New Zealand High Commission Ottawa, Canada

New Zealand and life after agricultural reform

Below is an article written by Second Secretary Koro Dickinson which appeared in Embassy Magazine on 20 July 2011.

New Zealand's farmers operate in a global business environment where peaks, troughs and price volatility are the norm. This volatility requires New Zealand farmers to remain competitive, business oriented and proactive in terms of securing market access around the world—all without the need for government protection, intervention or financial support.

There are some parts of Canada's agricultural industry that may fear for the future of those that work on the land, their families and for the communities in which they live if they were no longer afforded protection by the government through various tariffs, quotas and regulatory measures.

The New Zealand experience demonstrates that there is life after government support mechanisms are removed and reform implemented to make agriculture more innovative and competitive.

The New Zealand experience is a story of how farmers in the 1980s were faced with the sudden removal of all protection and subsidies. While a small number of farmers did leave farming—approximately one per cent—many more diversified into other agricultural sectors or pushed through the immediate pain to become more successful at what they were doing.

This experience demonstrates that in a modern economy, farmers and their communities do not need to rely on government protection and support to survive and prosper.

In 1984, nearly 40 per cent of the average New Zealand sheep and beef farmer's gross income came from some form of government intervention. A year later, almost all of these subsidies were removed and farmers had to move forward on their own. More than 26 years later, the agricultural industry remains a key driver of economic growth in New Zealand.

Today, New Zealand boasts the lowest level of government agricultural support vis-à-vis all OECD economies. In 2009, the level of government assistance to farmers was just one per cent of the value of farm receipts (2007-2009 average). Whereas, Canada had one of the sharpest rises in government support to farmers, with support on average totalling 20 per cent of farm receipts.

The removal of protection has also proven to be a catalyst for productivity gains across all agricultural sectors. Since 1986, agricultural productivity in New Zealand has improved by an average of more than six per cent per year. The period before the removal of protection saw agricultural productivity languish at an annual growth rate of one per cent.

The New Zealand experience shows that farmers can survive and prosper without government protection. The removal of all forms of agricultural protection in New Zealand has given rise to a vibrant, diversified, innovative and sustainable sector of the economy. The same could also hold true for some of Canada's most sensitive agricultural sectors, especially its dairy, poultry and egg farmers.

Looking forward, the question that Ottawa and the Canadian agriculture industry will need to consider is how they can modernize and innovate an industry so that it can become more efficient and responsive to consumer needs—without the continuous need for government intervention.

- Koro Dickinson is second secretary at the New Zealand High Commission in Ottawa.

Read the story in Embassy magazine: http://embassymag.ca/page/printpage/dickenson-07-20-2011 
 

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