“I think we are telling a much richer story back to the primary sector and to those who invest in it,” says Ray Smith, director-general of the Ministry for Primary Industries.
The Ministry for Primary Industries has established a bold action plan to ensure farming, forestry and horticulture remain the backbone of the national economy, writes Graham Skellern
The Ministry for Primary Industries has set a target of doubling the value of its exports within nine years in a drive to increase the economic wealth of New Zealand.
The ministry refreshed its primary sector growth strategy (called MPI Action Plan 2025-2026) and confidently predicted $106 billion worth of exports by 2034 – up from $53.3b out of a total $95b in 2024. Dairy made up $23.2b and meat and wool $11.3b.
Ray Smith, director-general of the Ministry for Primary Industries, says the Government is working hard to remove barriers to growth, and “New Zealand’s wealth will come most easily from growing the things we are best in the world at and where we have our competitive advantages. There’s just a lot of opportunity for the primary sector.
“If you think about the goal of doubling exports, it’s entirely within our grasp, providing we create the space to allow for land-use optimisation and make changes where necessary.
“Also, there’s those newish areas of development like open ocean aquaculture where the Fast Track regime is going to allow something that’s just been too hard to do for a long time.
“And forestry. There’s a growing understanding that we’ve got an amazing product. Can we just do more with it? Those big laminated beams, instead of concrete steel, being used in the new parliamentary [Museum St, Wellington] building are a really good example. Now, New Zealand’s cross-laminated wood products can actually produce high-rise buildings.”
Smith says that “probably for the first time in our lifetime – as petrochemical products become less the way forward and the costs of using them in terms of emissions profile go up – wood products become alternatives.
“Almost everything you can do with petrochemicals you can do with wood. So, we have this amazing resource coming to bear.”
Smith says New Zealand’s production is not going to grow anymore at the expense of the environment. There’s no need for that.
“The world is going to add another two billion people between now and 2050, and we’ve got a trusted product that’s wanted by the world.
“Increasingly, if we continue to lift our production capabilities – there’s a lot of opportunity in the sheep and beef sector – and get greater return through technology, then we can produce more and get that product to the world and lift our export earnings.”
Smith says the biggest challenge is the confidence among farmers and growers in working with regional councils and local authorities’ planning regulations. “There’s been a sense that they couldn’t grow or change easily.
“The farmers and growers have felt like ‘I’m not sure that it meets the planning regulations’ or it feels too difficult to swap from this activity to that activity. If we could get the ‘you can’ confidence, then New Zealand’s production base could grow.”
The MPI Action Plan has a vision of New Zealand being the world’s most trusted provider of high-value food and fibre products. The plan has four pillars:
Smith says these four goals sit under a mission over the next five years to grow the value of the primary sector for New Zealand. “We’ve now got a good, strong focus.”
The biggest challenge is the confidence among farmers and growers in working with regional councils and local authorities’ planning regulations. There’s been a sense that they couldn’t grow or change easily.
He has travelled the country and presented the plan to his frontline staff in 50 locations. “It was a really good thing because people said to me, ‘It helps breathe life into the plan by talking it through rather than just sending it out.’
“We’ve been galvanising the organisation behind the four goals. If you are one of 3500 people working in the ministry and you get up in the morning – whether you are on the front counter here or in an overseas market – primarily your job is to help grow the primary sector for New Zealand,” says Smith.
“We have been progressively repositioning ourselves on the economic front. I think that’s really working in terms of our sector feeling like we are enabling the things they want to get done. And it came through quite strongly for us at Fieldays.”
When Smith outlined the latest Situation and Outlook for Primary Industries (SOPI) at Fieldays, the presentation attracted its biggest turnout. “There was a lot more confidence and optimism than I’d seen in the previous couple of Fieldays.
“I think we are telling a much richer story back to the primary sector and to those who invest in it. They need to have the confidence about where the sector is making progress and where the opportunities are.
“Positioning ourselves to help grow the economic wealth of the country is quite a cultural change. I’m pleased with that. We’ve shifted a bit from where we were probably five, six years ago.
The SOPI spelled good news. Primary exports have increased 12% over the past year – from more than $53.3b to nearly $60b – after falling 7% the year before. There was significant growth in dairy and kiwifruit.
Smith says the economic conditions for farmers and growers have changed. “There’s strong demand for our product and we had amazing growing conditions, apart from the odd bits of drought here and there. Prices were up because of generally lower supply around the world.”
Milk prices have been at the high point, as has lamb in the American red meat market. Avocados have gone from having good supply but not much of a market to getting all the fruit into market at better prices.
Kiwifruit is a really interesting story, says Smith. It took a decade to go from $1b to $2b in export value, and then another six years to reach $3b. Within 12 months it will go over $4b.
Apple exports have gone over $1b for the first time. Creamy dairy products are in high demand – as seen in China foodservice – and have topped $5b. “There are quite a lot of firsts in the rich story.”
Smith says the only part of the primary sector that had a hit was wine. There was a big supply two to three years ago with a 27% uplift in export earnings. They have still been working their way through that supply overseas.
“So, that’s flat. It’s been tough on vineyards where contracts have not been renewed or there’s been caps on supply. The smaller vineyard owners have been trying to get the balance right again, and the long-run game for New Zealand wine is good.”
He says pasture-based farming and horticulture are two areas where New Zealand can lead.
“If you look at the dairy industry capability and the wide array of markets, you’ve got to think that with greater land use flexibility we would increase the amount of dairy farming. We would increase the productivity we have on our sheep and beef farms.
“Kiwifruit will continue to expand, as will apples, cherries, and others where there’s been huge success. So, New Zealand is in a good place to keep growing.
“We just need to make sure that all the changes we get through the Resource Management adjustments provide the platform where farmers and growers feel they can adjust their land use to the thing that creates the most value for them.
“There’s been a sense of constraint around that for quite a while, off the back of environmental concerns that were legitimate. But 15 to 20 years on, we understand more about how to control those concerns, and if you think about methane production, we will have solutions for farmers by 2030.”
“In fact, we will have some coming on to the market in New Zealand this year, designed for New Zealand conditions that will begin to knock down methane in animals,” says Smith.
“And we know more about how to keep nutrients out of waterways, though I think there’s still more to do with fresh water.
“One of the things we are deeply involved in with MBIE is Kanoa - RD (Regional Infrastructure Fund), and freeing up water availability and security to make sure that the land we have can continue to be productive on.”
Smith says Minister Todd McClay’s proposed land use class changes strike the right balance between saying farmers should be able to make a choice about percentage of their land and the rate of conversion into Emissions Trading Scheme credits should be limited each year.
Beef owners turned to planting trees to generate income off their land because they have not been able to diversify easily into other options like dairy grazing or mixed farming system because of the Resource Management constraints, he says.
“If forestry credits are going to be worth more than running your sheep and beef operation, then you are dragged towards that since you can’t diversify your land into another type of pasture-based farming. So, we’ve really got to free that up, otherwise you are creating a false choice.”
Smith says the time is right for the primary sector to grow again with further changes. “We’ve got the land, we’ve got the climate and we are surrounded by water. What’s got in our way is our own regulatory arrangements. Those are freeing up so we can productively grow what we’ve got and then in the marketplace.
“The world’s going to need our product because I think it will be more expensive in other areas overseas where they have to grow product and then feed the animals rather than just having them outside grazing.
“And so, we have this distinct advantage where our pasture-based farming system will always be more efficient,” says Smith.
Export revenue (June 30, 2025 forecast): A record $59.9 billion. In 2029 $65.9b.
Contribution to national economy: 82.5% of total goods exports (year to March 31), 10% of gross domestic product; 12.4% of employment.
Number of firsts in 2024/25: Butter, AMF (anhydrous milk fat), cream exports surpass $5b; infant formula surpasses $2b; kiwifruit reaches $3.9b; apples and pears surpass $1.1b; aquaculture surpasses $600m; sawn timber reaches $1b.
Individual contributors to exports (2024/25 forecast): Dairy $27b, up 16%; meat and wool $12.3b, up 8%; horticulture $8.5b, 19% increase; forestry $6.3b, up 9%; seafood $2.2b, 2% increase; arable $340m, down 1%; processed food $3.4b, down 1%.
Others: Avocados $108m, 192% increase; cherries $124m, up 35%; hoki fish $280m, up 12%; mussels $410m, up 8%; squash $60m, 7% increase.
Top export markets: China 31%, United States 12%, Australia 8%; European Union 7%, Japan 5%. Britain is 2%.
Farm expenses in March quarter this year: Local and central government rates/fees, up 10%; insurance premiums up 9.1%; livestock purchases up 7.8%; freight up 7.1%; electricity up 6.8%, dairy shed expenses up 4.5%. Fertiliser down 1%, fuel down 3.1%, weed and pest control down 4.3%; interest rates, down 14.9%. All inputs including livestock up 0.2%.
Ray Smith on research and development to reduce on-farm methane emissions:
“There are amazing New Zealand scientists working (for Rumenaut Ltd) in a brick building on the port in Dunedin. We went in through a hole in the wall, smelled like a cow shed, and I imagined must have been a whole lot of animals there. But there weren’t.
“What they’ve developed is artificial rumens [largest compartments of cows and sheep stomachs]. So, they’ve been able to copy the microbes and things that work in that rumen and put food in. The rumen just digests it.
“And they are testing all these products from around the world that are trying to reduce methane, as well as the ones we are invested in. That is a faster way of getting a predictive result out of what will happen when you give these products to animals. So, the scientists are checking for the effect these products have on methane.
“The questions are: ‘Do they reduce the productivity of the animal; do they increase the productivity of the animal; and what residues sit there?’ Some of the methods reduce the food intake of the animal, so they don’t eat as much, and that’s no good.
“So, what they are looking for are the products that hit the sweet spot where they cut methane and maintain the productivity or enhance it. Isn’t that amazing? It’s a great story.
“I think we will deliver huge reductions in methane, which will allow us to lift our productivity. In the end, we will end up with a vaccine or something that’s very low-cost.
“Between the processing companies, farmers and producers of these products, we can get an early advantage in the market. I think we’ll find a way to commercialise this [reducing methane] in a way that doesn’t hurt anyone.”
Smith says a range of products reducing emissions will come onto the market between now and 2030, resulting from the AgriZeroNZ partnership between the government and major agribusiness companies.
“You’ll see at the end of this year and then each year thereafter, whether they are boluses, vaccines, pasture-based solutions, and they will get cheaper and better as these things mature,” he says.
The Ministry for Primary Industries has been working hard behind the scenes on market access that benefits deer farmers, onion growers and meat exporters.
New Zealand deer velvet can be exported to China. Director-general Ray Smith met with his counterparts in China and it transpired they were initially thinking about closing off access.
“Because of the nature of the relationship, we kept the access open,” says Smith. “They worked with us and over a year we managed to address the concerns they had about the product going up.
“That’s the story of our relationship with China Customs, with the Ministry of Agriculture and Rural Affairs, and the regulator of infant formula products and so on – we have a very tight set of relationships.
“The architecture that underpins our relationship, which we’ve kept intact, really does work for New Zealand exporters. So, we get to help out, making sure we get those things smoothed away.”
Smith says, “We had to reinstate our onion access in Indonesia, which is worth $50 million for that sector. We have a person based up there and a good team that work on that.”
Smith travelled to Malaysia to get the meat trade back to where it used to be. “We only have seven establishments listed with them now – we used to have more than 60.
“The Malaysians have been out here and I think by the time we get to the end of the year, we will have that deal done as well, and we will meet their requirements.”
Smith says a lot of work at the ministry happens on the trade-side, “trying to get beneath these market access issues and making sure we meet all the requirements”.
The ministry has staff working in 13 countries right now.
The Ministry for Primary Industries is a sponsor of the Herald’s Agribusiness and Trade report.