Quote of the day

October 7, 2015

John Key's photo.

Trade is incredibly important to NZ. As a country, we won’t get rich selling things to ourselves. – John Key

NZ’s biggest trade deal

October 6, 2015

Prime Minister John Key has welcomed the successful conclusion of negotiations over the Trans-Pacific Partnership Agreement – New Zealand’s biggest free trade agreement.

“This agreement will give our exporters much better access to a market of more than 800 million customers in 11 countries across Asia and the Pacific, and help Kiwi firms do business overseas,” Mr Key says.

“In particular, TPP represents New Zealand’s first FTA relationship with the largest and third-largest economies in the world – the United States and Japan. Successive New Zealand governments have been working to achieve this for 25 years.”

TPP has been a significant focus for the National-led Government, as part of its wider plan to diversify the economy by building strong trade, investment and economic ties around the world.

“As a country, we won’t get rich selling things to ourselves. Instead, we need to sell more of our products and services to customers around the world, and TPP helps makes that happen,” Mr Key says.

TPP will eliminate tariffs on 93 per cent of New Zealand’s exports to our new FTA partners, the United States, Japan, Canada, Mexico, and Peru.

Dairy exporters will have access to these markets through newly created quotas, in addition to tariff elimination on a number of products.

Tariffs on all other New Zealand exports to TPP countries will be eliminated, with the exception of beef exports to Japan, where tariffs will reduce significantly.

TPP also reduces non-tariff barriers to trade, ensures fair access for New Zealand firms doing business in TPP countries and provides greater opportunities to bid for government procurement contracts overseas.

“We’re disappointed there wasn’t agreement to eliminate all dairy tariffs but overall it’s a very good deal for New Zealand,” Mr Key says.

“We’ve seen with China how a free trade agreement can boost exports of goods and services and deepen trade and investment links.

“The overall benefit of TPP to New Zealand is estimated to be at least $2.7 billion a year by 2030.

“That’s more jobs, higher incomes and a better standard of living for New Zealanders,” Mr Key says.

“Many concerns raised previously about TPP are not reflected in the final agreement. For example, consumers will not pay more for subsidised medicines as a result of TPP and the PHARMAC model will not change.

“Now the negotiations have concluded, people will see that TPP is, overall, very positive for New Zealand,” Mr Key says.

The conclusion of TPP follows recent trade agreements with Korea, Chinese Taipei, Hong Kong, ASEAN/Australia and Malaysia. The Government is continuing negotiations with a number of other countries and is actively pursuing the launch of an FTA with the European Union.

John Key's photo.

Trade Minister Tim Groser and the team of people who have been working on this for years deserve the praise they are getting.

This deal isn’t as good as it could be but it is a lot better than what we have now.

The Minister says it will deliver significant benefits to New Zealand and build on the hard-won gains from previous free trade agreements:

“This comprehensive agreement offers much better access for New Zealand goods and services in 11 important markets across Asia and the Pacific.

“TPP breaks new ground for us. It is our first FTA relationship with the United States – the world’s biggest consumer market – as well as with Japan, Canada, Mexico and Peru.

“As a result, New Zealand will now have FTAs covering our top five trading partners – Australia, China, the United States, Japan and Korea.

“We’ve seen from previous FTAs, including the China FTA, how positive they have been for New Zealand trade and investment, and therefore in supporting jobs and growth for New Zealanders.

“Not being in TPP, on the other hand, would put New Zealand at a competitive disadvantage compared to other countries,” Mr Groser says.

Tariffs will be eliminated on 93 per cent of New Zealand’s trade with its new FTA partners, once TPP is fully phased in. This will ultimately represent $259 million of tariff savings a year – around twice the savings initially forecast for the China FTA.

As a result of TPP:

  • Tariffs on beef exports to TPP countries will be eliminated, with the exception of Japan where tariffs reduce from 38.5 per cent to 9 per cent.
  • New Zealand dairy exporters will have preferential access to new quotas into the United States, Japan, Canada and Mexico, in addition to tariff elimination on a number of products.
  • Tariffs on all other New Zealand exports to TPP countries – including fruit and vegetables, sheep meat, forestry products, seafood, wine and industrial products – will be eliminated.

TPP also reduces non-tariff barriers to trade and ensures fair access for New Zealand firms doing business in TPP countries.

“TPP sets high standards in many areas,” Mr Groser says. “New Zealand is already an open, transparent and trade-friendly country, which means only a fraction of TPP’s obligations will require changes to our current practices.”

The most significant change is an extension of New Zealand’s copyright period from 50 years to 70 years. The cost of this to consumers and businesses will be small to begin with and increases gradually over a 20-year period.

“Other potentially far-reaching or costly proposals raised earlier in the negotiations were not included in the final agreement,” Mr Groser says.

“Consumers will not pay more for subsidised medicines as a result of TPP and few additional costs are expected for the Government in the area of pharmaceuticals. There will also be no change to the PHARMAC model.

“Regarding data protection for biologic medicines, New Zealand’s existing policy settings and practices will be adequate to meet the provisions we have finally agreed on,” Mr Groser says.

Investor-state dispute settlement provisions have been included in TPP, as they have in previous FTAs.

“This will give New Zealand investors more confidence and certainty when doing business overseas and does not prevent the Government regulating for legitimate public policy reasons.

“TPP also contains a provision that allows the Government to rule out ISDS challenges over tobacco control measures,” Mr Groser says.

“Overall, TPP is a very positive agreement for New Zealand, further improving access to international markets, which supports our exporters to grow and create new jobs.

“New Zealand supports the release of the text before it is signed by TPP governments but arrangements are yet to be finalised.

“TPP, like any free trade agreement, will go through New Zealand’s Parliamentary processes. We expect it to come into force within two years.”

There’s a Q&A here and more information on outcomes for specific industries here.

Some of us are old enough to remember Fortress New Zealand as it was before we opened our doors to trade.

The misguided doctrine of patronage and protectionism fostered inefficiency and divorced producers from the realities of the market. It limited what we could buy, made much of what was available more expensive and/or of poorer quality, gave far too much power to politicians and bureaucrats and provided far too much opportunity for corruption.

The TPPA hasn’t got rid of all protection. That means it isn’t as good as it could be, especially for dairy but it is an improvement on existing access and we’ll find other markets.

The people who will be hurt most by the failures in the agreement are those still behind the fortresses which add to their costs and limit their choices.

Their politicians have failed them by allowing the interests of a powerful, but small, group of sectional interests to trump the best interests of their countries.

Can’t afford to go from institution with failings to failed institution

October 2, 2015

Prime Minister John Key focused on a call for action in Syria and other conflicts, reform of the veto process and on the UN’s Sustainable Development Goals in his address to  the UN General Assembly.

The Prime Minister said the UN was the only organisation capable of focusing the world’s attention on the most pressing issues and finding ways to resolve them.

This was the reason New Zealand had fought so hard for a seat on the UN Security Council but Mr Key said real action was too often blocked by internal divisions.

“We cannot afford to let the Council go from an institution with failings to a failed institution,” Mr Key said.

While acknowledging the recent success of the Council in some areas such as the Iran deal, he also criticised some of its working methods, including the use of the veto by the five Permanent Members, saying it too often led to inaction.

Mr Key stressed the importance of Council action on the Syrian conflict.

“More than 160 leaders have shown up in New York this week to mark the enduring importance of the United Nations over the past 70 years,” Mr Key said.

“Yet we do so against the backdrop of the worst refugee crisis since World War II.

“It’s time for the Council to do its duty to those who have lost their lives, their loved ones, and for the millions who have been displaced.”

Mr Key pointed to the long list of other conflicts around the globe including in Yemen and South Sudan, and to the stalled Middle East Peace Process as other areas where the Council needed to lead.

New Zealand would continue to play an active role to try and address such issues for the duration of its time on the Council.

The Prime Minister also praised the adoption of the UN’s Sustainable Development Goals, including the agreement to better protect the world’s oceans and fisheries.

The full speech is here.

Rural round-up

September 24, 2015

Groser: TPPA not a gold-plated deal – Patrick Smellie:

New Zealand negotiators expect to conclude a Trans-Pacific Partnership Agreement (TPPA) deal with some improved access for dairy exports to the highly protected markets of North America and Japan but it won’t be a “gold-plated deal”, says Trade Minister Tim Groser.

He acknowledged that comments from Prime Minister John Key on Monday, that whatever deal was achieved would be “at least the very best we can do”, had been interpreted as a sign of a poor deal on dairy in the offing.

But Mr Groser told BusinessDesk that New Zealand negotiators weren’t in “capitulation mode”. . . 

No drought-breaker but ‘darn good help‘:

A farmer in the heart of the North Canterbury drought is welcoming the rain currently falling in parts of the region, describing it as a good morale boost for many farmers.

Vince Daly runs a 160 hectare cropping farm in Cheviot. He said the NIWA weather station on his farm showed the soil moisture level on his farm has gone from 32 percent to 37 percent this week so far. Normally it is at 100 percent at this time of year.

Mr Daly said 43 millimetres of rain had fallen but farmers further inland have, so far, not been so lucky. . . 

Aorere Wins NZ RiverPrize:

NZ Landcare Trust’s Aorere River Project won the inaugural Morgan Foundation NZ Riverprize at the International Riversymposium Gala Dinner in Brisbane last night.

Richard Thompson Chair of NZ Landcare Trust’s Board of Trustees said “What a fantastic result for the Trust and the Aorere community. This is an amazing result given the strength of the competition… it really underlines the value of this project and the work carried out by NZ Landcare Trust.”

NZ Landcare Trust CEO Dr Nick Edgar accepted the award on behalf of the Aorere River Initiative. “I think this is a real victory for community-led grassroots river management in New Zealand. Without the Aorere river community, the story really wouldn’t have happened.” . . 

Rural areas feeling agricultural sector slowdown:

Almost a third of businesses in regions see revenues fall

Three quarters of agricultural businesses expect economy to decline

Businesses in New Zealand’s rural areas are already feeling the effects of a significant slowdown for the agricultural sector, according the latest MYOB Business Monitor survey of over 1000 businesses nationwide, which includes over 200 rural SMEs.

Over the last 12 months, just 18 per cent of rurally-based SME operators have seen their revenue rise, compared to the SME average of 31 per cent. Almost a third (32 per cent) have seen revenue decline in the year to August 2015 (25 per cent SME average). . . 

Fonterra director Farrelly replaces Norris on Fund board – Paul McBeth:

(BusinessDesk) – Fonterra Cooperative Group director Ian Farrelly will replace Ralph Norris as one of the dairy exporter’s representatives on the board of the Fonterra Shareholders’ Fund manager.

Farrelly will join the board of the fund’s manager at the close of its annual meeting on Nov.27 when Norris retires, Fonterra said in a statement. Farrelly has been on the board of Fonterra since 2007, having clocked up a 20-year career in banking including 15 years as head of ASB Bank’s rural division. He operates a 400-hectare calf rearing farm in Te Awamutu and has dairy farm interests in Canterbury and Waikato. . .

Lasers: the transformation to come –  Lynley Hargreaves:

Cather Simpson wants every child and parent in New Zealand to know the word photonics – and to consider photonics science or engineering as a career. An Associate Professor at the University of Auckland and Director of the Photon Factory, she’s worked on problems as diverse as robotic surgery and sorting dairy herd sperm by sex. Now as part of the International Year of Light and Light-based Technologies, Associate Professor Simpson is working to give school children, and the general public, a glimpse of the future of laser manufacturing.  . . 

Official start of new PGP lamb programme:

Primary Industries Minister Nathan Guy has welcomed the official start of a new Primary Growth Partnership (PGP) programme involving premium quality lamb products.

“The ‘Targeting New Wealth with High Health’ PGP programme aims to reach existing and emerging markets with a new class of premium lamb products with improved health qualities,” says Mr Guy.

“This is a collaboration between Alliance Group, Headwaters New Zealand and the Ministry for Primary Industries (MPI). It will help our producers tap further into the increasing demand for premium and healthy foods, and add value to our exports. . . 

Rabobank Agribusiness Monthly (NZ) – September 2015:

Rabobank’s Agribusiness Monthly provides timely information and analysis on agricultural conditions, commodity price updates and commentary on the latest sectoral trends and developments.

Key highlights
Agribusiness Monthly

Dairy – Global commodity prices have shown signs of recovery in recent weeks, as international buyers look for short-term cover, given that prices appear to have reached a floor.

Beef – Steady demand from the US continues to fuel farmgate prices, with record levels reached this September (NZD 6.10/kg cwt). Prices have edged up 33% from last year, supported by seasonal tightening of supplies.

Sheepmeat – Farmgate prices have continued to improve into September 2015, with supply tightening heading into lambing season. . . 

Rural round-up

September 23, 2015

Drought breaks in Cheviot North Canterbury – Jeff Hampton:

 Much-needed rain fell in parched parts of north Canterbury today, raising farmers’ hopes that the serious drought they’re battling may be about to end.

It’s vital for farmers in an area of north Canterbury near Cheviot to get decent rainfall if their spring grass is to grow.

Farmer Louisa McClintock is never happier when there’s a bit of rain, after her district has been in drought all year. . . 

[I think that headline is more than a little optimistic. The rain will have been very welcome but it takes more than an inch or so of rain to break a drought].

Farmers suffer in drought-stricken corner of North Canterbury – Michael Wright:

Dan Hodgen must think the weather gods are against him.

The Hawarden farmer received “about one millimetre” of rain on his drought-stricken north Canterbury property at the weekend, despite solid falls being predicted.

“I’ve given up on trusting the forecast,” he said. . . 

Hard working couple take on velvet challenge – Kate Taylor:

In just seven years, Josh and Penny Buckman have graduated university and built up enough capital to buy 82 hectares near Hastings and a deer velvet business, not to mention starting a family.

They are busy people who wouldn’t have it any other way and are proud of their achievements so far.

“Josh is always up at midnight… thinking, planning. He’s an ideas man. He’s always working through ideas and scenarios and things we can do,” Penny says.

She is in charge of the daily running of Gevir Premium Deer Velvet, which they bought from another Hawke’s Bay couple earlier this year. She is also in charge of three-year-old George, 3, and 11-month-old Anna-Louise. Josh works on contract for Marsh corporate and business insurance and oversees the farm and a nearby lease block. The couple also have shares in other businesses. . . 

Saying goodbye to dirty dairy farming –  Lachlan Forsyth:

How do you achieve the balance between keeping a farm economical, and keeping the environment healthy? Is it actually doable?

Dairy has had many decades of being very good on the economics and not so good on the environment, and now there is a huge amount of pressure to ensure that changes.

Story visited one award-winning Waikato farm to see what’s being done to clean up dairy’s act. . . 

Key defends AgResearch cuts:

Prime Minister John Key is defending the government’s attitude to research and development amid reports that AgResearch intends laying off science staff.

Waikato University agribusiness professor Jacqueline Rowarth says she’s been told the cuts could involve 20 percent of the 500 or so research staff.

Prof Rowarth says she was originally told 82 staff were being laid off but the number had shifted to between 80 and 100.

Former AgResearch scientist Doug Edmeades says he’s been told by a staff member redundancies will be announced on Thursday, and the cuts are due to a drop in funding. . . .

New plant-based milk product under development:

The milk company, Miraka, is working with science and research organisations to create a new UHT milk product using plant-based protein.

Taupo-based Miraka is a predominately Māori-owned company that manufactures milk powder and UHT milk products for export to 23 countries in Africa, the Middle East, Asia, the Pacific, and Latin America.

It’s been awarded government funding to work with AgResearch and Plant and Food to develop dairy-based UHT milk products which contain plant or vegetable materials.

Chief executive Richard Wyeth said the scope is broad at this stage, but he wouldn’t be drawn on the ideas that are being thrown around. . . 

Farmers told to limit palm kernel feed:

Fonterra is encouraging farmers to limit the amount of palm kernel extract (PKE) they use as a supplementary feed for dairy cows.

The co-operative is recommending its suppliers feed a maximum of 3 kgs per cow per day.

Farm advisers spoken to by Radio New Zealand said some farmers were currently feeding out 6 to 9 kgs per cow per day, particularly during dry periods. . .

Delaval Backs NZ Dairy Awards:

Global dairy equipment market leader DeLaval has joined the family of national sponsors backing the 2016 New Zealand Dairy Industry Awards.

Preparations for the 2016 awards programme are being finalised this week, as organisers and sponsors meet in Rotorua to confirm final details.

DeLaval representatives will take their place at the table, alongside representatives from Westpac, DairyNZ, Ecolab, Federated Farmers, Fonterra Farm Source, Honda Motorcycles, LIC, Meridian Energy, Ravensdown, and Primary ITO.

Chair Gavin Roden says the awards continue to attract strong support from the country’s leading dairy industry players. . . .

Reporoa feed company taking on the world:

After exporting its equine feed products into Asia for many years, Reporoa-based company Fiber Fresh has also now launched its calf feed products into the international marketplace.

Fiber Fresh is New Zealand’s largest animal nutrition export company, specialising in high nutritional equine and calf feed products. It celebrated 30 years in business earlier this year.

The company’s launch into the calf feed market in Japan also includes a research partnership with the school of veterinary medicine at Rakuno Gakuen University in Hokkaido.

Fiber Fresh founding director Michael Bell says launching into the Japanese calf market is a milestone for the company. . . 

Paula Nickel's photo.

Quote of the day

September 22, 2015

“More chance of me holidaying on the lunar space station I would’ve thought,” he said at his post-Cabinet news conference today.

“There’s no chance. . . 

“It’d be totally unacceptable to the New Zealand public. Being Prime Minister is not something that is traded away with a bit coalition partner to get them over the line.”

Mr Key wasn’t sure how that would even work.

“He could take the weekends? Give me the time off, it’d be quite nice. Outside of that, I don’t see it working. It’s a joke.” –  John Key commenting on the suggestion that Winston Peters could be Prime Minister in a National-led government.,

Quote of the day

September 17, 2015

. . . in the private sector we tend to listen to the shareholders of the company, not the competitors of the company, about whether something is good or bad for them.John Key


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