THE HORTICULTURAL EXPORT SEMINAR

EGMONT HOTEL BELL BLOCK, TARANAKI

Special guest, ladies and gentlemen. The objective of this conference is to look at the potential of export marketing of horticultural products from Taranaki. As the Associate Minister of Agriculture I am therefore very supportive of any moves which increase profits, and encourage growth and prosperity in the sector and in the region.

I applaud you for your initiative in putting this seminar together. It is vital that we continue the export drive, and I hope that your initiative today will make a worthwhile contribution to this.

Today I want to talk with you about the overall horticultural industry, horticulture in Taranaki, and touch on what I believe are some of the things Government can do to increase our exports and standards of living.

New Zealand Horticultural Industry Overview
Firstly, to take a brief look at the overall horticultural industry.

Total value of horticultural exports:

The nominal value of horticultural exports has increased 50% between 1989 - 1997 to over $1.3 billion
New Zealand Horticultural Exports by Value - June 1996:

Kiwifruit and apples make up the biggest categories with 29% and 26% of horticultural exports respectively. But we also have a number of other niche areas that are making a very worthwhile contribution with vegetables 12%, ornamental horticulture, onions and wine 5%, peas and squash 4%, and others 10%.
Trend in area planted, quantity exported and value of exports of selected horticultural products table.

This table shows that the apple industry has grown significantly since 1990. The area planted in apples has increased 40%, the quantity exported has increased 47% and the value of apple exports has increased 60%.
The fortunes of the kiwifruit industry are also illustrated in the table. The area planted in kiwifruit has fallen 34%, with falls in export volume and value also. Consequently, New Zealand's share of global kiwifruit trade has decreased to 35% by volume.
The quantity and value of total horticultural exports has increased 38% and 31% in value. The total land area in horticulture has increased 40%.
New Zealand Kiwifruit Exports by Value (NZ FOB) - June 1996

This graph shows New Zealand's major kiwifruit market in terms of value is the European Union which accounts for 51% of kiwifruit export receipts. Japan is the other major market, accounting for 27%.
In volume terms New Zealand's share of world kiwifruit trade is 35%.
New Zealand Apple Exports by Volume

This graph shows New Zealand's major apple market in terms of volume is Continental Europe.
New Zealand's share of world apple trade in volume terms is 7%, so New Zealand is a small player on the world apple market.
So we can see that we have much talent and resources which we are putting to good use in a variety of ways and earning valuable export dollars. So let us have a quick look at horticulture in Taranaki

Horticulture in Taranaki
Ornamental horticulture is the dominant industry in the horticultural sector in Taranaki, consisting mainly of nursery production and, to a lesser extent, cut-flower production.

The biggest horticultural event in the region is said to be the Taranaki Rhododendron Festival, sponsored by TSB Bank. The Taranaki Rhododendron Festival runs in early November each year, and is now a major event on the international ornamental horticulture calendar. This year the Festival begins on 31 October and finishes on 9 November. I understand full programmes should be available early next month.

Fruit and vegetable production is comparatively minor in Taranaki, although kiwifruit production was significant in the region in the early 1980s.

Dairy farming and processing, oil and gas extraction and manufacture and the agrichemical industry are the mainstays of the Taranaki economy.

Opportunities
You could say that Tanaraki has a large untapped potiential in horticultural exports. An evaluation of the potential for new crops for the region may assist in diversifying the horticultural sector in Taranaki. The industry may wish to consider co-ordinating such an evaluation. The starting point for any such evaluation is to identify the market requirements, locally, nationally and internationally.

It is important that market research is linked to product research to ensure that producers can produce what the market wants, and to ensure that product research is properly focused.

Taranaki has no horticulture research facilities, therefore links to HortResearch and other Crown Research Institutes are important so that the horticultural sector in Taranaki can tap into the new technology and crop development resources.

Some areas in New Zealand, such as Taranaki, have a restricted horticultural production base. These regions could co-ordinate their efforts in order to build bridges to the horticultural servicing and research organisations. This is particularly important in New Zealand's user pays, deregulated environment.

The reduction in the size of the Taranaki fruit industry has seen a surplus of land planted out in shelter blocks, and surpluses of labour and other resources in the region. These surpluses have resulted from the demands of New Zealand's changing free market economy and the changing international fresh produce market. It is not a role of Government to tell people what to produce and where to sell it.

It is important that producers develop long term relationships with the people who buy their products.

Existing bodies such as the Business Development Board and the Business Enterprise Network could facilitate ongoing research to identify horticultural opportunities.

The global market for horticultural products is continuing to open up to new suppliers, new products and continuous supply (ie the removal of the impact of seasonality on consumers through purchasing from producers in different regions/hemispheres). In some markets (especially the UK) the market power of supermarket chains has increased substantially, and producers need to be fully aware of what supermarkets are demanding with respect to quality, timeliness, length of contract etc.

The Taranaki area and its people are very resourceful and energetic. I am sure that we will see positive moves in the horticultural sector over the coming years.

A TRIFECTA FOR PROGRESS
But where does government fit in? We have already touched on the BDBs but I want to share a few thoughts with you on the bigger picture, and what I personally believe Governments role should be.

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 closer 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. Good government does have a role to play in making the size of the cake bigger but getting a bigger government doesn't give a big economy. It is the New Zealanders who work hard and produce something such as the Horticultural sector who make the most important contribution.

To achieve this , 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, and in the provision of some services such as registries.

In Social Welfare, IRD, health and education we have seen many services 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.

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 suitation.

Thirdly we need to continue to improve Government's efficiency in the core roles that it still undertakes. The use of new technology in automating registering functions is but one example of this approach.

The second leg of the Trifector 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 with occupational regulation. There is still further scope in other areas.

In the last budget we 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

With the rapid developments in technology and resulting globalisation, we need to ensure that we attract investment into the New Zealand. A good idea without investment is just a good idea. But with investment it can build into a fortune.

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 not constrained from doing things because of unnecessary regulation and compliance costs

I recently announced a major review of compliance and regulatory costs. This is a three pronged review which looks at the compliance cost assessment framework, best practice policy development, and monitoring and reviewing existing regulation. 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.

We need to free things up in our agricultural industry

If we are to have growth, we cannot afford to have our biggest export earner constrained in a straight jacket and not perform to potential. Farmers and growers deserve the opportunity to evolve and progress their sector in a carefully managed way so that their standards of living can improve.

The third part of the trifector 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 North and 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.

Globalisation is continuing at pace. Our country's border cannot prevent the free flow of capital, skills or technology into or out of our society. The best approach is to make the New Zealand business environment internationally competitive so that it attracts and retains capital, skills and technology.

We need to lead changes rather than follow other developed economies to become internationally competitive, given some of our natural disadvantages of market distance, small population base and local market

It is important that Government plays its part to do what it can to help those who want to take up the challenge and harness the opportunities to export.

Conclusion
In conclusion, our horticulture sector is making a very valuable contribution to exports and earning the valuable dollars that we need to meet our social goals. I believe the horticulture sector still has much potential for more growth. Senimars such as this are an excellent start and I wish you well for the rest of the day and I hope that it will see progress in exporting horticultural products from Tanaraki. ThankyouEGMONT HOTEL BELL BLOCK, TARANAKI

Special guest, ladies and gentlemen. The objective of this conference is to look at the potential of export marketing of horticultural products from Taranaki. As the Associate Minister of Agriculture I am therefore very supportive of any moves which increase profits, and encourage growth and prosperity in the sector and in the region.

I applaud you for your initiative in putting this seminar together. It is vital that we continue the export drive, and I hope that your initiative today will make a worthwhile contribution to this.

Today I want to talk with you about the overall horticultural industry, horticulture in Taranaki, and touch on what I believe are some of the things Government can do to increase our exports and standards of living.

New Zealand Horticultural Industry Overview
Firstly, to take a brief look at the overall horticultural industry.

Total value of horticultural exports:

The nominal value of horticultural exports has increased 50% between 1989 - 1997 to over $1.3 billion
New Zealand Horticultural Exports by Value - June 1996:

Kiwifruit and apples make up the biggest categories with 29% and 26% of horticultural exports respectively. But we also have a number of other niche areas that are making a very worthwhile contribution with vegetables 12%, ornamental horticulture, onions and wine 5%, peas and squash 4%, and others 10%.
Trend in area planted, quantity exported and value of exports of selected horticultural products table.

This table shows that the apple industry has grown significantly since 1990. The area planted in apples has increased 40%, the quantity exported has increased 47% and the value of apple exports has increased 60%.
The fortunes of the kiwifruit industry are also illustrated in the table. The area planted in kiwifruit has fallen 34%, with falls in export volume and value also. Consequently, New Zealand's share of global kiwifruit trade has decreased to 35% by volume.
The quantity and value of total horticultural exports has increased 38% and 31% in value. The total land area in horticulture has increased 40%.
New Zealand Kiwifruit Exports by Value (NZ FOB) - June 1996

This graph shows New Zealand's major kiwifruit market in terms of value is the European Union which accounts for 51% of kiwifruit export receipts. Japan is the other major market, accounting for 27%.
In volume terms New Zealand's share of world kiwifruit trade is 35%.
New Zealand Apple Exports by Volume

This graph shows New Zealand's major apple market in terms of volume is Continental Europe.
New Zealand's share of world apple trade in volume terms is 7%, so New Zealand is a small player on the world apple market.
So we can see that we have much talent and resources which we are putting to good use in a variety of ways and earning valuable export dollars. So let us have a quick look at horticulture in Taranaki

Horticulture in Taranaki
Ornamental horticulture is the dominant industry in the horticultural sector in Taranaki, consisting mainly of nursery production and, to a lesser extent, cut-flower production.

The biggest horticultural event in the region is said to be the Taranaki Rhododendron Festival, sponsored by TSB Bank. The Taranaki Rhododendron Festival runs in early November each year, and is now a major event on the international ornamental horticulture calendar. This year the Festival begins on 31 October and finishes on 9 November. I understand full programmes should be available early next month.

Fruit and vegetable production is comparatively minor in Taranaki, although kiwifruit production was significant in the region in the early 1980s.

Dairy farming and processing, oil and gas extraction and manufacture and the agrichemical industry are the mainstays of the Taranaki economy.

Opportunities
You could say that Tanaraki has a large untapped potiential in horticultural exports. An evaluation of the potential for new crops for the region may assist in diversifying the horticultural sector in Taranaki. The industry may wish to consider co-ordinating such an evaluation. The starting point for any such evaluation is to identify the market requirements, locally, nationally and internationally.

It is important that market research is linked to product research to ensure that producers can produce what the market wants, and to ensure that product research is properly focused.

Taranaki has no horticulture research facilities, therefore links to HortResearch and other Crown Research Institutes are important so that the horticultural sector in Taranaki can tap into the new technology and crop development resources.

Some areas in New Zealand, such as Taranaki, have a restricted horticultural production base. These regions could co-ordinate their efforts in order to build bridges to the horticultural servicing and research organisations. This is particularly important in New Zealand's user pays, deregulated environment.

The reduction in the size of the Taranaki fruit industry has seen a surplus of land planted out in shelter blocks, and surpluses of labour and other resources in the region. These surpluses have resulted from the demands of New Zealand's changing free market economy and the changing international fresh produce market. It is not a role of Government to tell people what to produce and where to sell it.

It is important that producers develop long term relationships with the people who buy their products.

Existing bodies such as the Business Development Board and the Business Enterprise Network could facilitate ongoing research to identify horticultural opportunities.

The global market for horticultural products is continuing to open up to new suppliers, new products and continuous supply (ie the removal of the impact of seasonality on consumers through purchasing from producers in different regions/hemispheres). In some markets (especially the UK) the market power of supermarket chains has increased substantially, and producers need to be fully aware of what supermarkets are demanding with respect to quality, timeliness, length of contract etc.

The Taranaki area and its people are very resourceful and energetic. I am sure that we will see positive moves in the horticultural sector over the coming years.

A TRIFECTA FOR PROGRESS
But where does government fit in? We have already touched on the BDBs but I want to share a few thoughts with you on the bigger picture, and what I personally believe Governments role should be.

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 closer 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. Good government does have a role to play in making the size of the cake bigger but getting a bigger government doesn't give a big economy. It is the New Zealanders who work hard and produce something such as the Horticultural sector who make the most important contribution.

To achieve this , 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, and in the provision of some services such as registries.

In Social Welfare, IRD, health and education we have seen many services 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.

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 suitation.

Thirdly we need to continue to improve Government's efficiency in the core roles that it still undertakes. The use of new technology in automating registering functions is but one example of this approach.

The second leg of the Trifector 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 with occupational regulation. There is still further scope in other areas.

In the last budget we 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

With the rapid developments in technology and resulting globalisation, we need to ensure that we attract investment into the New Zealand. A good idea without investment is just a good idea. But with investment it can build into a fortune.

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 not constrained from doing things because of unnecessary regulation and compliance costs

I recently announced a major review of compliance and regulatory costs. This is a three pronged review which looks at the compliance cost assessment framework, best practice policy development, and monitoring and reviewing existing regulation. 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.

We need to free things up in our agricultural industry

If we are to have growth, we cannot afford to have our biggest export earner constrained in a straight jacket and not perform to potential. Farmers and growers deserve the opportunity to evolve and progress their sector in a carefully managed way so that their standards of living can improve.

The third part of the trifector 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 North and 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.

Globalisation is continuing at pace. Our country's border cannot prevent the free flow of capital, skills or technology into or out of our society. The best approach is to make the New Zealand business environment internationally competitive so that it attracts and retains capital, skills and technology.

We need to lead changes rather than follow other developed economies to become internationally competitive, given some of our natural disadvantages of market distance, small population base and local market

It is important that Government plays its part to do what it can to help those who want to take up the challenge and harness the opportunities to export.

Conclusion
In conclusion, our horticulture sector is making a very valuable contribution to exports and earning the valuable dollars that we need to meet our social goals. I believe the horticulture sector still has much potential for more growth. Senimars such as this are an excellent start and I wish you well for the rest of the day and I hope that it will see progress in exporting horticultural products from Tanaraki. Thankyou