NZ Primary Sector

A new lens for NZ’s primary sector

POOL VISION
The government offers a big cash hand-out to keep struggling businesses going.

When the disease came to New Zealand, it established a stranglehold in the South Island. To combat the disease’s progress, the Government adopted a ‘stamp it out’ policy, the likes of which other countries had found difficult to implement.

Movement was severely curtailed, and business owners compensated for the inability to operate. As thousands of animals died, questions were raised about the tracing system used to manage movement and track the M.bovis spread.

M.bovis was identified on a South Canterbury farm in 2017, sparking what is now nearly three years of aggressive disease management. As at 22 April 2020, 29 properties were under quarantine control.

Eradication may be in sight, but this massive biosecurity challenge has come at a great cost — financially and mentally — for farmers and for rural communities.

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The country is now fighting another pandemic, impacting all New Zealanders — not just those dependent on the agricultural value chain. Yet the opportunities for the primary sector emerging from the Covid-19 situation are coming into focus.

In the week ended 6 May 2020 compared with the equivalent week in 2019, total exports were down 8 per cent. However, key primary sectors still showed a positive growth in exports. For example, dairy exports increased by 19 per cent, fruit by 33 per cent and meat by 4 per cent.

As New Zealand starts to claw its way back from Covid-19, a growing tide of rural, economic and real estate commentators see the primary sector as being the bulwark for the sustainability of the country’s economy.

Even allowing for downward pressure on the milk payout, and subdued food demand from large consumers like China, New Zealand’s ability to safely feed more than 50 million people will likely haul the country through.

Dairy exports have grown by 19 per cent since this time last year.
THE-TIMARU-HERALD
Dairy exports have grown by 19 per cent since this time last year.

But this isn’t about business as usual, because we’re now facing a new normal as our country gears up to recover and thrive.

No industry is ‘lost forever’ — though some will take longer than others to recover, and they will probably not look the way they did in 2019. But if the primary sector has the weight of expectation on it, serious thought needs to be given around accelerating its growth.

As the country gets set to embark on a range of shovel-ready infrastructure projects, now is probably the time to reconsider the role of irrigation projects in prime growing areas, like Hawke’s Bay.

These projects would have a fundamental role in job and value creation. In this context, thought needs to be given around where to direct investment into the primary sector, or to divert from other industries, given its crucial role.

A second point is around talent. The primary sector workforce has radically altered, particularly in horticulture, where the largely overseas workforce is being replaced by Kiwis made jobless through downturns in tourism and forestry.

Budget 2020 includes an investment of $11.4 million to grow the agritech sector.
MANAWATU-STANDARD
Budget 2020 includes an investment of $11.4 million to grow the agritech sector.

Budget 2020 allocates $19.3million over four years to help the recently unemployed to access training and work opportunities in the primary sector. This initiative aims to place at least 10,000 New Zealanders into primary sector jobs.

While those industries will grow once more, it’s likely restrictions on visitors will dampen the involvement of RSE and other workers in the primary sector over the short term. Again, this is a real opportunity to invest in many of the skills the primary sector needs, including in specialist degrees and related disciplines including the sciences and engineering.

The growth of automation, robotics, sensing and other technologies in horticulture mean these skills are needed. Fortunately Budget 2020 includes an investment of $11.4 million to grow the agritech sector.

The demand for this hasn’t been caused by Covid-19 — horticulture in particular has been crying out for skilled people for years — but it certainly has lit a fire under it.

Now is the time to look at the primary sector through a new lens and see the value it provides New Zealanders through job creation, economic and financial value, social and community cohesion, while doing so sustainably.

And the lessons the primary sector can relay and reflect following its own battles with disease incursions may well contribute to the resilience of all New Zealand.

Jane Fraser-Jones is a partner at Deloitte