown further since then.

For decades New Zealand's pastoral production, that is meat and wool, along with dairy, has featured centrally as the backbone of our economy. It is backed by science and smart management. This is a profoundly strong platform on which to build the future success of the industry.

While we have a strong platform to build from, new competitive pressures are emerging while we continue to work hard on our existing challenges and problems.

I was in Europe recently looking at agricultural issues there. We know Europe's history of protectionism. As the pressure grows on them to get rid of direct subsidies, creative new replacements are being found.

In France, farmers are being paid to 'maintain the rural countryside'! In England to protect flora and fauna – like hedgerows and badgers. In New Zealand, we do it by farming!

There is talk about the carbon output involved in shipping produce around the world. Shipments from New Zealand are the direct target of this commentary.
So we have to respond to these changing market conditions. If we don’t act, overseas markets are increasingly likely to penalise New Zealand producers.
We need to adapt to changing markets, too.

Consumer demands are changing along with changing lifestyles. Health awareness is high and rising. Consumers are more environmentally aware and want to be reassured their food is produced in a way that respects our natural environment and leaves something for the future.

We should expect increasing attention to the way that we farm in New Zealand, particularly from the affluent markets of Europe. But we have a good story to tell. We can reassure the health conscious consumer, that we have the best tracking and tracing systems in the world.

We can distinguish our products from producers who compete by exploiting labour and the environment. We also have a good story to tell about our environment.

Federated Farmers is a key partner in the Fertiliser Quality Council – Fertmark, and the Spreadmark Codes of Practice operated by the Council, are examples of the leading edge tools that have been developed in New Zealand that will both aid production and assure environmental protection.

The challenge for us all is to work towards widespread adoption of these and the wide range of other tools that are already available. The recent inclusion of explicit environmental performance objectives into the Meat and Wool Monitor Farm Programme will provide an effective vehicle for this approach.
We are, therefore, better placed than just about any nation on earth to give overseas consumers assurances that they are purchasing socially and environmentally responsible goods.

Our future success will depend - in part - on our success at differentiating our products around these valuable advantages. The government is playing its role as a partner with the industry in work directed to improved performance.

Cash for research comes from the Foundation of Research Science and Technology. The MAF Sustainable Farming Fund has, since its inception in December 2000, provided over $11.7 million for projects specific to the sheep and beef sector. There'll be more funding announced very soon for projects beginning after 1 July.

The science is important because it underpins innovation. Overall, the Labour-Progressive government invests over $83 million/year in pastoral farming research. And it is innovation that will increase our productivity and provide us with an edge in global markets as they evolve in future. Innovation has always underpinned our primary industry.

Some years ago I wrote a book about New Zealand's Unsung Heroes. One of the individuals who shaped New Zealand that I chose for inclusion was William Saltau Davidson. He was the pioneer of refrigerated shipping. If we go back over a century to Davidson's time, agriculture looked very different.
New Zealand farmed mainly for exports of wool. We exported almost no meat and no dairy. Property speculators dominated land use in New Zealand.

It is easy to imagine the business leaders of the day pronouncing, "New Zealand will never be able to sell butter, cheese or lamb to Europe. We're too far from those markets." Davidson proved them wrong. His innovation changed the face of New Zealand's economy.

And it helped to secure a hundred years of prosperity.

Just as innovation in the nineteenth century set alight our primary industries then, it will continue to fuel our future prosperity. Our edge - our source of value - will be our excellence. We need more high value products, and better exports because we won’t get far competing as the lowest cost producer.

The last couple of years have not been easy for many of our primary sectors. The high exchange rate and low commodity prices were brutal. Industries like wool, deer and forestry have felt a scorching heat.

We need to develop better resilience against the business cycle. There is no magic bullet that will lock in export returns and insulate the industry against future challenges. But nor are we helpless. We are custodians of our own future.

Wool is our challenge. The Wool Industry Network is an important opportunity for the industry to increase the competitiveness and value of wool exports.
The Government is confident that the Network will make a difference – we will put in two million dollars over the next three years, with matching funds from Meat and Wool New Zealand.

The Network will work on a strategy to boost collaboration and innovation in the wool industry. This will help it to better respond to the changing demands of international consumers.

To realise the potential of the Network wool producers, suppliers, processors and exporters must work closely together with regulatory authorities, economic development agencies, textile manufacturers and others. That is the challenge for us all - positive results flow from effective partnerships and collaboration.

Our future is best guaranteed through innovation, and steady progress in everything we do. We have to get a lot of things right: Investment in skills and infrastructure. Innovation, driven by science and superior business processes to differentiate our products and improve yields; Global marketing networks that ensure we are responsive to the demands of consumers.

I want to illustrate the shape of our future success with one example. Many of you will be aware that the Rissington Breedline and meat processor Affco have entered into a trial initiative with UK retail giant Marks & Spencer that will see Rissington's primera-sired lambs join a range of elite products sold in Marks and Spencers stores.

The carcasses will be partly processed by Affco before shipment to the UK.
On arrival they will be further processed into individual cuts and portions, labelled with the Marks and Spencer brand and the name of the NZ farmer who provided the original carcass. This is an important story on a number of levels.

First, it rewards the four-years of intense progeny testing that Rissington has undertaken in order to deliver greater value for its clients by producing consistent carcass weights, meat yield and quality products that are specifically tailored to their needs.

Second, it demonstrates how effective collaboration between breeders, producers and processors can help establish new supply chains into premium markets.

Third, the fact that carcasses can be traced back to the farm gate responds to growing consumer demand for assurances that products are safe and have been produced using sustainable farm management techniques.

And fourth, while Rissington's investment in progeny testing shows the power of innovation, the fact that Rissington will now be working with UK farmers to grow New Zealand lamb sales in the UK says something about the potential value of the NZ meat and wool industry's intellectual property and how new business models, which focus on NZ Inc. selling its intellectual property to the world, can signpost the way to a sustainable future.

We need to continue to build world-leading practice to stay ahead of market challenges and pressures. As Minister I am putting my hand up for the challenge. We are all on the same team. We all want a prosperous and sustainable future for New Zealand. We are all reliant on our primary industries succeeding. We should celebrate and build on these advantages we have, and make a virtue of necessity.

I'm committed to working in partnership with the sector to overcome the barriers to faster growth. We have a lot of work to do. The job will never be finished. But tomorrow's success will be harvested from the seeds we plant today. It's time to get out into the fields.

ENDS

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