Thursday, April 25, 2024

Put your feet up and work smarter

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Despite Kiwi agriculture, forestry and mining contributing more to value-added products than the OECD average, the sector is not highly productive
Even working with the relatively simply tool kit that’s available, reducing a farm’s GHG emissions is not as simple as reducing its stocking rate, says agricultural economist Phil Journeaux.
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You could never accuse those in New Zealand’s rural sector of not working hard.

But, according to new research released by ASB, it may all be in vain. Hard work, it seems, doesn’t always equate to high productivity.

In fact, the NZ Institute of Economic Research (NZIER) report shows productivity in the country continues to lag behind that of many other countries. 

In short, New Zealanders work harder but produce less. The report says it’s because businesses have been slow, or reluctant, to invest in those things that can make everyone’s lives easier: capital, knowledge and research & development.

The report looked at growth opportunities and what business, the government and banks can do to grow productivity. It found lifting productivity growth from 1.5% to 2.5% would see real GDP hit $500 billion by 2045, an increase of about 5% on current projections.

NZ relies heavily on the agriculture industry. 

But despite agriculture, forestry and mining contributing more to value-added products than the OECD average, the sector is not highly productive.

NZIER principal economist Christina Leung says any change in approach has to be driven by business, not the government. If businesses cannot, or does not, recognise the need to innovate, there is little point in asking the government for a helping hand.

There is also concern about NZ’s aging labour force, with the report highlighting the need to take action on productivity now to ensure the future sustainability of providing essential services like health and education. 

Leung issued a challenge to NZ business to be more ambitious, embrace innovation and invest as an engine for growth and sustainability.

“The country’s economic growth over the past two decades has been largely driven by adding more people to the workforce, and this needs to change, we need to work smarter,” she said.

NZ’s exports have grown in the past 30 years, but compared to other small, advanced economies, exports still remain low with earnings, accounting for less than a quarter of gross domestic product. 

Of the top 20 companies in the 2023 Deloitte Top 200, only seven are exporters or have international operations: Fonterra, EBOS Group, Air NZ, Mainfreight, Zespri, Silver Fern Farms and Alliance Group.

But there is one shining light in this country. The kiwifruit industry has improved productivity, building on a partnership between growers, processors, researchers and Zespri.

“Since the changes in the industry that led to the formation of Zespri in 1997, the industry has been transformed and is a textbook case of how to turn a worthless food commodity into a high-value product,” Leung said.

It is an approach that has allowed growers to adopt new, protected varieties of kiwifruit and quickly develop new technology and share information across the industry.

It hasn’t come cheap. The kiwfruit industry has invested an estimated $800 million in automated infrastructure and technology.

But, as the old saying goes, sometimes you have to spend money to make it.

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