MPI director-general Ray Smith talks about future of New Zealand’s agriculture and trade

MPI director-general Ray Smith explains every country is good at something: food production, pastoral farming, "that’s the thing we’re best at".

“The future is bright for Aotearoa New Zealand. Our climate and natural resources and ability to produce quality food products competitively and sustainably position us well to meet demand from an increasingly diverse range of consumers. But to capture these opportunities we will need to continue to make good choices.”

Optimistic words from an independent report produced by the Ministry for Primary Industries (MPI) — The Future of Aotearoa New Zealand’s Food Sector.

MPI director-general Ray Smith explains every country is good at something: food production, pastoral farming, “that’s the thing we’re best at.”

When the ministry was required to produce a long-term insights briefing, it decided to focus on questions like, “What is the future of food consumption in 2050?”

Says Smith: “To cut to the chase there’s another 3 billion consumers going to go into the middle classes between now and 2050 … and they’re going to come mostly out of our emerging markets. They’ll be in Asia, and they’ll be in Africa. We’re already heavily in China, but China itself is forecasting a doubling of its middle class to 800 million people.”

MPI director-general Ray Smith.

New Zealand’s traditional markets — the US, UK, Europe and Australia — already have large middle classes.

Smith says India is also going to be a big player.

“We’re going to have to get closer to those emerging market countries to understand what their consumers require in order to build those relationships and get the sort of market access that we’re after.”

The upshot is that boards of directors, who Smith hopes will use the report as a reference point, will be better placed to decide where to place their global investment.

“While we’re developing weightless exports, and figuring out how to get more ‘direct to consumers’ and getting our origin stories really strong, we’re also going to have to go into new markets, where we have probably spent less time and energy, to make sure we shore up our position.”

The graphic above illustrates some forecast consumer changes to 2050.

Smith emphasises food production is also going to come under pressure with climate change.

“One of the things that we’re very conscious of is that the ‘ticket to the game’ at the moment, where New Zealand’s been successful, is food safety,” he says. “Trusted, high-quality products, good taste, reliable.

“Even through Covid we never missed a beat.

“We continued to supply worldwide markets with our products. So, we’re relied on.”

Increasingly, sustainability, the ethical production of food, and food sovereignty are figuring, particularly, amongst middle-class consumers who are going to become more and more focused on choosing products that are better for the environment and climate.

“People at the moment look at New Zealand as a brand, and that gets us most of the distance,” says Smith.

“But to maintain that edge, we’ll need to be able to verify where our product comes from, what goes in it, why it’s better for the environment, why it’s lowering our emissions profile, and so on.

“We think consumers are going to constantly look increasingly for products low in emissions profile.

“For all of our advantages, the one big challenge we’ve got is we produce a lot of greenhouse gases to produce all of that food. And whether we like it or not, it’s a big per cent of New Zealand’s profile, because we’re not big industrial polluters.”

He suggests producing more of what New Zealand currently produces is going to be difficult. But there is an opportunity get more value, whether it’s through seafood, or finished wool products for instance.

“You’ve got to believe by the end of this decade, people are going to want wool products,” says Smith.

“Our challenge between now and then is getting farmers to keep having sheep.”

On balance, and the report underlines this, it makes sense to look through the current economic difficulties New Zealand agribusiness faces.

“We are so well-positioned to grow food. The climate change issues will affect us, but not as badly as others,” says Smith.

“Consumer preferences are also changing — such as strong individual preferences; those who would like to buy food that’s grown closer to home.

“But we think we’re well positioned.

“I think that whole thing about conquering the greenhouse gas emissions, and maximising our strong environmental credentials and being able to demonstrate that will continue to position us really, really strongly,” says Smith.

Forecast GDP rank 2050

New Zealand’s current major markets include:

China (ranked 1st in 2016 and 2050)

United States (ranked 2nd in 2016 and 3rd in 2050)

Japan (ranked 4th in 2016 and 8th in 2050)

United Kingdom (ranked 9th in 2016 and 10th in 2050)

Australia (ranked 19th in 2016 and 28th in 2050)

Sample growing markets include:

India (ranked 3rd in 2016 and 2nd in 2050)

Indonesia (ranked 8th in 2016 and 4th in 2050)

Nigeria (ranked 22nd in 2016 and 14th in 2050)

Philippines (ranked 28th in 2016 and 19th in 2050)

Vietnam (ranked 32nd in 2016 and 20th in 2050)

● The Ministry for Primary Industries is an advertising sponsor of the Herald’s Agribusiness & Trade report.