Speech to Pipfruit New Zealand's annual conferencePrimary Industries
Today I want to say a few words about my portfolio, and on some of the big challenges and opportunities facing your industry.
The horticulture industry plays a major role in New Zealand’s economic growth, contributing $6.7b to the economy in the year to June 2013 and making up around 8 percent of New Zealand’s total merchandise exports.
Horticultural exports have more than doubled since 2000, to $3.6 billion in 2013, and are forecasted to surpass $4 billion in 2016, a major milestone for the sector.
Apple and pear export revenue reached $504 million in the year to 31 December 2013 due to high production and improved prices resulting from strong market demand.
Commercial pipfruit production in this country has a long and proud history.
Our commercial orchards showed themselves to be world leaders many years ago in producing new cultivars – Royal Gala and Braeburn, for example.
This proud tradition continues today with varieties like the Pacific Series, Jazz, Envy, Smitten, and Rockit, and the Piqa brand.
The New Zealand pipfruit sector has a strong reputation around the world for its high yields, good quality fruit, and food safety credentials.
I was pleased to see that at last year’s conference your industry launched its own strategy to double exports – with the goal of ‘$1 billion by 2022’. This is an ambitious, but achievable, goal.
This fits in with the Government’s goal of doubling our primary sector exports by 2025
Your strategic priority of the ‘apple story’ is a constructive follow-on from the launch of the New Zealand story in November last year. By showing consumers who we are, how innovative we are, and what drives us as a country we can create distinction and drive growth through value rather than volume alone.
In my view, the key to reaching your ambitious goal is to work together across the value chain and with government.
Trade deal activity
Market access will be very important in achieving our export goals. As many here will have experienced, trade rules are complex and often slow to change.
One of the ways we try and counter these are Free Trade Agreements (FTA’s) which can be game changers for our primary exports.
These have the potential to make your ‘$1 billion industry by 2022’ goal that much more attainable.
The agreement signed with Chinese Taipei (Taiwan) is a good example of this. Tariffs on apples and cherries were eliminated overnight on 1 December 2013. 99% of our trade will be tariff-free within four years.
In the year ending March 2014, Chinese Taipei was New Zealand’s tenth largest goods export market worth $950 million, up 12 percent on the previous year. Once the agreement is fully implemented, annual tariff savings will reach an estimated $75.8 million, based on current trade. But, given trade is expected to continue to increase, those savings are likely to be even higher.
Negotiations for FTAs are underway with Korea, India and the TPP – this offers great potential to access high value markets.
To keep up this momentum, I encourage your industry to draw up development plans for these markets - and remain committed to them.
It may be that sticking with an existing relationship brings better long-term gains than chasing short-term higher prices elsewhere.
Importance of the region as a supplier to Asia
The Asian market, driven by China, is one of the fastest growing markets for exporters in the world today.
Market conditions for the 2014 season are generally positive with good early demand from markets in Asia, particularly Taiwan. Market diversification into Asia has increased, taking around 100,000 tonnes of apple exports in 2013 (32 percent) compared with 50,000 tonnes (16 percent) in 2002. Thailand, India, China, Hong Kong, and Japan are markets showing most growth in recent years.
China’s economic growth over the past 25 years is massive. As China becomes more connected with the Western world, and middle class incomes continue to grow, demand for agricultural commodities is predicted to double by 2050.
Role of innovation
Research & innovation will also be big drivers in adding value and reaching the export double goal.
Primary Growth Partnership (PGP) a big priority; 18 projects with over $700m co-invested. ‘Go Global’ avocadoes is the first horticultural project; I hope to see more.
Sustainable Farming Fund (SFF) is also very important. In the 13 years since it began, over $5 million of SFF funding has been committed to pipfruit projects.
Two projects currently underway relate to European Canker and the biological control agent for codling moth. This latter project will help us overcome market access challenges.
Government is also co-funding, through MBIE, the national apple and pear breeding programme valued at around $20 million up to 2017.
Protecting New Zealand’s horticultural sector
Export double goal won’t be achieved if we don’t protect our industries through the biosecurity system. This is why biosecurity is my number on priority as Minister.
Our international reputation for food safety and freedom from many unwanted pests and diseases underpins access to overseas markets for many of our goods.
New Zealand will always face threats from unwanted pests and diseases. We need to manage risks pragmatically, and this requires targeted investment, working together, and new scientific knowledge to drive innovation and improvement throughout the biosecurity system.
The challenge is how we facilitate and grow trade, while continuing to protect New Zealand from unwanted pests and diseases. It can’t be a choice between these two goals. We have to do both.
MPI’s approach to biosecurity is one of risk management across the whole of the biosecurity system pre-, post and at the border; enabling us to direct our efforts and resources to provide the best possible level of protection.
Significant new investment and improvements have been made at the border over the past 18 months, including upgrading our X-ray detection technology, and over 125 new quarantine inspectors, including five additional detector dog teams, across the country.
It’s worth giving a bit of context here. Around 175,000 items come across our border each day, and we receive around 10 million travellers a year.
The Queensland Fruit Fly detections earlier this year demonstrated the effectiveness and strength of our biosecurity system’s detection and response programmes.
In both cases, the responses progressed smoothly, largely due to the fact that MPI had taken on board many of the lessons from the 2012 Queensland Fruit Fly response. MPI’s Queensland Fruit Fly response plan has been peer-reviewed by international experts, and reflects international best-practice in responding to fruit fly detections.
It is important that we all learn from biosecurity detections and responses, re-assess risks, and continue to improve our biosecurity system. The two fruit fly responses in particular show that our biosecurity system is working, and demonstrate why New Zealand is a world leader.
Government Industry Agreements
You have already heard from MPI’s Chief Operations Officer Andrew Coleman about GIA but I want to emphasize how important GIAs are.
The Kiwifruit Psa-V outbreak and the Queensland Fruit Fly detections, have highlighted the importance of having Government and industry working together to prepare for, and respond to, incursions.
Government Industry Agreements are based on the idea that in pursuit of common goals, government and industry can both bring resources and expertise to the table.
It means that both industry and government will be better prepared to reduce the impact of incursions on productivity and markets if and when they occur.
Pipfruit New Zealand has been an active supporter of GIA. I am pleased to have received your application to formally join GIA and to sign the GIA Deed. I have asked MPI officials to ensure your application meets the requirements to join GIA before formally lodging your application with my office.
These initiatives represent a significant milestone in the development of a partnership approach to biosecurity that has been many years in the making.
Working together, government and industry can, and will, do more.
Increased funding relating to primary industries in the 2014 Budget
This year, the Ministry for Primary Industries’ budget has increased by over $17 million, with a focus on further strengthening our biosecurity and food safety systems.
This funding increase includes placing more MPI staff in overseas postings in priority and emerging market. This will help us respond to trade issues quickly and effectively.
This includes an increase of MPI representation in China to seven positions. Three of these positions have been filled already. There will also be an additional staff member each in Jakarta and Dubai.
Capability building in the horticulture sector
Ultimately, the future growth and prosperity of our primary industries lies with people.
Across New Zealand, the primary industries account for nearly one in every six jobs. In some regions it’s nearly one in every three j.
We have two challenges. We need to retain those already working in the primary sector, develop their skills and offer a career path. At the same time, we need to attract new entrants to join industries at every level.
In June, I launched the Future Capability Needs for the Primary Industries in New Zealand report, which forecasts the future requirements for our primary industries.
We’ll need 50,000 more workers by 2025 and around half of these will need to be tertiary level or level 4, or higher.
Addressing this workforce gap will be a major challenge, and the Government and industry need to work together.
As a first step MPI is working on a review of current educational material, along with industry groups.
In the Budget this year the government provided an additional $8.47 million over four years to increase tuition subsidy rates for degree level and above for agriculture, horticulture, viticulture, forestry studies and other agriculture, environmental and related studies. This equates to an increase of around 8.5 percent.
In May 2014, I also launched the Enterprising Primary Industries Career Challenge for 2014. The EPIC Challenge is for Year 10 students to raise awareness among their peers about the many and varied careers that can be found in the primary industries.
Initiatives like the ‘Young Fruitgrower of the Year’ competition are a step in the right direction. We need to celebrate our success – if we don’t, mo-one else will do it for us.
Recognised Seasonal Employer (RSE) scheme
I know that a reliable supply of workers is also essential for your industry.
Recently the Government announced we’re raising the number of RSE workers from 8000 to 9000 per year. We’ll also be developing a new programme aimed at getting more Kiwis into seasonal work.
To finish, can I thank you again for inviting me today.
I hope I’ve given you a good overview of some of the opportunities, and challenges, your industry faces. You have an exciting future.
Thank you for the hard work you do.
It’s your exports, and your taxes, that pays for our schools, hospitals and roads.
I don’t believe you get thanked often enough for that. As a Government we’re determined to back the productive sector.