Comment: Primary exports key to paying our way

Photo / File

Comment: Agriculture's huge contribution to New Zealand's economy is resulting in a more positive response from the Government, writes Federated Farmers Manager General Policy Nick Clark.

The Ministry for Primary Industries released its latest Situation & Outlook for Primary Industries last week, highlighting the huge contribution of agriculture to our economy.

The report revealed that for the year to June 2019 primary sector export revenue was $46.4 billion, up $3.7 billion or 8.7 per cent on the previous year. Over the past two years primary sector exports have increased by $8.2 billion, which is more than 21 per cent.

Read more from Federated Farmers here.

Primary sector exports make up 78 per cent of total merchandise exports and more than half of total exports when including services.

Over the year to June 2019, dairy exports were up $1.5 billion to $18.1 billion, while meat and wool exports were up $600 million to $10.2 billion. Forestry was up $550 million to $6.9 billion; horticulture was up $730 million to $6.1 billion, and seafood was up $180 million to a little under $2 billion.

The past couple of years have seen a positive combination of growth in primary production and good international commodity prices. Hence the very strong growth in export revenue.

Looking ahead to what is now the current year to June 2020, primary sector exports are tipped to slip slightly.

Nick Clark, Federated Farmers Manager General Policy. Photo / Supplied

Mostly this is due to a projected sharp $1 billion fall in forestry exports due to a slump in log export prices. There is a backlog in log supplies in China and MPI expects it will take time to clear the backlog.

Meat and wool exports are expected to have a show a small fall, due to lower production, but remaining over the $10 billion mark.

Better news is that dairy exports are expected to increase a further $470 million to $18.6 billion and there should also be further rises for horticulture and seafood.

The primary sector combined is still by far the biggest contributor to New Zealand's exports.

Although New Zealand has for a long time run trade deficits, generally speaking you need to sell to the world to be able to buy from the world.

Much of what New Zealanders like to buy, from cars to computers, from cell phones to coffee, and from petrol to aeroplanes is imported and has to be paid for - if not now, then eventually.

Also, the primary sector remains a significant contributor to the economic and social wellbeing of rural and regional economies and even metropolitan areas.

In many districts farming and processing of primary production is the biggest employer and that does not include the service industries that cater for farmers. Even big cities like Christchurch have a lot of primary sector businesses and employment.

There has been a lot of talk about negative rhetoric from the government towards farming impacting on farmer morale. The government's response has been to shift to more positive language.

Agriculture Minister Damien O'Connor described the results as absolutely "outstanding" and "record-breaking".

He also said:

"To our farmers and growers I say – you are the backbone of our economy are you're at the heart of our rural communities. This Government appreciates you and we're behind you. These results are down to your hard work – congratulations".

The next day he also released results of research that disproved there is an urban-rural divide and said that New Zealanders value farmers' work and there is a lot to be positive about.

This is good stuff and much needed as farmers are feeling beat up. But it's taken a long time for these positive comments to come and ultimately actions will speak louder than words.

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