Overall business environment and policy framework
Executive summary
New Zealand’s agribusiness and forestry sectors depend on international demand conditions and the global trading environment. New Zealand needs to put substantial effort into market access and agricultural and forestry trade negotiations. These centre around the WTO and its rules-based system of facilitating international trade, multilateral and bilateral negotiations, and overcoming technical trade barriers.
New Zealand’s domestic business environment is a major determinant of its long-run economic performance. New Zealand’s business environment benefits from macroeconomic stability and high institutional integrity. To increase New Zealand’s per capita income on a sustainable basis it is necessary to improve public and private sector performance in a number of areas – there is no “magic wand”. Issues that need to be addressed include skill levels, infrastructure, the innovation system, regulatory impediments, thin and distorted capital markets, and business short-termism.
The Government needs to foster an environment in which New Zealand businesses can take a longer term view of investment in the intangible assets of R&D, new technology, skills and learning, and in the capital investment needed to capitalise on their benefits.
Long-run per capita income growth depends on the cumulative effects of continuous product, process and market innovation, incremental gains in labour and capital productivity and increases in labour market participation. Ongoing productivity gains are critical to the sectors, and much of this will come from incremental gains in on-farm productivity and processing efficiency. There is also potential for substantial gains in productivity and innovation from biotechnology.
New Zealand needs to drive off its existing agribusiness and forestry sectors, including the wider cluster businesses around them. The scale of the agribusiness and forestry sectors provide much of the platform and the critical mass of competencies for New Zealand’s future economic growth, for the seeding and spinning off of new entrepreneurial ventures, and for the exploitation of new biotechnology opportunities.
Much new wealth creation comes from firms established in one market migrating into other markets. New Zealand agribusiness and forestry companies are increasingly diversifying into more specialised and niche markets. Many of these markets can return premiums and they may also be less prone to market access barriers than higher volume commodity markets. Service and technology provider firms such as agritech, machinery, and animal vaccine businesses have developed around discriminating domestic demand and have the potential to grow further in international markets.
The agribusiness and forestry industries compete not only on the basis of a product but also on how it was produced, and so factors such as environmental sustainability, animal welfare and product traceability will be increasingly important to maintain market access, let alone to sustain and enhance international competitiveness.
Contact for Enquiries
Monitoring and Evaluation
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
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