Good morning and thank you for inviting me today.

I'd like to acknowledge your Chair, Ian Palmer, the Board of Pipfruit New Zealand and your Chief Executive, Peter Beaven.

We are living in extraordinary times, and to begin with, I want to talk about the global economic situation, the worst conditions we have seen since the 1930s.

The economies of the EU, United States and the UK are all forecast to contract by at least three percent this year. Japan's economy will contract by at least six percent.

New Zealand's economy is forecast to shrink by one percent a year, so while we have been affected, compared with these other major economies, we haven't been hit as hard.

Our dependence on primary production has insulated us from the worst effects of the recession, and these industries will lead us back to economic prosperity.

Today you have asked me to present the Government's perspective on the effects that global changes in agriculture and horticulture will have on New Zealand producers, and the outlook for the future.

I also want to touch on some specific topics: research and innovation, biosecurity, market access, the Recognised Seasonal Employer scheme and climate change.

Suffice to say, I am passionately confident about the future of New Zealand's primary sector, and I say that having just returned from the UK and Brussels, where I've observed - with pride - your products on the shelves of their supermarkets.

What this trip reinforced to me was the position of New Zealand's products in the world.

We are no longer a low cost producer. That mantle has passed to countries like China and Uruguay. Our future is producing quality food for the consumer who can afford to pay more.

This consumer is a person who buys not only according to price, but also according to conscience - and is prepared to pay a little more to satisfy concerns around the integrity of food production.

Critical to this decision is the underlying environmental impact of the production system behind that food. In other words, is the environment being permanently damaged to produce that item?

Thankfully, New Zealand's image is extremely positive, but this clean, green image must be maintained at all costs.

Secondly, people want to know that they're purchasing food that is safe. Buying food is an act of faith. Breach that faith and expect no mercy from the market.

To continue producing high quality food requires us as a nation to spend substantially more on research and development.

You have some great stories to tell in this area, with Jazz and Envy, and I know you have more releases up your sleeve.

This is a must if we are to stay ahead of our competitors, which is where research and innovation comes in.

In this year's Budget, we announced the Primary Growth Partnership.

Government will provide $190 million over four years. When fully operating in 2012/13, the partnership will see the Government investing $70 million annually in primary sector innovation.

The Government's commitment will be matched dollar-for-dollar by industry, leading to a total investment of up to $140 million a year.

It is an enduring and significant commitment from central Government.

PGP incorporates a transparent and accountable funding structure that is focused on results, not red tape.

We do not see PGP as 'business as usual'. It is an ambitious project and has an ambitious scope.

The priorities and strategic direction of PGP will be led by those industries that choose to be involved.

To this end, there is funding set aside for horticultural research and development and I hope that Pipfruit New Zealand will work with others in your field to make sure you are part of PGP.

Of my three portfolio areas, biosecurity is the most important. A major breach of biosecurity would affect the livelihood of every New Zealander.

We need to constantly review the way we do things at the border, and not complacently accept that what we have now is as good as we can deliver.

In the near future, our Prime Minister will be announcing plans to facilitate easier travel across the Tasman. Of course this has implications for biosecurity. In fact, if biosecurity wasn't a consideration, you could almost make trans-Tasman travel a domestic experience.

We recently did a trial at Auckland Airport, where we profiled and selected 15,000 travellers as extremely low risk. Having assumed they would carry no items of interest to us, we then subjected them to same level of scrutiny as everybody else.

Of the 15,000 passengers, 32 (just 0.2%) passengers carried goods that were discovered by our hard-working beagle dogs.

A further 19 (just 0.1%) had products discovered when their luggage was then x-rayed.

The point of this exercise was that out of 15,000 passengers, we put considerable resource into 14,949 passengers for no real gain.

What this shows is that we can do things better at the border. By targeting our resources to those we suspect are potentially more dangerous to New Zealand biosecurity, I'm positive we will actually get better outcomes and deliver lower risk at the border.

Shortly we will be announcing a number of other measures that are designed to strengthen our border biosecurity.

I know that another important biosecurity issue for you is the apples to Australia case - currently before a WTO Panel - with its final report due for release early next year.

Apples access is a significant issue for New Zealand and the move to the WTO was not taken lightly. However, I think it is a sign of a mature relationship when close partners can pursue their trade interests through dispute settlement, without it seriously affecting other aspects of the relationship.

Parallel to the WTO process, I can assure you that the apples issue was a major focus of discussion when the Prime Minister met with his Australian counterpart earlier this year.

At this meeting both sides expressed a strong desire to see the issue resolved, and I received a similar message during my meeting with the Australian Agriculture Minister Tony Burke in February.

Let me reassure you, though, that this Government will not compromise on the apple issue, and we are absolutely committed to achieving WTO-consistent, science-based and commercially-meaningful access for New Zealand apples into Australia.

On now to the wider issue of market access, where a lot is happening.

As a nation that trades internationally for its very survival, we certainly know the importance of market access for all of our exports.

Let's look at our trade with India for example -a growing economy and massive population with a rapidly expanding middle class. It currently imposes a 40 percent tariff on apples from New Zealand.

A successfully negotiated Free Trade Agreement with India would have obvious benefits to you and we expect to begin those negotiations later this year.

New Zealand has also started free trade agreements with a number of trading partners.

Key successes so far have been agreements with China, Malaysia, Thailand, as well as a combined agreement with ASEAN and Australia, and the Trans-Pacific Agreement with Chile, Brunei and Singapore.

On top of this, we have work continuing with the Republic of Korea, Hong Kong and the six-nation Gulf Co-operation Council.

These agreements will reap huge benefits both now and over the next 10 years as tariff reductions are progressively implemented.

I want to touch briefly now on the Recognised Seasonal Employer Scheme.

The Prime Minister talks with pride of his recent trip to Samoa, where he visited Potasi Village. There he saw first-hand the results of 240 people from the village who had taken part in the RSE scheme over the last two years.

The return of income to this village means that they now enjoy a substantially better standard of living than prior to the introduction of RSE.

We have also made some change to the RSE scheme since the election. We have amended the policy to ensure the rules for deductions from RSE workers' wages are now the same as those for New Zealanders.

In response to submissions from your industry, we have made life simpler for growers and for employees. We now require that employers arrange health insurance for their RSE workers whilst they are in New Zealand. RSE workers are not eligible for public funded health care and their lack of this insurance cover had in the past created problems for growers and workers.

These two changes are good examples of how our Government intends to listen to you and work with you to find solutions.

My final comments this morning concern climate change and Greenhouse Gas footprinting.

Climate change is a major issue on our agenda and with more difficult summer seasons becoming prevalent, many farmers and growers are now switched on to the problem.

There are two issues; the Government's Emissions Trading legislation and how the primary sector can adapt.

We are currently reviewing the previous Government's Emissions Trading Scheme and at this stage await a report back from the Select Committee. You can be sure that our final policy position will likely be an Emissions Trading Scheme that is substantially more balanced than the current legislation, recognising the economic impacts of any climate change legislation, as it attempts to meet our international Kyoto responsibilities.

We have already signalled our intention to align our strategies with Australia, our closest trading partner and whilst we will continue to be prepared to play our role in this global challenge, unlike the previous Government we have no intention of leading the world.

The flow-on issue from climate change is the considerable amount of work going on right across the primary sector in developing greenhouse gas footprints.

Over time, the whole of our primary sector will be greenhouse gas footprinted and this information will then be made available internationally, so it can be compared with our overseas competitors.

We have completed our kiwifruit and dairy industries and I'm pleased to acknowledge today the completion of the pipfruit carbon footprinting project, which reveals the carbon footprint of New Zealand apples, from the grower right through to the UK customer.

I won't go into details now as I know you'll be hearing a lot more about this project later this morning. I congratulate you on this achievement and I encourage you to use this type of information, along with efforts around low pesticide residues, to make that all-important point of difference in the marketplace.

New Zealand Pipfruit must be prepared to set itself apart from the rest, because of its environmental credentials and also because it is a superior product and it tastes better.

I want to conclude by saying that despite New Zealand being caught up in the worst global recession since the 1930s, I am optimistic about the future of our primary industries. The pipfruit sector has shown itself to be innovative and prepared to look to the future. I encourage you to continue to adopt new practices that build on tried and true methods.

This will be a challenge, but when I look at the history of your industry, I know that you can do it.

I wish you all the best for the remainder of your conference.

Thank you.