Berryfruit Industry

  • John Luxton
Associate Minister of Agriculture

QUALITY HOTEL, AUCKLAND

Special guest ladies and gentlemen. Thankyou for inviting me to your conference today. I want to talk about three main things; your industry; the changing world that we live in and finally what I think we need to do as a country to remain competitive and increase our standards of living.

Berry Fruit sector
Like many New Zealanders, my first contact with the berry fruit industry was at about age 3 at breakfast time. Since then I have enjoyed the fruits of your labours , literally.

As well as the New Zealand market, the major export market for blueberries is the west coast of America. For boysenberries the major market is Europe, Scandinavian countries in particular. The major market for strawberries is Australia.

Your industry has been growing. The value of fresh Berryfruit exports has increased 13% between 1995 and 1997. The volume increased by 7%. The largest fresh Berryfruit export is strawberries which increased by 20% in volume and value.

The volume of frozen Berryfruit exports increased 11% between 1996 and 1997, however there was a slight decrease in value of 2%. The largest frozen Berryfruit export is boysenberries which increased 29% in volume and 8% in value.

Total Berryfruit production increased by 11% in value between 1995 and 1997.

The value of total Berryfruit production has increased 50% between March 1989 and March 1997, the volume has increased 28% in this period.

Current Issues in the Berryfruit Industry
I know there are a few issues specifically of concern to you at the moment.

Despite the flexibility of the Employment Contracts Act, Berryfruit growers have been finding it difficult to find part time casual fruit pickers. Recent changes made by Government allowing New Zealanders on benefits more flexibility to work may be of some assistance.

Other Berryfruit producing countries can obtain much cheaper labour than New Zealand, in particular Chile, so like all New Zealand industries, we need to continue to improve what we do and remain competitive. But I will talk about this later.

While an issue, the value of the dollar has seen a correction take place in recent weeks which will make some difference. However I would say that while the dollar can be a factor, there are always other factors such as international prices, and marketing strategies that can have a bigger impact.

For your industry export costs can be high due to the large distance from our markets. But an advantage of being bordered by sea is that there is less chance of pest infestation. Last year there was a medfly problem but border control was increased and the problem subsided.

The Government has also recently announced some open skies initiative which increase the options for airfreight to several destinations and effectively bring our markets closer.

There are also reviews currently being undertaken in the Raspberry and Blueberry sectors which I hope will progress your industry.

Globalisation
While you have these specific industry concerns, you are operating in an ever changing world. So today I want to talk a little about this.

It is an indisputable trend that the world is getting smaller. The process of globalisation is continuing at pace.

In today's world, labour, capital and technology know no national boundaries. They simply shift to where they can be best utilised. The challenge for New Zealand is to make sure that we retain our competitiveness so that we can attract the capital and technology, use our labour, and increase our standards of living. Not only is this a discipline that we are going to have to get used to, but an opportunity and resource we are going to have to get better at tapping

Information Technology
IT means that our children in schools down the road can communicate with children in schools on the other side of the world. It means that we can walk into our office on the farm and tap into shopping lists in America. And the Internet has totally changed the traditional concept of the bricks and mortar library.

The world is becoming a village. Some have said that the village will end up with the production being done in Asia, the supermarket in America, and Europe will be the museum. Other technology

Earlier this month, we had New Zealand scientists isolate a gene which regulates growth. Some are calling it the Lomu factor. Speculation is taking place on what this discovery could mean.

For agriculture, this discovery could also mean much. Perhaps New Zealand's comparative advantage of growing grass and turning it into products will be lessened, or enhanced.. Perhaps it may impact on the Berryfruit sector. We have yet to see.

I would suspect that commerce, transactions, and banking will be conducted in 10 years time using technology we possibly don't even know about today. If we think back to the days when you begged for a loan in front of a bank manager between 9 and 3pm in a great big building, now we can get on the phone seven days a week to get a mortgage or pay our bills.

Globalisation and new technology are the drivers for the uncertainty and change of the future. They force us to change our thinking. The ability to compete on a time basis is crucial if we are to keep pace and increase our standards of living. We have to be able to adapt and respond quickly to these changes.

These drivers of globalisation and technology are forcing other trends on us.

The importance of national economies become less as reliance on the world economy becomes greater. We are no longer in an isolated, self - sufficient economic system.

While capital flows were freed up in the mid 1980's, New Zealand has still yet to position itself to make the most of overseas technology, skills and even capital. There are concerns of the impact of all this on our sovereignty, and sometimes for the wrong reasons. Perhaps in a couple of decades or so the concept of citizenship will be different.

This globalisation has had and will continue to have significant impact on our trading relationships and patterns. We need to have the marketing structures to make the most of the opportunities. Like our national sports bodies, we need to bring our domestic industry structures into the real world. Rather than cast them in stone and protect their past, we need to future proof them.

International competitiveness
To survive in this changing world we need to become even more internationally competitive. Given some of our natural disadvantages of market distance, small population base and local market, means that we need to lead in changes rather than follow other developed economies.

I want to give you a personal perspective of what I believe needs to happen to the economy.

If we want to get the jobs, security, and the healthy environment that all New Zealanders want, it is important that we increase the size of the economic cake. To get this growth, my personal view is, that we need to work on a trifecta of areas.

The first part of the Trifecta is to reduce the size of Government in the economy to about 20% of GDP.

Government does not create wealth, it merely transfers it at a cost so we need businesses to invest in people, jobs and ideas to add value. Getting a bigger government doesn't give a big economy.

However, good government does have a role to play in making the size of the cake bigger, but getting bigger doesn't mean Government is doing a better job. We need to be more light on our feet, rather than be like a big oil tanker - always adding more oil.

To achieve this end, we need to continue to privatise businesses that are not core activities. In the recent budget, the Treasurer announced the privatisation of Government Property Services, some small power stations and signalled that other assets may be privatised on a case by case basis. I believe other activities involved in Government ownership need to continue to be looked at, including local government assets, such as power companies, airports and Local Authority Trading Enterprises (LATES).

Secondly, we need to continue to contract out services that private enterprise can do better. In my own portfolios of fishing and lands, we are working towards more contestability and contracting out in areas such as research, in the provision of some services such as registries.

In Social Welfare we have seen many services contracted out to organisations such as CCS and others. In education and health we have seen services such as cooking and cleaning contracted out. However, there is still scope for more gains to be made in this area. Recently there has been some publicity regarding contracting out of security and prosecutions.

My above comments refer both to central and local government because local government has a large impact on business and the economy.

I note with concern the growth in some areas of both local and central Government spending and the inability of some locally elected representatives to get the efficiency gains possible by refusing to contract out. Like central government, bigger local government doesn't mean a bigger local economy.

Papakura City Council is to be congratulated on their leadership in this area. Some of the wishy washy so called "do gooding" councils would do well to follow suit. Papakura is a good example of what can be achieved for both ratepayers and the community. It is a win win situation.

The second leg of the Trifecta is to free things up more.

We need to have a free, open and competitive economy to allow the productive sector to get on with the job. We have seen many benefits from good competition in telecommunications, airways and supermarkets. Currently, we are doing further work in the energy area and occupational regulation. I believe there is still further scope with more central, local and other areas, such as in health, education sectors and producer boards.

With the rapid developments in technology and resulting globalisation, we need to ensure that we attract investment into the New Zealand. In the last budget, the Treasurer announced that we will be continuing with tariff reviews and accelerating tariff reduction programme. Currently over 90% by value of goods coming into New Zealand are tariff free. We should be tariff free on the remainder by the middle of the next decade.

We need to free things up so that we get investment that we need to get things done

A good idea without investment is just a good idea. But with investment it can build into a fortune. For example, Bill Gates and his garage plus a bit of money. It is also important that we get the investment in infrastructure to enable our economy to function smoothly. In particular, transport infrastructure is pretty important. In the last term of Government we saw the freeing up of coastal shipping and various other freeing up in the transport sector. Recently, my colleague, the Minister of Transport, released a report on options for road transportation. It is important that we get the incentives right.

We need to free things up so that we can get the innovation that we need

We need innovation to add value. New Zealanders have been great at growing grass and producing commodities, such as meat, wool, dairy products, forestry and fish. However, we need to make sure things are free enough so that we can get the investment and innovation to add the value that we need to optimise the benefit to New Zealand.

Also to progress innovation, we need to ensure that we have the legal framework and intellectual property rights that enable those who make the investment to capture the benefits.

We need to free things up so that business is constrained from doing things because of unnecessary regulation and compliance costs

You may be aware that I recently announced a major review of compliance costs. This is a key area of effort for my Ministry. It covers three major areas including; compliance cost assessment framework; best practice policy development; and monitoring and review of existing regulation and legislation. I am expecting an initial report in September.

We need to free things up in education, immigration and employment areas so that we can improve the skills and expertise in our workforce and firms

It is vital for our future, if we are going to compete in a rapidly changing world market, that we have the learning and the skill levels required to maintain our competitiveness. I would have to say that I believe it is particularly important that we free things up in the children's education sector, in particular away from the dominance of two major unions. My personal belief is that these unions place far too many restrictions in an area that is vital to our future. They reduce and stifle innovation that our children deserve

We need to allow Kiwi ingenuity to have a go and increase New Zealand's standard of living, improve education and other Government services.

The third part of the trifecta is to continue to push in the international arena for free trade.

We need to continue our push through the likes of the Cairns Group, APEC, WTO and Bilateral free trade agreements with the likes of the USA and the South American. countries. As a small island nation it is important in order to earn income and increase the size of the cake for New Zealand, that we have access to markets. I would agree with some who say the international marketplace is not always a level playing field. I believe this is one of the few core roles that central government should still have in the future.

Conclusion
If we work hard at these three areas of the trifecta we will get the jobs, security, health and the environment that all New Zealanders want. More people will be willing and able to buy your berry fruit

This Government has continued to move positively along this path. However the movement may not be as fast as some would like. While there has been some drop in business confidence, which some have attributed to the political environment, as a Cabinet Minister on the inside, the reality is that in general the coalition is working very well.

In conclusion, ladies and gentlemen, I would like to thank you for having me along to talk to you today. I would like to congratulate your industry on its success in particular achieving impressive growth.

I would like to wish you well for a successful conference and year ahead.

Thank you.