Farmers help shave trade deficit
Released 29 Nov 2010
Those looking for the ‘next big thing' to export are advised to look at agriculture, with the sector helping New Zealand towards an actual trade deficit for October, $138 million less than forecast.
"While the trade deficit is still deep in the red, it's the exporters, especially in the agricultural sector, who are helping New Zealand advance economically," says Philip York, Federated economic and commerce spokesperson.
"Despite the high Kiwi dollar exports are up almost a quarter, at 24 percent, year-on-year.
"I think we can all collectively thank China. Its demand for protein, led by dairy as well as other commodities, has literally exploded.
"This explains why Federated Farmers is so keen on free trade agreements. By any measure, our agreement with China has been a success and that must annoy the lunatic fringe.
"While we say roll-on Russia, India and the Trans Pacific Partnership, we still hold out hope for the Doha trade round, given such engagement by these major economies.
"But the concern Federated Farmers has, shared by the Reserve Bank, is the spending trajectory we're on as a country.
"Standard & Poor's placed our foreign currency sovereign credit rating outlook on negative for a good reason. It's a warning about the size of Government, given Government is consuming 44 percent of our economy - eight percent more than what it did in 2000.
"That's $30 billion in real terms, which is unavailable to the private sector, to help grow companion industries that the agricultural sector wishes to see emerge.
"Developing Kiwi-based versions of Monsanto, Novartis and the like, builds off the deep institutional knowledge we have for producing and exporting food.
"In terms of spending choices, the ability to export more protein and fibre is being held back by not treating water storage as national infrastructure. It's a summer thing and summer is a production lottery, yet it's one that could be made far less by water storage.
"What's the point of a nice road to a port if we're under producing our real potential?" Mr York concluded.
For further information contact:
Philip York, Federated Farmers economics and commerce spokesperson, 09 292 8843, 027 290 5418
