Federated Farmers: TPP will have significant net benefits

Mike Petersen

Improving market access for agricultural products has recently been at the forefront of debate in New Zealand. The Trans Pacific Partnership (TPP) has been the target, with much of the discussion ignoring the realities of New Zealand's place in the world of food.

So why is the trade and market access agenda so important for New Zealand agriculture, and why should we continue to fight for better access to markets?

Let us first look at the facts.

The fundamentals of increased demand for food in a rapidly growing world are undeniable. For New Zealand the opportunity is not in feeding the masses, but instead, accessing the growing middle class of discerning consumers who are prepared to pay more for high quality, authentic, naturally produced food.

In the pursuit of food security, countries are now realising that this cannot be efficiently obtained with yesterday's policies of self-sufficiency. For most countries, food security will be achieved by using a balance of domestically produced food supported by imported food products. Smart thinking will be required to determine priorities, but global shortages of water, agricultural land and know how place New Zealand right at the heart of providing solutions for a hungry world.

The brutal reality for New Zealand is that with a domestic market the size of Sydney, we rely on the world for a living. When we combine the need for free-flowing food value chains and New Zealand's efficiency in food production, it is increasingly apparent that barriers to markets are barriers to our future prosperity.

Access to markets remains a major challenge for a number of New Zealand primary sector products. New Zealand has been very successful in securing a number of high quality trade agreements with emerging markets. However, access for New Zealand exporters to many of the worlds most affluent markets remains blocked, due to the prohibitive costs imposed by tariffs and quotas supposedly to protect domestic farmers.

There is irony in the fact that these tools of the past were established when food was plentiful. In the environment that exists today, these are yesterday's tools to deal with a threat that doesn't exist anymore. New barriers to markets are emerging in the form of non-tariff trade barriers that increasingly require attention to make sure that they also, do not impede the flow of New Zealand's goods into markets.

In order to secure New Zealand's future prosperity, access to affluent markets remains a key priority. Added value products will only have value in markets where consumers can afford to pay for them. Currently, tariff regimes that increase exponentially on processed products punish value-adding here in New Zealand. All of these issues need to be addressed to make New Zealand more competitive on the global stage.

TPP is at the centre of our attempts to increase access to affluent markets in what is the fastest growing region in the world. TPP matters hugely for New Zealand with the region home to 40 per cent of the world's GDP. Importantly, among the 12 TPP member countries, International Monetary Fund data reports that six of these have purchasing power higher than New Zealand.

Additionally for New Zealand, concluding TPP is critically important to balance our trade in the Asia Pacific region. Current trade agreements secure our future options in China and South East Asia. TPP will open up Japan, and importantly encourage us to look east across the Pacific Ocean to the Americas where huge opportunities abound. Recent turmoil in world markets confirms the need for New Zealand to have alternatives and a diversity of market destinations to mitigate risk in an increasingly volatile world.

Concluding TPP will have significant net benefits for New Zealand. Claims to the contrary by some commentators are misplaced and misinformed. New Zealand will not lose its sovereignty, or be sold off as claimed, and improved access for New Zealand primary sector products is the prize worth pursuing.

TPP is one part of the puzzle that is currently on the table, and nearly complete. There is still further work required to get a deal for New Zealand that meets our expectations on quality, but work is continuing to make sure this can be achieved. Improved market access into Europe is another priority that is on our immediate horizon.

Success and prosperity for New Zealand agriculture, and the country itself, depends on improved access to a wide range of emerging and affluent consumer markets. This matters more for New Zealand than any other country. It is critically important we continue to fight for this objective to secure the future for the next generation of farmers.