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Global food security and strong trade links key to future competitiveness of New Zealand agriculture: report

Posted in Rural News
Agriculture in Focus 2013 report

Content supplied by Rabobank

Global food security and strong trade links key to future competitiveness of New Zealand agriculture – report

The world’s increasing focus on food security and safety – along with New Zealand’s strong trade links with major importing markets – will be among the key factors supporting the international competitiveness of New Zealand’s agricultural sector in 2013, according to a newly-released industry report.

In its flagship Agriculture in Focus 2013 report – examining the outlook for New Zealand and Australian agriculture – specialist food and agribusiness bank Rabobank identifies key opportunities and challenges for the competitiveness of New Zealand agricultural commodities in the year ahead.

Overall, the report finds the outlook for New Zealand agri commodities remains generally robust, despite some ongoing challenges to competitiveness.

“Global supply and demand fundamentals indicate an increased reliance on exportable supplies from New Zealand in 2013, which should help bolster local prices, largely off-setting the currency drag (from the high dollar),” the report says.

However, the report cautions, maintaining competitiveness is vital in order to take full advantage of the opportunities.

“Enhancing the international competitiveness of New Zealand agribusiness is becoming increasingly challenging. Where possible, these challenges must be tackled in 2013 to mitigate the impacts of the elevated New Zealand dollar and to unlock the growing opportunities for the sector into the future,” it says.

Food security and safety

Chief among the opportunities for the New Zealand agricultural sector are those presented by the pressing global need to provide food security to rapidly-expanding and increasingly wealthy populations, particularly in developing Asian economies.

The report says New Zealand, like its near-neighbour Australia, is well placed to increase the volume of agricultural exports into the Asian region due to its competitive advantages, including superior product quality, developed trade linkages and geographic proximity.

“The issues of food security and food safety provide enormous opportunities for New Zealand and Australia’s agricultural sectors,” the report says. “Both countries have ample supply of high quality food and agricultural products, and comfortably sit on the doorstep of a fast-growing region.”

However, extracting and retaining maximum value for that production – along with maintaining and developing competitive advantages – will be key to ongoing growth in exports, says Rabobank senior analyst Hayley Moynihan.

“The New Zealand agribusiness sector is expected to play a major role as a reliable supplier of high-quality, safe food over the next decade, however it is not the only country eyeing the opportunities presented by the increasing food demand from a rising middle class in Asia. Maintaining competitiveness is vital to take full advantage of the opportunities,” she said.

Food safety is also an important factor identified by the report. “Plagued by local food safety issues, many trading partners are seeking the assurance of high quality imported food and agricultural products,” Ms Moynihan said.

“And stringent food quality and safety frameworks already underpin production systems in New Zealand.”

Trade links

Throughout 2013, New Zealand’s strength in international trade links with key importing markets is expected to be a distinct competitive advantage for the country’s agri exporters, according to the Rabobank report.

“The inability of many, particularly developing countries, to feed growing populations through domestic production means that governments are aiming to facilitate trade flows and offshore investment in agriculture as a means of securing food supply,” Ms Moynihan said.

“Trade relationships and agreements are integral in developing and maintaining efficient access to global markets. The continued facilitation of trade flows to ensure stable food stocks globally in 2013 is expected to help support the local prices of agri commodities in New Zealand.”

For New Zealand, a key focus is the ongoing negotiations with Russia, Belarus and Kazakhstan to form a Free Trade Agreement.

The report says foreign interest in New Zealand’s agricultural assets also looks set to continue in 2013, with the country’s reputation for quality food production making it an attractive destination for investors.

Other issues

Other key issues facing the agricultural sector in 2013 identified by the Rabobank report include the strong New Zealand dollar, increasing regulatory pressures and sector employment.

The New Zealand dollar is forecast to remain elevated for at least another 12 months, challenging the competitiveness and profitability of the country’s agricultural exports, the report says.

“The elevated currency makes the pursuit of future productivity gains in New Zealand agriculture all the more critical,” Ms Moynihan said.

In addition, increasing regulatory pressures are creating some extra headwinds across the agricultural sector adding to the cost of production, as well as creating uncertainty, limiting resource availability and driving change in farming practices.

While attracting current and future generations to agriculture is a priority for all of the farming sector, Ms Moynihan says. “The challenge is not just meeting and being able to afford immediate labour requirements to get the job done, but identifying from where the next generation of farm owners, managers and agribusiness leaders will emerge,” she said.

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Content supplied by Rabobank

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7 Comments

It's hard to be get excited

It's hard to be get excited about it though, who will benefit apart from importers and currency speculators?  The kiwi dollar will rise and absorb any increase in trade revenue before our farmers get a look in and certainly exporters will suffer.

This is a press

This is a press release...............
but check out the warding off the Shylock below .....

About Rabobank Food & Agribusiness Research
About Rabobank Group and Rabobank Food & Agribusiness Research and Advisory
 
Rabobank Group is a Netherlands based, international financial services provider operating on the basis of cooperative principles with a predominant focus on providing allfinance services in the domestic market. Internationally the Group's focus is on food and agriculture. In line with its cooperative roots, Rabobank Group is a cooperative bank, comprised of independent local Rabobanks, plus their central organisation Rabobank Nederland and its (international) subsidiaries. The organisation has almost 60,000 employees (fte) worldwide and operates in 48 countries.
The group comprises 139 independent local Dutch Rabobanks, a central organization (Rabobank Nederland), and a large number of specialized international offices and subsidiaries. Food & Agribusiness is the prime international focus of the Rabobank Group.[2]
 
The bank is rooted in the ideas of Friedrich Wilhelm Raiffeisen, the founder of the cooperative movement of credit unions who in 1864 created the first farmers' bank in Germany. Being a countryside mayor he was confronted with the abject poverty of the farmers and their families. He tried to alleviate this need through a variety of charitable activities. He soon realised, however, that self-reliance had more potential in the long run than charitable aid. He therefore converted his charitable foundations into a farmers' bank in 1864. In doing so he created the Darlehnskassen-Verein, it collected the savings of the countryside dwellers and provided the enterprising but needy farmers with loans.
This model found a lot of interest in the Netherlands at the end of the 19th century. One of the first of Raiffeisen's followers was father Gerlacus van den Elsen who stood at the basis of a number of local farmers' banks in the south of the Netherlands. The model caught on being championed by the clergy and the countryside elites. The mission of the farmers' lending banks was an idealistic one but they always operated using strict business principles. Controversially, a founding principle of Rabobank's co-operative style was to co-operate in the interests of "warding off the Shylock". The cooperative bank model assured a tight bond between invested capital and the community.
 

One concern that I have

One concern that I have always had for NZ's primary products is that everyone focuses on volume -- XX% increase in production in milk, XX% increase in production in lambing percentage. With limit on land, water and labour, there would a day that volume may not increase anymore.
 
Where are your focus on value, and most importantly on your MARKETS!!!?????
 
I know it is easy, convinient, less costly to negotiate with big factories/brands to supply just raw matierials. Nowadays, it is the vertically integrated businesses that control the design and core tech, and influence behavor of the end market make the most profit.
 
It may require confrontation with existing market players but hey show some guts and nuts, NZ.

Cause at the very least the

Cause at the very least the export markets are commodity style. Meaning price.

Add that to the thinking of the major buyer groups. Food manufacturers or supermarkets. These are not touchie feelie types.

Then above think of our nation state friends = meaning the usa influence to get rid of the nz dairy board.

So one 20 yr plan sees amd or

So one 20 yr plan sees amd or heinz buying the guts out of fonterra.

For all nz inc exports, there are fewer gen exporters...

Thats a real problem....

What if NZ farmers were able

What if NZ farmers were able to work with farmers, suppliers and processors internationally so as to have leverage with the end market players?
 
Dr Van Bekkums final report (pdf file p 23) postulates an interesting scenario.http://www.ourco-op.co.nz/