The Poultry Industry: Market LeaderAnnual Conference

  • Lockwood Smith
International Trade

New Zealand Poultry Industry Association
Hyatt Hotel

Executive Director Bob Diprose; Ladies & Gentlemen.

Contrary to what some of you may believe, I'm a great admirer of the poultry industry. Your executive director, Bob Diprose is both a keen advocate for your industry and a staunch protector of your reputation. It's Bob who frequently sends me letters of protest when I allow my prejudices as a beef farmer to become public.

As Minister of Agriculture, I'm delighted with your success over the past few decades. It's as a beef farmer that I'm aggrieved. This is an industry which has expanded domestic consumption from less than 1 kilogram of product per year per person in the 1960s to 25 kilograms last year. That represents 25% of the animal protein market. Sales of poultry meat and eggs account for over $650 million. It's a staggering achievement. What's more, local production is set to pass the 100,000 tonnes mark very soon. You'll hit 108,000 tonnes in 2002.

Some people in the agriculture sector dismiss all that by saying it's just an international trend. That's pretty lame. It's true that the poultry industry round the world is also capturing a greater market share, but it hasn't happened by accident either in New Zealand or internationally. With people increasingly worried about health, you have positioned poultry and eggs as healthier alternatives to other sources of protein. With people no longer willing to spend all day in the kitchen, you've made poultry easier to prepare. At the retail end, you've presented poultry far better than your competitors have presented their protein products. And your breeding programmes have massively increased feed conversion in poultry. While your focus is the domestic market, you already have a small export base, mainly round the Oceania region. That's forecast to grow.

All I can say is: imagine what you would have achieved had politicians helped you by setting up a poultry meat producer board, with its own special statute.

Right now, there is some concern in the business community about New Zealand's political and economic stability. It's been fuelled by changes in how Government operates under MMP, and, more recently, by the Asian Economic Crisis. The fact is that in 1996, New Zealanders traded off some political stability for what they saw as greater democracy through MMP. I was an opponent of MMP - it's hard these days to find people who admit voting for it - and if and when there is another referendum on the issue I would vote against it again.

Having said that, I would have to say that we have as stable a Government as you could ever expect under a proportional representation system. The Parliament has survived for more than 18 months which would come as a surprise to anyone who has lived in Italy under proportional representation. There is no real prospect of an early election which would come as even more of a surprise to anyone who's lived in Italy. The Coalition Government has remained in office through all that time, and I'm confident can remain in office through to the election. That's despite the fact that of the four key leaders at the time of the Coalition Agreement - Jim Bolger, Don McKinnon, Winston Peters and Tau Henare, only one - Mr Peters - remains in the same office.

The relationship between the coalition partners is satisfactory. It has been strong enough to allow for modifications to the Coalition Agreement, such as the decisions not to replace Mr Kirton, Mrs Fletcher and Mr Bolger when they left ministerial office. The $5 billion cap on new spending has been reduced to $4.4 billion because of the Asian Crisis. And significant new policies have been implemented.

From New Zealand First, has come policies important to them which a National-only Government may not have supported: abolishing the surtax and income and asset testing for long stay geriatric care in public hospitals, the superannuation referendum and free health care for children under six. From National, policies like our legislated tax cuts have proceeded.

From the Coalition as a whole, the economic reform programme has been as comprehensive as you would find in any proportional representation country. It will take us safely through the storm of the Asian Crisis.

The five pillars of economic growth have been maintained:

price stability through the Reserve Bank Act;
sensible fiscal policy under the Fiscal Responsibility Act;
labour market flexibility through the Employment Contracts Act;
a low-rate, broad-base tax system;
an open, internationally competitive economy.
On top of that, we have a comprehensive microeconomic reform programme, spanning electricity, roading, tariff reductions, producer boards, ACC, the Resource Management Act and the reduction of business compliance costs in general. These reforms are all being implemented, or will be implemented prior to the end of next year.

In addition, the more than $1 billion in tax cuts will spur economic activity and encourage greater saving. Yesterday's $315 million in savings will protect the surplus and reduce pressure on interest rates. We are planning further measures in September to improve our export performance given the Asian Crisis. And we are encouraging the necessary reforms in Asian economies through APEC. Globally we are working towards rules-based free trade through the World Trade Organisation.

That is a full, comprehensive reform programme. It exceeds my expectations of what would have been possible under MMP. The only thing which puts this country's future at risk is the danger of an Alliance/Labour Coalition - the only possible alternative to a National-led Government.

The economic package we are putting in place is designed to make the environment for business better. Maintaining and improving a stable business environment is the best thing the Government can do for New Zealand and for the poultry industry. But there are three specific issues I would like to address.

Right now, I'm aware that the Egg Producers Federation of New Zealand currently has an application before MAF for a new Commodity Levy (Eggs) Order. In the past, it has collected compulsory levies, represented the industry and played a role in research funding. It has support from producers for a new order.

I can't pre-empt MAF's assessment of the specific application, but I want you to know that the current producer board reform process will not involve organisations like the federation. Organisations like the Egg Producers Federation will continue to be able to be funded under the Commodity Levies Act, given sufficient support. In fact, the Government sees the act as a future vehicle for the Meat, Wool, Game and Pork boards to continue collecting levies if they have sufficient support from their producers.

It is possible that, in the future, changes may need to be made to the act to accommodate larger industries such as red meat and wool. I can't predict what the nature of those changes may be. They would not be intended to impact on you. But if you were concerned that they might impact on you, you can be assured we would address that at the time. In the meantime, the reform process will have no implications for the current application.

Another issue which will hit my desk which is directly relevant to your industry concerns animal welfare. This is an extraordinarily contentious issue, especially as it relates to layer hens.

I'm pleased that the Threat Assessment Bureau at Police Headquarters in Wellington is making a presentation to this conference on how my MAF officials are liaising closely with the police on dealing with extremist groups like the Animal Welfare Front overseas. The Government will ensure that should similar extremist groups adopt criminal tactics here, they will feel the full force of the law. We won't tolerate it. Your right to do lawful business will be protected at all costs.

Nevertheless, more mainstream concerns about animal welfare must be addressed. As both minister of agriculture and trade, I have a double interest in the issue. First, mistreatment of animals is not acceptable in New Zealand on simple moral grounds. But, second, it is an issue which is of growing importance to consumers internationally, as you well know, so it is also a marketing issue. Some are seeking to latch into those consumer values by niche marketing free range eggs, and good luck to them. But those using more conventional methods must also be able to satisfy consumer concerns.

The current Animal Welfare Advisory Committee code for layer hens was published in 1996. You, along with vets, scientists and animal welfare groups, were consulted. Since then, animal welfare has continued to be an issue. After the unsuccessful attempt for there to be a Citizens Initiated Referendum on the issue, an AWAC Layer Hen subcommittee was formed. It includes individuals drawn from the same sorts of backgrounds as those involved in developing the 1996 code, and is currently awaiting the results of an Agriculture New Zealand/Massey University study into alternative types of egg production.

I know that you take animal welfare seriously, and your publication for schools, Poultry Biology, produced in conjunction with Massey University demonstrates that. I trust the AWAC layer hen subcommittee will make good progress, as is the subcommittee looking at welfare of broilers. It's code should be ready by early next year. Whatever personal views we may have about the "animal welfare industry", one thing is for sure, and that is that animal welfare issues must be addressed to the satisfaction of consumers.

Consumers will also continue to be concerned about the health status of products. Right now, our national flock is considered to have a health status superior to that of other countries. You are right to be concerned it remains that way.

Many argue that the biggest threat to the health status of our flock comes from imports of avian meat products and, in particular, uncooked poultry. To ensure we remain free from serious avian pathogens, the only poultry meat products which have been allowed into New Zealand, up until now, have been cooked, and subject to stringent heat treatment.

But, increasingly, as the poultry market grows, there is interest in Australia, the EU and the US in exporting raw poultry to New Zealand. Commercially, I'm confident that you have nothing to fear from imports of safe poultry. But you have legitimate concerns about the possibility of imports of unsafe meat. We don't want diseases like Newcastle disease and Avian Influenza in New Zealand.

But it is a matter of international law that we can only ban imports under the World Trade Organisations's SPS agreement on sound science after sensible risk analysis. New Zealand will not allow other countries to impose bans on our products based on shonky science. If, for example, in the next few weeks Australia decides to maintain the ban on imports of New Zealand apples, and does not have sound scientific reasons for doing so, we will be forced to consider our options, including taking a case to the World Trade Organisation.

I have no difficulty with us banning the importation of any product which imposes an unacceptable, scientifically-proven risk to New Zealand. I have no difficulty ensuring that our testing procedures are appropriately rigorous. I know that MAF is addressing all your technical concerns, and full consultation with the industry will be undertaken when drafts of risk analyses have been finalised. What I cannot do is agree with any regulatory measures which are more stringent than those applied to domestic produce. Apart from the hypocrisy of implementing any such measures, we would run the very real risk of being taken to the World Trade Organisation ourselves, losing, and being forced to implement science-based regulations ourselves. That will not happen while I am agriculture and trade minister.

My message is very simple on this issue. We will maintain strict SPS regulations. We will ensure you are fully involved in their development. But we will not do what is forbidden by the World Trade Organisation, and go beyond science and common-sense analysis of risk in our decision-making. You will never face competition from unsafe poultry from overseas, but eventually, I believe you will face greater competition from safe poultry. But I'm confident that that competition won't remain in the market for long.

Ladies and gentlemen, I have great confidence in your industry. I have enjoyed my contact with you for the last 2 years. While I'm sure I'll let my prejudices as a beef farmer continue to get me into hot water with Bob on occasion, I look forward to working with you over the next 18 months, and well beyond.