ministry for primary industries the world’s biggest nz’s ... jamieson.pdf · ministry for...
TRANSCRIPT
CAR presentation
• February 2013
Ministry for Primary Industries
The World’s biggest challenge – NZ’s greatest opportunity
Michael Jamieson
Director, Strategy, Science & Systems
New Zealand is a good place to live...
New Zealand
Denmark
Finland
Sweden
Israel
Ireland
Australia
UKUnited States
AustriaBelgium
Brazil
Canada
Chile
Czech Republic
Estonia
FranceGermany
GreeceHungary
Iceland
ItalyJapan
Korea
Mexico
Nether-lands
Norway
Poland
PortugalRussia
Slovak Republic
SloveniaSpain
Switzerland
Turkey
0
10
20
30
40
50
60
70
80
90
0 10,000 20,000 30,000 40,000 50,000 60,000
GDP per capita in 2012 US$ (PPPs)
Source: Conference Board, Total Economy Database; OECD, Better Life Index.
Bubble size: GDP per capita in 2012 US$ (converted to 2012 price levels with updated 2005 EKS PPPs).
Better Life Index -- All 11 categories (0 - 100 best)
Better Life Index vs income
... but, we have become poorer
Growing and protecting New Zealand
Australia
AustriaBelgium
Canada
Switzerland
GermanyDenmark
Spain
FinlandFrance United Kingdom
Greece
IrelandIsrael
Italy
Japan
Korea
Luxembourg
NetherlandsNorway
New Zealand
Portugal
Sweden
USA
-40
-20
0
20
40
60
80
-40 -30 -20 -10 0 10 20 30
Actu
al G
DP
per
cap
ita g
ap
(%
)
Predicted GDP per capita gap (%)
Relationship between predicted and actual economic performance
Barnes et al (2011)
Below the line: under- performers / perform worse than predicted
Above the line: over-performers / perform better than predicted
...historic factors dragged down our
economic performance...
...and an increasingly inter-connected
world brings challenges and opportunities.
We will have to be innovative and internationally connected to prosper in a more volatile and global world.
Going
global
Getting
personal
Going
Asian
Going
green
Recent decades have seen greater global flows of people, capital, trade and ideas. Globalisation brings trade and investment opportunities for a small economy but it also brings challenges –
including the concentration of economic activity in global cities, greater volatility, risks of a retreat from
openness and pressures on inequality.
By 2025, Asia will account for almost half the world’s output. Asia’s rapidly growing middle class will increasingly demand our agricultural exports. But we will have to
cope with volatility in Asian growth and increasing competition.
There will be increasing pressure on natural resources and the environment. This global challenge creates opportunities for a country that has a relative abundance of water and some
other natural resources. However, it underlines the importance of good management of these resources.
Increasing expectations of public services within tight fiscal constraints. Advances in information and other technology enables better and more customised services but also fuels
public expectations. Meeting these expectations will be challenging as we balance the costs of a ageing
population with limits to increasing taxes in a global world.
• Primary production is the powerhouse of our
export economy
• It pays the bills
• It maintains our standard of living
• Global demand for many of our primary products
is growing
So why does MPI have an Export Double
target?
Our strong natural advantage in the Primary
Sector will drive growth
Growing and protecting New Zealand
We do have some scaled-up companies
Analysis suggests global category leaders acquire
NZ category leaders to integrate NZ into their
global value chain
Source: Coriolis, 2013
Although the export footprint is diverse .... a lot
is low value
Growing and protecting New Zealand
The Government’s Business Growth Agenda aims
to reverse these trends
Growing and protecting New Zealand
Exports to be 40% of GDP by 2025 – what do
we need?
We have a national brand ...... of sorts
THE NEW ZEALAND STORY
If we want exports to be 40% of GDP by 2025 –
what does it look like?
Where could growth in our exports come from?
Creating purposeful change
PURPOSEFUL
CHANGE
Cost
Regulatory Stewardship
Changing Consumer Demand
Technology
In-market competition
Consumer Welfare
Export D
ouble
as a
Lens
Sustainability
Significant Drivers of Change
Purposeful Change
Protecting our comparative advantage and
natural resource is just as important as
maximising production.
The value of any innovation to the Export
Double will be determined by its contribution
to Growing and Protecting primary industry
exports - not by how different it is from what
has gone before.
Can we coordinate our efforts across the whole
supply chain?
Growing and protecting New Zealand
Further work underway to support the Export
Double initiative
• Do we understand all of the opportunities we have to drive significant additional growth?
• How do the Primary Industries view the prospects for innovation to grow future productivity or value-add?
• MPI is coordinating a series of in-depth analyses to help answer these questions.
• And of course, the question of China’s rapid growth in trade with New Zealand.
We are already working with the primary industries
to identify opportunities around
• market access and new assurances;
• industry scale and structure;
• skills;
• access to capital; and
• environmental outcomes
• Stanford University “bootcamp”
– In 2012, 24 primary industry leaders visited Stanford
University
– In 2013, 30 Maori primary sector leaders attended at
Stanford University
– Both groups committed to an ongoing programme of
collaborative action planning
– Led by industry, enabled by government.
How can we organise for success?
The world’s largest megatrend is on our side ....
growth in Asia
Growing and protecting New Zealand
... which has had a major impact already
Growing and protecting New Zealand
By 2025, China will have 221 cities with one million–plus
inhabitants—compared with 35 cities of this size in Europe
today—and 23 cities with more than five million. Source: McKinsey & Company, 2009
NZ Primary Industry makes up 95% of NZ Merchandise
exports to China
0.78
0.8
0.82
0.84
0.86
0.88
0.9
0.92
0.94
0.96
Oct 07-Sep 08 Oct 08-Sep 09 Oct 09-Sep 10 Oct 10-Sep 11 Oct 11-Sep 12 Oct 12-Sep 13
Agriculture, fisheries and forestry share of total exports to China
Primary Industry was 85% of China’s share of
NZ exports of 5.5%.
Now it is a 95% of China’s 21% share of NZ
exports
in just five years... a massive change.
Are we prepared for growth in China? • China will be the largest global importer of agriculture and
forestry goods by 2020.
• These goods will be used by China for domestic and value-added
re-export markets.
• China is seeking a diverse and competitive global supply base.
• China’s growing demand for imports will create changes /
opportunities in all global markets.
• China is now New Zealand’s largest export market. Yr end Dec
2013 - exports up 45.2% to $9,957b and imports.
China Strategy
Since 2007, China’s Share of our Total Exports has Grown Rapidly to Now be Our Top Trade Destination
Last Two Quarters of 2013 saw a Rapid Rise in the
Value of NZ Milk Powder, Butter and Cheese Exports
Reach New Highs
No.1 in Dairy
• China has a large shortage of raw milk of 3 to 4 million tonnes a
year.
• Raw Milk is 10% of Chinese domestic raw milk production - raw milk
price has increased from RMB$3.4/kg to almost RMB $5/kg from
June to December 2013.
• From 2007 to 2012 dairy consumption per person raised from 16
litres to 24 litres at CAGR of 9.1%. Value wise increase from
$RMB328 million (NZ$65.6m) in 2008 to $RMB1.7 billion
(NZ$340m)
Just a reminder, China has :
• 20% of the world’s population.
• 9% of the arable land (recent soil testing remains a state secret).
• 7% of the water (recent tests suggest 47% of their water table is not in a usable
state).
• 6% of the milk production.
New Zealand is Competitive in natural resources to
support export growth in primary products
ANZ Focus, Issue 4, 2012
ANZ Agribusiness Infocus, Edition 2, 2013
Estimates of China’s Global Production and Consumption
Highlight’s Their Domestic Supply Is Unable to Meet Demand
for Commodities such as Dairy
The growth switch in NZ exports to China is huge
for the Primary Industry
ANZ Agribusiness Infocus, Edition 2, 2013
Changes in the Structure of China’s Food Distribution Network
make it Easier for Imported Food and Beverage to Reach
Consumers
Rapid Growth in Online Transaction Volumes in China are
Rapidly Creating New Ways to Efficiently Service and
Communicate With Consumers
ANZ Agribusiness Infocus, Edition 2, 2013
NZ’s primary sector growth ... undifferentiated
commodities or branded products for integrated
consumer orientated value chains?