Friday, April 12, 2024

Economics Forum unpacks goal to double exports

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A purely neoliberal prescription will not suffice, Waikato University panel says.
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The new government’s aim to double the value of exports in the next 10 years is an important one, given the headwinds facing the New Zealand.

But it will be challenging to achieve, a panel of agribusiness experts told the audience at the Waikato University Economics Forum.

Te Puna Whakaaronui’s Lain Jager said it will require a compounded average growth rate of 7.2%, which  would only be achieved if the food and fibre sector continues to grow.

The objective from a “NZ Inc” perspective is appropriate, not unreasonable and important because of the challenges the country faces. 

“We must continue to grow exports to be able to support the standard of living that we all aspire to.”

Jager said the new government is operating in an extremely tough global economic environment. 

“These headwinds have a New Zealand face.”

That face is unaffordable housing, health and education systems under pressure, road and water infrastructure requiring investment and significant investment needed to decarbonise the economy.

“All against a backdrop of economic fragility and increasing geopolitical tensions globally.”

Jager said successfully implementing high-level objectives to meet these headwinds will be challenging and complex. It will mean meeting a number of secondary objectives around decarbonising dairy, increasing R&D investment and reviewing GE regulations.

“A purely neoliberal prescription will not suffice.”

To decarbonise, NZ will need to electrify, which will mean doubling its investments in renewable energy. How this is done will be critical given that electricity costs will be key to future export competitiveness, Jager said.

Investments in the food and fibre sector need to continue at the same time that it decarbonises.

Reaching the export goal will also require better government-industry collaboration, he said.

“If we think we can drift into the future with an incrementalist approach and achieve the growth we are talking about, we’re out for lunch.”

AgriZero chief executive Wayne McNee said the goal is a great idea, and that there has been a similar aspiration when he was Ministry for Primary Industries director-general.

Reaching the goal is about value, not volume.

“We don’t have the space to grow more and more of everything.”

It needs focused support from the government and has to be led by the industry, McNee said.

This sector remains the backbone of the economy and strong strategic action and investments are required to decarbonise and grow this sector.

Massey University’s Professor Harjinder Singh emphasised the threats and opportunities that animal agriculture faces from plant-based and lab-grown protein.

“I believe we need to actively participate in this food revolution, potentially developing our own capabilities skills, international investments and partnerships in this space.”

Alternative protein will never replace animal protein because of global food demand, but there is an opportunity to do both, he said.

It will require more investment into R&D, startups and infrastructure. Some also require genetic engineering, which will require re-examining the country’s laws around GM and GE, he said. 

McNee said one challenge facing the sector is the disruptive risk posed by customers setting ambitious Scope 3 targets for reductions.

“There’s massive customer pull and they are putting big expectations on our sector, our processors and our farmers to meet those targets.”

NZ farmers start with an advantage being a low-emitting sector already, but it will not stay that way with new technology coming in. It means NZ farmers have to be part of this change as well, McNee said.

For those doubting the science, McNee said governments, customers and consumers regard it as an issue, opening up risks around trade if NZ is seen to be not meeting its climate obligations.

“There is a very real and disruptive risk to our dairy and meat sectors from customers’ emission reduction targets but there is also a very real opportunity to stay among the most efficient producers of dairy products and meat in the world.”

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