Rivals threaten NZ's Asian markets
Tough new competition is looming for New Zealand in its key Asian agricultural markets from big economic changes in Europe and we don't have a strategy to meet it, says KPMG.
The business advisory firm's head of agribusiness for New Zealand and Asia Pacific, Ian Proudfoot, told a rural seminar in Hamilton today that boom-bust casualty Ireland is now focusing on developing its agriculture and aquaculture export sectors.
European farming countries generally were preparing for the lifting of Common Agricultural Policy in 2015 and associated declining farm subsidies.
''They are working out what they need to do under CAP reform, and that includes opening new markets... and they are looking to Asia because that is where the growth is,'' Proudfoot said.
Added to this threat, the US, Japan and Canada are aiming to join Trans Pacific Partnership trade negotiations.
In short, other countries were focusing on innovation in order to be better than New Zealand, so this country had to think even further ahead and be prepared for ''a real international challenge'', Proudfoot said.
China's biggest challenge was feeding its growing population, but it was not trying to do that on its own. It was partnering with heavyweight food and innovation companies like Fonterra, Nestle and Arla along with technology and education entities to meet the challenge.
''It's fair to say in New Zealand we are not. We don't have a strategy.
''Agriculture pays for beds in our hospitals, education and for our roads. We can't afford to think of our assets as non-strategic.''
The challenge for New Zealand primary producers was to maximise the value of their production by understanding the needs of its consumer customers, Proudfoot said.
''It is not a premium or commodity choice. We need to do both better than our competitors to lock into customer supply chains.''
There were times when our customers would not want New Zealand value-added branded products.
''They want to maximise the value of their own branded products. They don't want our branded products. We need to be collaborative.''
New Zealand agriculture needed to move from a tactical position to a strategic one, he said.
''In New Zealand we spend a lot of time focusing on day to day, not the future.''
Proudfoot said there had been ''a real shift'' in public awareness of the importance of agriculture to our future in the past two years.
''Specifically about food. The clear message is there is not enough food now and there won't be in 20 to 30 years when the world's population has grown by two billion.''
Governments could no longer keep providing subsidy support to agriculture, he said. Fully costing in the environmental cost of growing food means global food costs would have to treble to maintain profitability, he said.
For New Zealand producers right now this may not be such a key concern but a change of government could see profitability quickly erode if full charges were implemented for water and carbon.
This sort of thinking was driving the thinking about agriculture of policy makers around the world, Proudfoot said.