Primary Industries Minister Nathan Guy gets up close with his portfolio. Meat and wool exports have grown to $8 billion.
In the past 12 months we have seen a boom time for the primary industries.
Overall exports have reached a record high of $37.7 billion, with dairy and forestry having strong growth in both prices and production. Meat and wool exports have grown to $8 billion, which is a great achievement considering last year's brutal drought.
All of this is a positive sign for achieving the Government's goal of doubling the value of primary exports by 2025. This is an ambitious target that will bring both challenges and opportunities. To get there we'll need to work smarter, producing higher-value products and making the most of new technology and innovations.
We'll also need more workers -- a lot more.
Recently I released a report showing that employment in the primary industries will need to increase by 50,000 to reach this export double goal by 2025. This will cover a whole range of careers -- from manual jobs like fruit picking, right through to food scientists, environmental planning, IT and marketing. Over half of these extra workers will need a Tertiary or Level 4 Qualification.
Businesses are likely to be larger, more complex, use more technology and require more professional support. The challenge for all of us now is to promote the diversity and breadth of careers in the primary industries.
Last month saw an important first step as industry, Government and the education sector came together at a workshop in Wellington to plan the way forward.
We need to ensure those who advise and support people making career decisions -- teachers, parents, career advisors -- have access to the best and most relevant information.
One small but important example is the Enterprising Primary Industries Career Challenge (EPIC) which was launched recently. This is an interactive competition for Year 10 students to come up with novel marketing plans to attract other 15-year-olds into these careers.
Having enough suitable workers will be a major challenge, but it's a good challenge for New Zealand to have. This growing demand for workers just reinforces to me how the primary industries are still the backbone of New Zealand's economy.
Around 350,000 people work in farming, forestry, horticulture, viticulture, fishing and supporting industries. This accounts for one in six jobs, and in some regions the figure is as high as one in three.
Clearly, any plan for regional development has to be strongly focused around the primary industries and helping them succeed. This is why we're investing in irrigation and water storage projects. We only capture and store around 2 per cent of the rain that falls in New Zealand, with the rest running out to sea.
There are major potential benefits from capturing and using this precious resource. NZIER estimates irrigation could create thousands of new jobs and boost exports by $4 billion a year. Water storage projects have real environmental benefits too, because it takes the pressure off ground water aquifers and gives the ability to maintain decent summer river flows.
In the Budget this year an extra $40 million was allocated for investment into irrigation, on top of $80 million last year. Along with this opportunity comes challenges. It's crucial for our reputation around the world, and for ourselves, that we balance this economic growth with environmental sustainability while protecting our borders.
In July the Government announced the introduction of national standards for fresh water in New Zealand. This means, for the first time, rivers and lakes will have minimum requirements for water quality that must be achieved.
We're also investing hundreds of millions of dollars into freshwater clean-ups, and there is lots of work going into understanding how nutrient management technology can help improve water quality.
This will mean changes to some of our farming practices, but I know farmers are up to the challenge.
My number one priority as Minister is biosecurity, because we're never going to double our exports if we don't protect our borders from pests and diseases.
This is why we have trained around 125 new quarantine inspectors in the past 18 months, and have 12 new x-ray machines at our international airports.
A new biocontainment laboratory will be built, and we are investing in preparedness, training and planning. Industries now have the chance to be directly involved in this work through Government-Industry Agreements (GIAs).
Increasing our trade access to markets overseas is another major priority. Our two-way trade with China has now reached a massive $20 billion, years ahead of forecasts. Though it is a hugely important market for us, it's worth remembering there are plenty more countries with great potential.
The Trans-Pacific Partnership involves 11 other countries including major markets like Japan and the US. These countries take around 45 per cent of New Zealand's trade. Progress has been slower than New Zealand would like, but the potential gains are enormous from a comprehensive agreement. We also have trade deals at various stages of negotiation with other important markets.
Investing in research and development is also a top priority for both industry and Government. More than $700 million is being co-invested into 18 projects through the Primary Growth Partnership (PGP).
Some of the most exciting projects include getting more value from red meat products, more efficient use of fertilisers, and a new net design that enables fish to be selected and caught alive. This last project has the potential to open up new opportunities for the export of live, high-value fish and improve sustainability at the same time.
A report by NZIER estimates the benefits to New Zealand could be as high as $11 billion a year by 2025. And this doesn't take into account wider benefits like health, safety and environmental efficiency.
Clearly, the old image of farming as being dirty, low-tech and unskilled is completely out of date. Today's producers are environmentalists and sophisticated business operators whose product ends up feeding around 40 million people in 200 countries.
The challenge -- and opportunity -- for all of us now is to communicate this message to the wider public.
This annual feature on agribusiness by the NZ Herald is a good start and I want to congratulate them again for this feature.
Primary sector revenues forecast to reach $37.7b (June 2014 year). Export values projected to reach $40.7b by June 2018, an 8 per cent increase relative to year ending June 2014.
Dairy
5.6 per cent compound growth between 2001 and 2013. Particularly strong in June 2014 year, export revenues expected to grow 31 per cent billion to $17.6b due to high international prices and lift in production. Will fall in June 2015 year, but forecast to reach $18.4b by June 2018. Dairy exports to China grew from 2.6 per cent in 2001 market share to 35 per cent in June 2014 ($0.2b export revenue to $6.1b). Product mix changing, with 'Other' category (mostly higher value, consumer-branded dairy) having the highest compound growth rate; 13.6 per cent between June 2001 and 2013.
Meat and wool
Value of meat and wool exports expected to increase by about 22 per cent over the next five years, from $8.1b forecast in 2013/14, to $9.4b by 2018.
Stock numbers will recover in 2014 following 2013 drought, but numbers will then decline with conversions to dairy. Productivity improvements will see beef production relatively stable and lamb production slowly increasing.
Forestry
$5.1b at end of June 2014. Log harvest is at record levels, and Chinese demand driving growth of sector. Exports forecast to be $5.0b in June 2018 year. Forest harvest volumes are expected to reach a record 30.1 million cubic metres in June 2014, a 55 per cent volume increase over 5 years.
Horticulture
Horticulture export revenue forecast to increase 5.2 per cent to $3.83b in June 2015 year. Wine comprises 36 per cent of this total, and is set to increase to220m litres of exports ($1.45b total export value) in June 2015 due to the record vintage of 2014.
Export values of kiwifruit fell 22 per cent to $817m in June 2014 year, with Psa virus affecting orchards and falling gold kiwifruit prices.
Seafood
Seafood exported expected to total $1.44b (June 2015 year); rising to $1.64b in year to June 2018.
Nathan Guy is the Minister for Primary Industries.
Squeeze on costs collides with rising excises to sour sentiment.