Agriculture and high-tech industries can both flourish, writes Owen Glenn in the fourth part of a series leading up to the election
I'm not one who favours either/or situations.
They tend to limit possibilities and the imagination. Consequently I'm a little perturbed by what appears to be symptoms of a return to the arm wrestle between two alternative paths towards securing New Zealand's economic future - is agriculture the way or is it the development of high-tech enterprises?
This should not be an either/or choice and those at the coal face of developing both sectors are not necessarily the ones creating this artificial divide.
Case in point is the reaction to a Herald opinion piece by Federated Farmers president Bruce Wills discussing the implications of taxation. This is the same Bruce Wills who has painted a "smart thinking" picture of how we can harness our agricultural know-how to create global agri-services counterparts to what we do on-farm. Yet strong negative reactions to the tax column online surprised me.
Is this a fallback to some past government's dreams of us being a global finance/IT hub, predicting that the sun was setting on New Zealand agriculture?
Those waiting for this to happen might need to exercise patience simply because agriculture and food are part of the country's competitive advantage.
Let's count ourselves lucky that New Zealand has the distinct advantage of being able to play to a repertoire of strengths. Like all successful countries or enterprises what is required is a good understanding of where the opportunities lie that provide the best return on investment.
Over the past 10 years the rural sector has generated sustained growth and share as a measure of New Zealand's tangible exports. Agriculture's share of New Zealand exports is five times greater than the share of agriculture in global exports. Agriculture and forestry account for 65 per cent of New Zealand's exports.
Sir Paul Callaghan, New Zealander of the Year and one of our scientific thought leaders, has a strong sense of where our economic "bangs" will stem from.
At present the top three contributors to the "buck" side of the equation shows that dairy and milk powder account for $350,000 of GDP per job per year; technology-based companies bring in an equivalent $240,000; and farming and fishing $125,000. We must incentivise the development of high-tech enterprises while also enhancing and leveraging off what's happening on the land.
The world is crying out for safe and quality food sources - the opportunity is ours to become the mouse that roared.
Clearly we have a known and respected reputation in agribusiness - the question I ask is can we do more to promote our capabilities? Let's ask our agribusiness leaders but my guess is that with an exceptionally well-managed and co-ordinated New Zealand Inc type effort the increases would be significant, particularly underpinned by the smart use of science and technology.
Especially given agriculture already contributes in excess of $25 billion to GDP and accounts for over half our total export revenue.
Such an entity may exist or be in the making but I'd encourage the likes of Massey University - perhaps in collaboration with CRIs - to set up their agri-focused version of the University of Auckland's Icehouse programme.
The acronym of PIG - a place for Primary Innovation and Growth - fits, however more clever and creative minds would come up with the right name.
The combination of bright people, a strong base of research and development activity, and a diverse and innovative "eco-system" which can create the conditions where niches are found and opportunities for value creation and capture are exploited, is a winning formula.
In all sectors, but especially one with so much history of contribution and on-going potential, we need to really understand more about the critical path from an idea, to R&D, to IP protection, through to the successful production and sale of a new products and services worldwide. All the time remembering you can have all the science and innovation in the world but without the accompanying business leadership and management capability to commercialise outcomes then the "economic" plant will wither.
At the same time why not create literal innovation "clusters" - zoned and incentivised to encourage the admixture of science and technology applied to both agriculture and high-tech industries.
Let's also put together a true NZ Inc task force to visit countries that are high on the totem pole of achievement in both sectors and see how they have managed the process of diversification and co-operation.
Such a process would help us to create a blueprint investment strategy and also will give us a clearer picture of the capacity of New Zealand resources and businesses to add value and capture margins in these sectors. Working as one is the best way forward.
Owen Glenn is a NZ businessman and philanthropist and an officer of the New Zealand Order of Merit.