Comment
Key Findings
11. The report underlines the importance of the sector to the New Zealand economy. Over the last ten years, the sector has performed well with a compound annual growth rate of approximately five per cent. It generates over half of our export earnings from merchandise trade and directly or indirectly employs one in five members of the working population.
12. The sector has significant strengths, some unique to New Zealand, including:
- a strong and diversified research infrastructure;
- a history of innovative and flexible responses to market opportunities;
- an international reputation for food safety and consistency of product;
- the capacity to meet increasingly stringent requirements for food labeling and product traceability;
- New Zealand's "disease-free" status, underpinned by effective bio-security systems; and
- a closely networked community that can underpin any new initiatives centered around collaborative approaches to product and market development.
13. The key finding of the taskforce is that the sector's robust performance in the past cannot be taken for granted in the future. Emerging pressures include:
- New Zealand's comparative advantage in pastoral primary production is under threat from low cost competitors (e.g. South America and China) which are rapidly gaining in terms of quality;
- consolidation in global supermarket chains placing pressure on producer returns;
- changing consumer demands;
- environmental concerns – e.g. food miles, sustainable production;
- constrained New Zealand resources – land, water, energy;
- increasingly stringent food-safety and traceability requirements; and
- New Zealand food and beverage exports are focused mainly on low growth markets in Europe and North America.
14. Some of these pressures, if managed well, also represent significant opportunities for the sector. Other opportunities identified by the taskforce include emerging higher value markets in Asia, functional foods and nutraceuticals directed particularly at income-rich health-conscious baby-boomers, science-based solutions creating superior foods, latent capacity to lift productivity based on improved uptake of available knowledge and technique and potential to link New Zealand gourmet cuisine to the tourism industry.
The Taskforce's Strategic Approach
15. The taskforce rightly asserts that the food and beverage sector is critical to achieving the government's economic transformation objectives and raising New Zealand's sustainable growth rate. The taskforce considered that delivering on these objectives depended on the sector and government adopting the following strategic imperatives:
- protecting and enhancing the sector's existing base and strengths (a key asset for the New Zealand economy), by taking actions to enable continued growth of five per cent per annum in the face of increasing challenges, while at the same time addressing:
- the need to develop new higher-value products, particularly to capture a share of the growing functional-foods1 market; and
- the need to develop new markets, particularly focusing on the emerging high growth markets in Asia.
16. The Taskforce considers that these strategic imperatives can be addressed by:
- continuously improving productivity across all product inputs and at all points in the production chain;
- improving workforce skills, including at management level;
- improving market responsiveness, knowledge and penetration;
- encouraging innovation in developing new products, processes and business models; and
- encouraging a more collaborative attitude and approach.
17. The report provides 49 recommendations for actions in these five areas.
Approach to Response
18. Previous responses to taskforces, such as the GIF sector taskforces, have tended to focus on a one-to-one analysis of the individual recommendations. In this case, government agencies have provided a view on each of the 49 recommendations (see Annex 1). In summary, three are statements requiring no further action, three address issues which are being monitored, three are considered to be actions for industry and two will not be addressed at this time. The remaining 38 will be, or have been, addressed in some form either through existing work-streams or through new policy.
19. Officials have sought, however, to develop a response that goes beyond the recommendations and addresses the substantive issues raised in the taskforce's report and the objectives of government in establishing it. The taskforce's key themes are considered in the context of the economic transformation agenda together with recent developments in thinking about industry policy. A strong influence has been Ministers' intent to see a more targeted and effective industry policy. Alignment of government effort was also one of the taskforce's concerns.
20. The first part of this paper:
- provides comment on the taskforce's overall strategy for development and identifies how it fits with both the economic transformation and sustainability objectives; and
- provides a vision of the sector's future from the government's perspective, to provide a strong signal of the government's expectations for the sector's development and transformation.
21. The second part of this paper identifies generic and specific actions directed at driving the sector's development, including the steps required to take the sector to the next level of transformation and added value products.
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