Farming provides economic safe harbour

By Phil Boeyen, ShareChat Business News Editor

Friday 18th January 2002

The government is predicting New Zealand's agricultural base will once again help the country to weather the world economic downturn.

Agriculture Minister, Jim Sutton, says although New Zealand isn't immune from the effects of a downturn, the sound health and performance of its most important export industry puts it in an excellent position to ride out the storm.

"Farming looks set to see New Zealand through an economic sticky patch once again," he says.

Mr Sutton admits that although international prices for some farm products have gone off the boil, others are gaining in favour.

"The truth is, most farmers have never had it better than they have it now, but instead of this resulting in an inflationary boil-over and loss of competitiveness, as has happened in the past, the CPI rose a mere 1.8% for the 2001 calendar year, and the New Zealand dollar remains extremely exporter-friendly.

"Farm revenue is flowing through the rural towns, many of which have never looked better than they do today. And it is underpinning our main cities.

Mr Sutton says one of the most gratifying aspects of the farming situation is the effective partnership that has emerged between central government and industry sectors. He cites the creation of dairy giant Fonterra (NZSE: FCGHA) as an example.

"The result is an industry that is bubbling with energy and confidence and moving energetically forward. We were told the new dairy company would be the 12th biggest in the world, but already it's at 4th or 5th."

Although there has been a set-back to international dairy prices caused by increased subsidies to overseas competitors, the Minister believes these should be more than offset in future by further investment in added value, and improved market access.

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