Agricultural Policy Monitoring and Evaluation 2018

Chapter 17. New Zealand

Support to agriculture

Since its reforms of agricultural policies in the mid-1980s, production and trade distorting policies supporting the sector in New Zealand have virtually disappeared, and the level of support for farmers has been the lowest among OECD countries for almost three decades. Practically all prices are aligned with world market prices, with the exceptions of fresh poultry and table eggs (as well as some bee products) which cannot be imported to New Zealand due to the absence of Import Health Standards for these products, required for risk products to be allowed for imports.

Agricultural policies in New Zealand predominantly focus on animal disease control, relief payments in the event of natural disasters, and the agricultural knowledge and information system. New Zealand also provides support to large-scale off-farm investments in irrigation systems, and over the past decades has significantly increased its agricultural land under irrigation. As a consequence, in recent years, more than 70% of all support was through general services.

Main policy changes

Key policy changes respond to specific problems and thus comprise a set of detailed measures. In particular, these relate to disaster relief, biosecurity risks, and foreign investment in sensitive business assets.

Several medium-scale adverse events in 2017 have triggered additional Government support, including flooding and storm damages as well as a drought in both the North and South Islands. Support was provided for the reparation of infrastructure, including drinking water, storm water, waste water, and river management systems, re-grassing of pastures, re-sowing of crops, clean-up of silt and debris, and Rural Assistance Payments and tax relief measures for affected farmers. Grants were also provided in response to the regions impacted by the Kaikoura earthquake in November 2016, for community projects, professional advisory and recovery related work on farms.

Several measures concern the country’s biosecurity risks, including the launch of the Biosecurity 2015 Direction Statement in late 2016, a biosecurity response after the finding of the bacterial cattle infection mycoplasma bovis in mid-2017, and the signing of the Government Industry Agreement on Biosecurity Readiness and Response deed by four more industry sectors.

Since November 2017, foreign investors in New Zealand agricultural land and other sensitive business assets have to get consent through the Overseas Investment office. Before that, this had only been required for investments in sensitive agricultural land.

Assessment and recommendations

• New Zealand’s consistently low level of farm support, and in particular of potentially most distorting support, underlines the country’s openness and focus of its agricultural sector towards foreign markets and trade.

• New Zealand’s Import Health Standards help to ensure the country’s biosecurity for imported products and are required for all risk products to be importable. For some livestock products, including eggs, fresh chicken meat and some bee products, no IHS are in place, and these products therefore cannot be imported. While this concerns only a small share of New Zealand’s agricultural output, the development of relevant IHS would allow consumers to benefit from additional variety and lower prices in these markets, while ensuring the required biosecurity standards.

• Kiwifruit exports to markets other than Australia continue to be regulated by requiring authorisation by Kiwifruit New Zealand for third-country exports by groups other than Zespri. A 2017 update of the Kiwifruit Export Regulations 1999 has not led to changes in these restrictions, even though these could facilitate participation in Kiwifruit exports by all firms wishing to do so and hence increase competition and efficiency in Kiwifruit trade.

• Agricultural policies in New Zealand rightly focus on key general services, but expenditures for general services relative to the sector’s value added are not particularly high when compared to other countries covered in this report. The country’s above-average focus on its knowledge and innovation system is appropriate not least given the comparatively low estimates of its sector’s total factor productivity growth in the most recent decade for which data is available. The positive development in the capitalisation of farms should help to boost future productivity growth.

• New Zealand’s focus on lower GHG emissions from agricultural sources is in line with its commitment in the context of the Paris Agreement on Climate Change. In contrast to many other countries, New Zealand’s agricultural sectors, including meat and dairy processors, nitrogen fertiliser manufacturers and imports, and live animal exporters have reporting obligations under the New Zealand Emissions Trading System, even though agricultural GHG emissions are neither constrained nor taxed. New Zealand supports a number of research activities aiming at reduced agricultural emissions, however, involving public and private institutions as well as the international community. Similar efforts are also needed to reduce the high Nitrogen and Phosphorus balances which pose a threat to the environment.

Figure 17.1. New Zealand: Development of support to agriculture

Source: OECD (2018), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Support to farmers (%PSE) has declined sharply due to reforms in the mid-1980s, and has remained at levels below 2% of gross farm receipts since 1990. The majority of this (very low) support to producers is provided through potentially most distorting support, due to some market price support (MPS) arising from SPS-related import restrictions (Figure 17.1). These create some Single Commodity Transfers (SCT) for poultry meat and eggs, corresponding to 15% and 25% of commodity-specific gross farm receipts, respectively (Figure 17.3). Apart from those, domestic prices are aligned with world market prices, resulting in an average price ratio between domestic and reference levels of less than 1.01. Overall, the Total Support to agriculture represents less than 0.3% of GDP, with most of the support to the sector provided for general services, mainly focusing on the knowledge and information system and on biosecurity-related measures (Figure 17.1). In 2017, the low level of support to farmers has decreased by a quarter as the SPS-related market price support has declined. While average domestic prices remained unchanged, the reduced MPS was almost exclusively due to a rise in average world market prices (Figure 17.2).

Figure 17.2. New Zealand: Decomposition of change in PSE, 2016 to 2017

Source: OECD (2018), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Figure 17.3. New Zealand: Transfer to specific commodities (SCT), 2015-2017

Source: OECD (2018), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), http://dx.doi.org/10.1787/agr-pcse-data-en.

Statlink

Table 17.1. New Zealand: Estimates of support to agriculture

Statlink

Contextual information

New Zealand is a relatively small and comparatively thinly populated economy with a per capita GDP slightly below the OECD average, but well above the average of all countries covered by this report. Its market openness is related to its high dependency on international trade. Agriculture’s importance in the total economy is higher than in most other countries covered in this report, accounting for almost 7% in both GDP and employment. Moreover, agro-food products account for close to two-thirds of the country’s total exports. With little arable land, grass-fed livestock products represent the backbone of the agricultural sector, making New Zealand the world’s largest exporter of dairy products and sheep meat. Fruit and horticultural products also contribute significantly to the country’s agriculture and food exports.

Table 17.2. New Zealand: Contextual indicators

	New Zealand		International comparison
	1995	2016*	1995	2016*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	66	181	0.2%	0.2%
Population (million)	4	5	0.1%	0.1%
Land area (thousand km2)	263	263	0.4%	0.3%
Agricultural area (AA) (thousand ha)	14 975	11 116	0.6%	0.4%
			All countries analysed1
Population density (inhabitants/km2)	14	18	38	45
GDP per capita (USD in PPPs)	17 819	38 346	9 650	24 866
Trade as % of GDP	22	19	10.2	14.3
Agriculture in the economy			All countries analysed1
Agriculture in GDP (%)	8.2	6.8	3.0	3.1
Agriculture share in employment (%)	9.7	6.5	-	-
Agro-food exports (% of total exports)	50.8	62.8	7.7	7.3
Agro-food imports (% of total imports)	7.8	11.5	7.8	6.7
Characteristics of the agricultural sector			All countries analysed1
Crop in total agricultural production (%)	20	24	-	-
Livestock in total agricultural production (%)	80	76	-	-
Share of arable land in AA (%)	11	5	30	30

Note: *or latest available year. 1. Average of all countries covered in this report. EU treated as one.

Source: OECD statistical databases, UN Comtrade, World Development Indicators and national data.

Statlink

New Zealand has a stable economy having featured robust growth and a relatively low inflation rate for most of the past decade. It is a consistent and growing net exporter of agricultural products, despite some drop in agro-food exports in 2015 and 2016 due to, among others, lower dairy prices. Most of New Zealand’s agro-food trade, and particularly of its exports, is processed food for final consumption. On the import side, intermediary products represent more than a third of the trade basket.

Figure 17.4. New Zealand: Main economic indicators, 1995 to 2017

Source: OECD statistical databases.

Statlink

Figure 17.5. New Zealand: Agro-food trade

Note: Numbers may not add up to 100 due to rounding.

Source: UN Comtrade Database.

Statlink

New Zealand’s average growth in total factor productivity (TFP) is estimated at just 0.2% p.a. over the 2005-14 period, the lowest value across countries covered by this report and well below the growth during the 1990s.

New Zealand’s agricultural sector is the country’s prime consumer of freshwater and has strongly expanded its irrigated land as a response to climate related uncertainties. Nonetheless, its overall level of water stress is limited. Agriculture is also the main source of GHG emissions, due to the high importance of grass-fed livestock production. For the same reason, the country’s nitrogen and phosphorous surpluses are well above the respective OECD averages.

Figure 17.6. New Zealand: Composition of agricultural output growth, 2005-14

Note: Primary factors comprise labour, land, livestock and machinery.

Source: USDA Economic Research Service Agricultural Productivity database. Available at: www.ers.usda.gov/data-products/international-agricultural-productivity/documentation-and-methods.aspx#excel.

Statlink

Table 17.3. New Zealand: Productivity and environmental indicators

	New Zealand		International comparison
	1991-2000	2005-2014	1991-2000	2005-2014
			World
TFP annual growth rate (%)	1.66%	0.18%	1.60%	1.63%
			OECD average
Environmental indicators	1995	2016*	1995	2016*
Nitrogen balance, kg/ha	36	60	33	30
Phosphorus balance, kg/ha	10.7	7.4	3.7	2.4
Agriculture share of total energy use (%)	3.5	5.0	1.8	1.9
Agriculture share of GHG emissions (%)	51	48	8.5	8.5
Share of irrigated land in AA (%)	3.7	6.3	-	-
Share of agriculture in water abstractions (%)	..	62	45	43
Water stress indicator	0.6	1.1	10	10

Note: * or latest available year. EU treated as one.

Source: USDA Economic Research Service. OECD statistical databases, UN Comtrade, World Development Indicators and national data.

Statlink

Description of policy developments

Main policy instruments

New Zealand largely limits its agricultural support to expenditures on general services, such as agricultural research and bio-security controls for pests and diseases. A significant share of the costs of regulatory and operational functions, including for border control, is charged to beneficiaries or those who create risks.

Practically all of New Zealand’s agricultural production and trade is free from economic regulations. Since the phasing out of restrictions for dairy exports to specific tariff quota markets by the end of 2010, such export rights are now allocated to dairy companies on the proportion of milk-solids collected. Export regulations continue to exist for kiwifruit: the New Zealand company Zespri has the default right to export kiwifruit to all markets other than Australia, although not the exclusive one. Other traders can export kiwifruit to markets other than Australia in collaboration with Zespri, subject to approval by Kiwifruit New Zealand, the relevant regulatory body. Kiwifruit exporters to Australia are required to hold an export licence under the New Zealand Horticulture Export Authority Act 1987 which provides for multiple exporters to that market.

The Dairy Industry Restructuring Act 2001 (DIRA) was established to promote the efficient operation of the New Zealand dairy industry. In particular it aims at ensuring that farmers can freely enter and exit the Fonterra Co-operative, and that other processors can obtain raw milk necessary for them to compete in dairy markets.

The Food Act 2014 came into force on 1 March 2016. It aligns the domestic food system with the risk-based approach of other New Zealand food statutes that have more of an export focus. New Zealand’s food system aligns with international trends in food regulation that have shifted to using a risk-based approach that focuses on the outcome of providing safe and suitable food, rather than using prescriptive regulation.

Import Health Standards (IHS) are documents issued under the Biosecurity Act 1993. They state the requirements that must be met before risk goods can be imported into New Zealand. Risk goods can only be imported if an IHS is in place for the product, and if all the IHS measures have been met by the good to be imported. For some products (representing a small share of New Zealand’s agricultural output: table eggs, uncooked chicken meat, and honey) there is currently no IHS in place, and therefore the goods cannot be imported. This leads to some market price support for the mentioned products as the domestic prices for those products are above the world market level.

“Industry good” activities1 (such as research and development, forming and developing marketing strategies, and providing technical advice) previously undertaken by statutory marketing boards are now managed through producer levy-funded industry organisations under the Commodity Levies Act 1990. Under this legislation, levies can only be imposed if they are supported by producers, and producers themselves decide how levies are spent. With a very limited number of exceptions, levy funds may not be spent on commercial or trading activities. The levying organisations must seek a new mandate to collect levies every six years through a referendum of levy payers.

OVERSEER is a nutrient management tool used for setting and managing nutrients within environmental limits. It helps farmers and growers improve their productivity, reduce nutrient leaching into waterways, and reduce greenhouse gas emissions. The intellectual property is jointly owned by the Ministry for Primary Industries, AgResearch Limited, and the Fertiliser Association of New Zealand. The tool is increasingly being used by regional councils that are implementing the National Policy Statement on Freshwater Management.

Pastoral Genomics is a New Zealand consortium for forage improvement through biotechnology. It is funded by the Ministry of Business, Innovation and Employment (MBIE), DairyNZ, Beef+Lamb New Zealand, Grasslands Innovation, NZ Agriseeds, DEEResearch, AgResearch, and Dairy Australia. The consortium aims to provide pastoral farmers with better forage cultivars that will increase productivity, profitability and environmental sustainability of New Zealand’s pastoral farming systems, and to raise the value of the sector’s exports. The New Zealand Government is investing NZD 7.3 million (USD 5.2 million)2 between 2015 and 2020 through the MBIE partnerships scheme; this funding will be matched by industry funding. The partnership intends to use non-regulated biotechnologies to help progress breeding and commercialisation of high-performing forages for grazing livestock, in order to improve the nutritional content of forage cultivars and to make the forage sectors more resilient to drought and disease.

Since 2000, the Sustainable Farming Fund (SFF) has invested in community-driven projects that deliver economic, environmental and social benefits to New Zealand’s land-based primary industries and aquaculture sector. Approximately 80 SFF projects are underway at any one time.

The Primary Growth Partnership (PGP) programme was introduced in 2009 and is administered by the Ministry for Primary Industries. The PGP is a government-industry partnership initiative that invests in significant programmes of research and innovation to boost agricultural productivity, economic growth and the sustainability of New Zealand’s primary, forestry and food sectors. Investments cover the whole of the value chain, including education and skills development, research and development, product development, commercialisation, commercial development, and technology transfer. PGP programmes are up to seven years duration. Industry co-investors must invest a minimum of 60% of the total investment (50% for programmes approved in or before December 2015), with a minimum amount of NZD 0.5 million (USD 0.36 million) to co-invest over the lifetime of a programme; the balance is invested by the Crown. By the end of 2017, the total PGP funding commitment from government and industry to the portfolio of 22 programmes was around NZD 759 million (USD 539 million), of which the government’s commitment was NZD 358 million (USD 254 million). NZD 254 million (USD 180 million) of this commitment have already been paid out.

Most of the Government’s funds to support large (regional) scale and community scale investments for the development of water storage, distribution and off-farm irrigation infrastructure are channelled through the Ministry for Primary Industry’s Crown Irrigation Investments Limited (CIIL) and Irrigation Acceleration Fund (IAF), respectively.

A total of NZD 183 million (USD 130 million) has been allocated to CIIL for investment into scheme construction. Construction of Central Plains Water (CPW) Stage 1 is complete and commissioned and CPW Stage 2, an investment worth NZD 65 million (USD 46 million), commenced in early 2017. Negotiations for investments in four further schemes are in progress. In addition to scheme construction investments, since July 2016 CIIL has also managed the development grant funding for regional irrigation schemes. CIIL secured an additional NZD 26.7 million (USD 19 million) in Budget 2017, to provide further grants to irrigation schemes in development. The IAF supports community scaled irrigation infrastructure development and strategic water management studies and trials. Crown funded projects are expected to result in some 126 000 hectares of new irrigated areas, and improvements to up to 104 000 hectares of irrigation infrastructure. Of these, around 47 000 hectares are commissioned or currently being constructed and 55 000 hectares have received upgrades. All projects are co-funded by private investors whose investments have to represent no less than 50% of the total funding.

The two parties continue to work closely together to provide an overall Crown funded irrigation portfolio. In the past decade, more than 30 projects throughout New Zealand have received support by way of grant funding. Some NZD 46 million (USD 33 million) have been provided from the IAF and, more recently, CIIL, for water storage and infrastructure development. To be eligible for funding, the projects need to promote efficient use of water, environmental management, and demonstrate a commitment to good industry practice. Schemes receive development grant funding to the stage where they are commercially robust and demonstrate a high level of community support.

In ratifying the Paris Agreement on Climate Change, New Zealand has committed itself to a Nationally Determined Contribution (NDC) of reducing emissions on an economy-wide basis to 30% below 2005 levels over the period 2021-2030 (-11% below 1990 levels by 2030). The commitment includes all sectors and all gases, with no specific targets or commitments set for the agricultural sector. New Zealand is on track to achieve its current target under the UNFCCC (-5% below 1990 levels by 2020).

The New Zealand Emissions Trading Scheme (NZ ETS), New Zealand's primary policy response to climate change, imposes reporting obligations on agriculture, including meat processors, dairy processors, nitrogen fertiliser manufacturers and importers, and live animal exporters, although some exemptions apply. The NZ ETS also imposes an emissions cost on the transport fuels, electricity production, synthetic gases, waste and industrial processes sectors.

The New Zealand Government continues to research and develop mitigation technologies to reduce agricultural greenhouse gas emissions. It does so through the New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC), the Pastoral Greenhouse Gas Research Consortium (PGgRc), and in co-ordination with the 49 member countries of the Global Research Alliance on Agricultural Greenhouse Gases (GRA).

The NZAGRC, funded by the Ministry for Primary Industries, brings together nine organisations that conduct research to reduce New Zealand’s agricultural greenhouse gas emissions.3 Research is focused on finding practical ways of reducing on-farm methane and nitrous oxide emissions while improving productivity and sequestering soil carbon.

The PGgRc is a partnership, funded 50:50 by Government and industry,4 that aims to provide livestock farmers with the information and means to mitigate their greenhouse gas emissions. The PGgRc mainly focuses on research to reduce methane emissions in ruminant animals.

The GRA, of which New Zealand hosts the secretariat, was established in 2009. Its member countries collaborate on the research, development and extension of technologies and practices that can deliver more climate-resilient food systems without growing greenhouse gas emissions. In 2017, a new PhD scholarship programme was established to build global expertise on climate change, agriculture, and food security, with the purpose of boosting New Zealand’s contribution to agricultural greenhouse gas research. The scholarship programme is a joint initiative of the GRA and the climate change programme of the Consultative Group on International Agricultural Research (CGIAR). New Zealand funding will support up to 40 recipients to be hosted in research centres of the CGIAR and GRA member countries and partners over the next three years.

The Afforestation Grant Scheme is a NZD 19.5 million (USD 13.9 million) programme to establish 15 000 hectares of new forest plantations between 2015 and 2020, providing funds to farmers and land owners. New planting aims at increased erosion control, improved water quality, reduced environmental impacts following flooding, and reduced GHG emissions.

On climate change adaptation, the New Zealand Government has established a Technical Working Group to look at how to build resilience to the effects of climate change, while ensuring sustainable economic growth. Members of the Group represent various economic sectors, including agriculture.

New Zealand currently has nine Free Trade Agreements (FTAs) in force, which account for approximately 50% of the value of New Zealand’s total exports and for almost half of its agro-food exports. As a trade dependent economy, and being geographically distant from export markets, FTAs are one way through which the New Zealand government aims at supporting improved productivity, value-added, and export earnings in the primary sector. There are an additional three agreements that are concluded but not yet in force – the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP; see also section on trade policy developments), the New Zealand-Gulf Cooperation Council FTA (involving Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), and the Anti-Counterfeiting Trade Agreement (ACTA) (also signed by ten other WTO member countries).

Domestic policy developments in 2017-18

Farmers and growers faced three medium-scale adverse events in 2017: flooding and storm damage, and drought in both the North and South Islands. Classifying these adverse events triggered additional Government support. In the case of flooding in Otago, the New Zealand Government contributed NZD 50 000 (USD 36 500) to the Dunedin Mayoral Relief Fund in addition to funding its share of the costs associated with repairing essential infrastructure, such as drinking water, storm water, and waste water systems, and river management systems. In response to the Bay of Plenty flooding, the Primary Industries Bay of Plenty Flood Recovery Grant was established to help with essential uninsurable infrastructure repairs. Affected farmers and growers could apply for contributions from the NZD 300 000 (USD 213 000) grant to help with specific infrastructure repairs such as re-grassing of pasture, re-sowing of crops, and clean-up of silt and debris. An additional NZD 1 million (USD 0.71 million) was committed by the New Zealand Government to enable Enhanced Taskforce Green teams to clear debris from towns, rural properties, and parks and reserves in affected areas of the Bay of Plenty. The severity of the storm damage in the Franklin Ward, Hauraki District, Thames-Coromandel and Waikato Districts led to additional funding being made available to the Waikato Rural Support Trust, and for Rural Assistance Payments (RAPs). RAPs are available to farmers in real hardship. RAPs cover essential living costs for those farmers whose income is severely impacted by a medium-scale (or greater) adverse event and who have no other means of supporting the family.

In December 2017, drought affecting Taranaki and parts of Manawatu-Whanganui, Wellington regions was classified as a medium scale event. This was extended to parts of the West Coast of the South Island in January 2018. NZD 350 000 (USD 249 000) was made available to the Rural Support Trusts. Rural Assistance Payments and tax relief measures allowing farmers to make late income equalisation deposits and apply for early refunds are also available to farmers and growers in affected districts.

Grants provided by the Earthquake Recovery Fund support farmers and growers in the Marlborough, Kaikoura and Hurunui region, impacted by the Kaikoura earthquake, by funding community-driven projects and professional advisory services for future land use planning. Eight community project applications were approved, totalling NZD 3.54 million (USD 2.52 million) over three years. A further NZD 1 million (USD 0.71 million) was available for land owners and managers to access professional advisory services from an approved support list. The remaining NZD 460 000 (USD 327 000) covered earthquake recovery related work such as precision agriculture and resilience planning.

In July 2017, the bacterial infection Mycoplasma bovis was found in cattle in the Oamaru region. This was the first detection of Mycoplasma bovis in New Zealand and the Ministry for Primary Industries declared a biosecurity response. Mycoplasma bovis can cause serious health problems in cattle, which do not respond to treatment. The bacterium presents no food safety or human health risks, but adversely affects both animal welfare and productivity. Between October and December 2017, around 5 000 cattle were culled to prevent further spread of the disease. A programme has been put in place to decontaminate and repopulate affected farms, and the response is ongoing in an effort to contain the disease. Affected farmers can claim compensation for the losses directly caused by the Ministry for Primary Industries’ exercise of powers, under the Biosecurity Act 1993. Compensation may cover verifiable losses as a result of damage to or destruction of property (including stock and equipment destroyed in an attempt to limit the spread of the bacteria), or as a result of restrictions imposed on the movement or disposal of their goods. Compensation claims are still under review.

The Biosecurity 2025 Direction Statement was launched in late 2016 and sets out a long-term vision for protecting New Zealand. Working groups are developing plans to implement each of the five strategic directions: involving all New Zealanders, harnessing science and technology, improved information availability and data analysis, effective leadership and governance, and skills and assets. Better targeting and facilitation of low-risk travellers and traders and concentrated efforts on high-risk areas aim at further efficiency gains at the border.

The New Zealand government continues to engage with industry and stakeholders to build biosecurity readiness and response capability. The Government Industry Agreement on Biosecurity Readiness and Response (GIA) has established an integrated approach to preparing for and effectively responding to biosecurity risks, through partnerships between the government and primary industry sector groups. Signatories share decision making, costs and responsibility in preparing for and responding to biosecurity incursions. In 2017, Summerfruit New Zealand, Meat Industry Association of New Zealand, New Zealand Winegrowers and the Dairy Companies Association of New Zealand (DCANZ) signed the GIA deed, bringing to 17 the number of industry sectors that have joined with the Ministry for Primary Industries under GIA. Participation in GIA is voluntary, and further industry sector groups are considering whether or not to join GIA, with membership expected to increase further in 2018.

The New Zealand kiwifruit industry is overcoming the challenges of the bacterial kiwifruit vine disease “Psa-V”. A class action, brought by a group of kiwifruit growers and a post-harvest operator against the Crown for an alleged negligence resulting in Psa-V entering the country in 2010, is awaiting the High Court’s decision after the hearing in 2017.

In response to the industry’s self-review of its performance through the Kiwifruit Industry Strategy Project, the Government updated the Kiwifruit Export Regulations 1999, taking effect on 1 August 2017. The changes allow Zespri shareholders to consider setting rules around maximum shareholding and eligibility for dividend payments; clarify the activities Zespri can undertake as a matter of core business; and enhance the independence and transparency of the independent industry regulator, Kiwifruit New Zealand.

The Resource Legislation Amendment Act 2017 (RLAA) represents the Government’s second phase of reform of the Resource Management Act 1991 (RMA). Together these changes aim at supporting more effective environmental management and driving capacity for development and economic growth.

Crown Forestry, a business unit that administers the Crown’s residual interest in a range of commercial forestry assets, has entered into commercial arrangements with farmers and landowners to plant trees on privately owned land. Funding of NZD 14 million (USD 10 million) will support the planting of trees in 2018 and the purchase of seedlings in 2019. Farmers and landowners with more than 200 hectares of unused land have the option of a lease or joint-venture with Crown Forestry in order to meet the government’s target of planting one billion trees over 10 years. For land to be suitable it needs to be reasonably fertile, easily accessible, and identified as suitable for production forestry. Crown Forestry will pay establishment and management costs, pay rent to the land owner, and allow carbon credits to be retained.

On 5 February 2018, the Ministry for Primary Industries’ General Export Requirements for Bee Products notice came into effect. In particular, these requirements strengthen traceability across the supply chain and implement a robust scientific definition of mānuka honey that can be used to identify and authenticate mānuka honey from New Zealand. The definition is a combination of five attributes (comprising four chemicals and one DNA marker from mānuka pollen) required to separate mānuka honey from other honey types. The requirements aim to give consumers and trading partners confidence that all mānuka honey exported is true to label.

In November 2017, rules around foreign investment in “sensitive agricultural land” were extended to virtually all agricultural land. Foreign investors in New Zealand agricultural land and other sensitive business assets have to get consent through the Overseas Investment Office. These rules aim to make growth more inclusive and to ensure more benefits from such investment are captured by New Zealanders.

Forthcoming changes

The Dairy Industry Restructuring Amendment Bill was introduced in December 2017 to prevent the expiry of the key Dairy Industry Restructuring Act 2001 (DIRA) provisions in the South Island. This Bill is planned to be passed by 31 May 2018. The Government also intends to undertake a comprehensive policy review of the DIRA as a matter of priority. Officials are currently scoping the review, and terms of reference for the review are likely to be publicly released later in 2018.

Changes to the Animal Welfare Act 1999 in May 2015, gave the Ministry for Primary Industries the ability to make animal welfare regulations. After the Young Calf and Live Animal Export regulations were released in July 2016, a further 46 new animal welfare regulations are being developed, and are to come into effect before October 2018. These regulations concern stock transport, farm husbandry, companion and working animals, pigs, layer hens, and the way animals are accounted for in research, testing and teaching. A third tranche of regulations is to be considered in 2018, for introduction in 2019.

An agreement reached between New Zealand and Australian food safety authorities will lead to hemp seed legalised as food in New Zealand. Before the standard can take effect in New Zealand, changes to New Zealand domestic legislation will need to occur. This process will take place in 2018.

Trade policy developments in 2017-18

In March 2017, an arrangement on developing an Agricultural Growth Partnership (AGP) was signed between New Zealand and Argentina. The AGP is a public-private partnership aimed at developing and delivering agricultural cooperation programmes focused on education, training and research in the primary sector.

The Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) was signed by the Trade Ministers of the eleven partner countries5 in March 2018, but remains to be ratified before entering into force. The CPTPP would eliminate tariffs on all New Zealand’s exports to CPTPP economies, including in agriculture, with the exception of beef and a number of dairy products into several partner countries which would see partial tariff reductions and duty-free quotas. As New Zealand’s MFN tariffs are zero or at low levels already, tariff changes due to the CPTPP would be small. The 11 signatories to the CPTPP collectively account for 13.5% of global GDP, nearly one-third of New Zealand’s current goods and service trade and about one-fourth of New Zealand’s exports of agro-food products.

New Zealand continues negotiations to upgrade, including on agricultural products, the New Zealand-China FTA and the New Zealand-Singapore Closer Economic Partnership (CEP).

New Zealand continues negotiations in the Regional Comprehensive Economic Partnership (RCEP). Negotiations between New Zealand and the countries of the Pacific Alliance6 started in October 2017 and will continue into 2018. Negotiations for a New Zealand-European Union FTA have been delayed and are expected to begin in the first half of 2018.

New Zealand is currently developing a New Progressive and Inclusive Trade Agenda through extensive civil society, industry, and public consultation and engagement.

References

NZIER (2007), Productivity, Profitability and Industry Good Activities, Report to Dairy Insight, February, available at at http://nzier.org.nz/publication/productivity-profitability-and-industry-good-activities.

Notes

← 1.  Activities “beneficial to the industry, but whose benefits cannot be captured by those who fund or provide the activity”, or “long-term investments in the industry made with the expectation of accelerating delivery of better technology and products for the industry” (NZIER, 2007).

← 2.  All values in this policy description use the 2017 exchange rate for monetary conversion.

← 3.  The seven member Crown research institutes and universities are: AgResearch, Landcare Research, Lincoln University, Massey University, National Institute of Water and Atmospheric Research, Plant Food Research and Scion. The two other organisations involved are DairyNZ and the Pastoral Greenhouse Gas Research Consortium.

← 4.  Industry partners are DairyNZ, Beef+Lamb New Zealand, DEEResearch and Fertiliser Research.

← 5.  CPTPP countries are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Viet Nam.

← 6.  Pacific Alliance countries are Chile, Colombia, Mexico and Peru.