CAR presentation. The World s biggest challenge NZ s greatest opportunity. February 2013 Michael Jamieson Director, Strategy, Science & Systems

Transcription

1 Ministry for Primary Industries CAR presentation The World s biggest challenge NZ s greatest opportunity February 2013 Michael Jamieson Director, Strategy, Science & Systems

2 New Zealand is a good place to live... Better Life Index vs income Better Life Index -- All 11 categories (0-100 best) Brazil Sweden Switzerland Denmark Canada Australia Netherlands United States UK New Zealand Finland Ireland Iceland France Belgium Austria Germany Slovenia Spain Italy Czech Republic Japan Poland Israel Slovak Republic Hungary Portugal Greece Korea Russia Chile Estonia Norway Turkey Mexico ,000 20,000 30,000 40,000 50,000 60,000 GDP per capita in 2012 US$ (PPPs) Bubble size: GDP per capita in 2012 US$ (converted to 2012 price levels with updated 2005 EKS PPPs). Source: Conference Board, Total Economy Database; OECD, Better Life Index.

3 ... but, we have become poorer Growing and protecting New Zealand

4 Actual GDP per capita gap (%)...historic factors dragged down our economic performance Relationship between predicted and actual economic performance Above the line: over-performers / perform better than predicted Luxembourg 40 USA 20 0 France Belgium Norway Austria Sweden Finland Switzerland Ireland Netherlands Israel Germany Japan Canada Denmark United Kingdom Australia -20 Greece Korea Spain Italy New Zealand Portugal Below the line: under- performers / perform worse than predicted Predicted GDP per capita gap (%) Barnes et al (2011)

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6 ...and an increasingly inter-connected world brings challenges and opportunities. We will have to be innovative and internationally connected to prosper in a more volatile and global world. Going global Recent decades have seen greater global flows of people, capital, trade and ideas. Globalisation brings trade and investment opportunities for a small economy but it also brings challenges including the concentration of economic activity in global cities, greater volatility, risks of a retreat from openness and pressures on inequality. Going Asian By 2025, Asia will account for almost half the world s output. Asia s rapidly growing middle class will increasingly demand our agricultural exports. But we will have to cope with volatility in Asian growth and increasing competition. Going green There will be increasing pressure on natural resources and the environment. This global challenge creates opportunities for a country that has a relative abundance of water and some other natural resources. However, it underlines the importance of good management of these resources. Getting personal Increasing expectations of public services within tight fiscal constraints. Advances in information and other technology enables better and more customised services but also fuels public expectations. Meeting these expectations will be challenging as we balance the costs of a ageing population with limits to increasing taxes in a global world.

7 So why does MPI have an Export Double target? Primary production is the powerhouse of our export economy It pays the bills It maintains our standard of living Global demand for many of our primary products is growing

8 Our strong natural advantage in the Primary Sector will drive growth Growing and protecting New Zealand

9 We do have some scaled-up companies

10 Analysis suggests global category leaders acquire NZ category leaders to integrate NZ into their global value chain Source: Coriolis, 2013

11 Although the export footprint is diverse... a lot is low value Growing and protecting New Zealand

12 The Government s Business Growth Agenda aims to reverse these trends Growing and protecting New Zealand

13 Exports to be 40% of GDP by 2025 what do we need?

14 We have a national brand... of sorts

15 THE NEW ZEALAND STORY

16 If we want exports to be 40% of GDP by 2025 what does it look like?

17 Where could growth in our exports come from?

18 Creating purposeful change Significant Drivers of Change Technology Sustainability Consumer Welfare Regulatory Stewardship Changing Consumer Demand Cost In-market competition Export Double as a Lens PURPOSEFUL CHANGE

19 Purposeful Change Protecting our comparative advantage and natural resource is just as important as maximising production. The value of any innovation to the Export Double will be determined by its contribution to Growing and Protecting primary industry exports - not by how different it is from what has gone before.

20 Can we coordinate our efforts across the whole supply chain? Growing and protecting New Zealand

21 Further work underway to support the Export Double initiative Do we understand all of the opportunities we have to drive significant additional growth? How do the Primary Industries view the prospects for innovation to grow future productivity or valueadd? MPI is coordinating a series of in-depth analyses to help answer these questions. And of course, the question of China s rapid growth in trade with New Zealand.

22 We are already working with the primary industries to identify opportunities around market access and new assurances; industry scale and structure; skills; access to capital; and environmental outcomes

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24 How can we organise for success? Stanford University bootcamp In 2012, 24 primary industry leaders visited Stanford University In 2013, 30 Maori primary sector leaders attended at Stanford University Both groups committed to an ongoing programme of collaborative action planning Led by industry, enabled by government.

25 The world s largest megatrend is on our side... growth in Asia Growing and protecting New Zealand

26 ... which has had a major impact already Growing and protecting New Zealand

27 By 2025, China will have 221 cities with one million plus inhabitants compared with 35 cities of this size in Europe today and 23 cities with more than five million. Source: McKinsey & Company, 2009

28 NZ Primary Industry makes up 95% of NZ Merchandise exports to China 0.96 Agriculture, fisheries and forestry share of total exports to China Primary Industry was 85% of China s share of NZ exports of 5.5%. Now it is a 95% of China s 21% share of NZ exports in just five years... a massive change Oct 07-Sep 08 Oct 08-Sep 09 Oct 09-Sep 10 Oct 10-Sep 11 Oct 11-Sep 12 Oct 12-Sep 13

29 China Strategy Are we prepared for growth in China? China will be the largest global importer of agriculture and forestry goods by These goods will be used by China for domestic and value-added re-export markets. China is seeking a diverse and competitive global supply base. China s growing demand for imports will create changes / opportunities in all global markets. China is now New Zealand s largest export market. Yr end Dec exports up 45.2% to $9,957b and imports.

30 Since 2007, China s Share of our Total Exports has Grown Rapidly to Now be Our Top Trade Destination

31 Last Two Quarters of 2013 saw a Rapid Rise in the Value of NZ Milk Powder, Butter and Cheese Exports Reach New Highs

32 No.1 in Dairy China has a large shortage of raw milk of 3 to 4 million tonnes a year. Raw Milk is 10% of Chinese domestic raw milk production - raw milk price has increased from RMB$3.4/kg to almost RMB $5/kg from June to December From 2007 to 2012 dairy consumption per person raised from 16 litres to 24 litres at CAGR of 9.1%. Value wise increase from $RMB328 million (NZ$65.6m) in 2008 to $RMB1.7 billion (NZ$340m) Just a reminder, China has : 20% of the world s population. 9% of the arable land (recent soil testing remains a state secret). 7% of the water (recent tests suggest 47% of their water table is not in a usable state). 6% of the milk production.

33 New Zealand is Competitive in natural resources to support export growth in primary products ANZ Focus, Issue 4, 2012

34 Estimates of China s Global Production and Consumption Highlight s Their Domestic Supply Is Unable to Meet Demand for Commodities such as Dairy ANZ Agribusiness Infocus, Edition 2, 2013

35 The growth switch in NZ exports to China is huge for the Primary Industry

36 Changes in the Structure of China s Food Distribution Network make it Easier for Imported Food and Beverage to Reach Consumers ANZ Agribusiness Infocus, Edition 2, 2013

37 Rapid Growth in Online Transaction Volumes in China are Rapidly Creating New Ways to Efficiently Service and Communicate With Consumers ANZ Agribusiness Infocus, Edition 2, 2013

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40 NZ s primary sector growth... undifferentiated commodities or branded products for integrated consumer orientated value chains?