Groser lauds progress over Kiwi exports

Trade Minister Tim Groser spoke at a meeting organised by ExportNZ Bay of Plenty in Tauranga last week. Photo / Ben Fraser

New Zealand exporters are transitioning up the value chain, but the ongoing demand for high quality commodities is masking the progress that is being made, says Trade Minister Tim Groser.

Developing and distributing new branded products in large and complex markets like China was difficult and expensive, he added.

"China is an absolute graveyard of failed attempts to launch branded products," he told a meeting organised by ExportNZ Bay of Plenty in Tauranga last week. "Many great companies have fallen by the wayside."

New Zealand had seen a high rate of growth in advanced processed agro products, which have risen at a combined annual average of 15 per cent over the past 15 years, said Mr Groser.

Nutraceuticals and advanced food products were growing at 18-19 per cent annually.

"It's intriguing that our second-largest F&B market after China is Australia," he said.

"That's not commodity based. That is very respectable. There has been progress.

"But what has masked this has been the massive demand for high quality commodities.

"We've seen very good growth moving up the value chain, but also very high growth for commodity exports as a result of this insatiable demand for high quality goods."

A major problem in entering large and complex markets such as China was the difficulty in securing distribution, he said.

Fonterra last month announced it was buying 20 per cent of leading Chinese infant food manufacturer Beingmate and planned to form a global partnership to help meet China's growing demand for infant formula. The partnership is intended to increase the volume and value of Fonterra's ingredients and branded products exported to China.

Todd Muller - who stepped down as Fonterra's group director of co-operative affairs to campaign as National's candidate for the retiring Tony Ryall's Bay of Plenty seat - told the meeting it was frustrating Fonterra was categorised as a commodities-only supplier.

The Beingmate deal was "a huge opportunity" for Fonterra to get distribution across the Chinese partner's 80,000 distribution outlets in China, he said.

"More than one-third of Fonterra's revenues are now valued-added," he said.

"But there is a huge pull, particularly out of Asia, and particularly out of China, for commodities. If you're still able to produce a commodity at scale and at competitive price with good margins, and you've got voracious demand, it's commonsense to play to your historic strengths."

Tauranga MP Simon Bridges, who also attended the meeting, said New Zealand had to make its way as a trading nation.

"And in Tauranga, more than the rest of New Zealand, because we're predominantly export-fused," he said.

"Tauranga Port obviously leads the pack nationally, 20 per cent of our local economy is kiwifruit, and then you move through the various other industries that export or service exporters. It's great to have them here."

Exports

About 34 per cent of New Zealand's total exports are made up of dairy products. Recent dairy commodity price declines have alarmed the market and fuelled calls for greater export diversification.