Agricultural Policy Monitoring and Evaluation 2024

20. New Zealand

Main findings

Support to agriculture

Support to agricultural producers in New Zealand consistently ranks among the lowest in the OECD. During 2021-23, the Producer Support Estimate (PSE) averaged 0.7% of gross farm receipts, slightly higher than the 0.5% reported for 2000-02 but far below the OECD average.

Almost all prices align with world market prices. Exceptions are fresh poultry and table eggs, and some bee products, which cannot be imported into New Zealand due to biosecurity regulations. These restrictions result in some market price support (the only form of support to individual commodities in New Zealand), amounting to 4% of gross commodity receipts for poultry meat and 39% for eggs in 2021-23. Additional minor producer support is provided through on-farm services, mainly related to animal health and disaster relief.

Thanks to structurally low producer support, around 70% of all support to the sector for most of the past two decades was for general services. Such support (General Service Support Estimate, GSSE) is estimated at just 1.7% of the value of agricultural production during 2021-23, well below the OECD average. It focuses on relief payments in response to natural disasters, animal disease control, and investments in the agricultural knowledge and innovation system.

Total support to the sector represented just over 0.2% of Gross Domestic Product (GDP) during 2021-23. This level is largely unchanged from two decades earlier and remains at less than half the average share across the OECD.

Key recent policy changes

Several urgent measures were implemented following a series of severe weather events in early 2023, which caused widespread flooding and landslides that damaged critical infrastructure and resulted in losses of horticultural crops and agricultural assets. Government support in response to this situation included farmers’ and growers’ grants, funding for urgent response and support projects, and the North Island Weather Event Regional Recovery Funding. Initial funding available for these measures totalled NZL 103.3 million (USD 63.4 million).

A ban on the sale of eggs raised in battery cages came into effect in January 2023 after a phase-in period of more than ten years. A ban on the export by sea of live cattle, sheep, goats and deer came into effect in April 2023.

In April 2023, the Organic Products and Production Act became law. The act aims to help with developing new standards for organic products, and to set requirements for businesses in the organic sector from production through to sale.

Funding and advisory services were made available to Māori agribusinesses to help them to realise the potential value of their land and primary sector assets, to develop and implement local solutions to improve freshwater quality, and to identify needs and encourage equitable access to government cyclone recovery funding and support.

The New Zealand-United Kingdom FTA entered into force on 31 May 2023, while the New Zealand-European Union FTA, signed in July 2023, was ratified in March 2024 to enter into force on 1 May 2024. Both agreements include Māori trade and co-operation chapters to increase trade opportunities for Māori primary producers, and to allow for differentiated arrangements for Māori businesses without breaching the free trade agreements.

Assessment and recommendations

• New Zealand’s agricultural productivity growth has been slowing significantly, while maintaining high nitrogen and phosphorus balances. Its ruminant livestock sector is responsible for a large share of the country’s GHG emissions. To address these challenges, significant sustainable productivity improvements will be needed.

• The country’s strong focus on research and innovation, combined with investments in partnership-based extension systems, provide a solid basis for progress in achieving sustainable productivity growth. New Zealand’s engagement in various national and international research streams predominantly aims to lower the emission intensity of production and improve the sustainability of pest management. However, public investments in the agricultural knowledge and innovation system relative to the sector’s size remain below the OECD average. This suggests that additional funding could be considered.

• The Productive and Sustainable Land Use package aims to improve value creation and environmental outcomes. An evaluation of the impacts of these efforts, and of the end of the Extension Services programme in June 2023, could be useful. Moreover, the government should carefully assess the need for additional measures, such as regulatory approaches or results-based programmes, to limit the significant (and increasing in the case of nitrogen) nutrient surpluses.

• In addition to R&D efforts to reduce the emission intensity, notably of its livestock industry, New Zealand’s move towards pricing agricultural GHG emissions is remarkable at the international stage. While the exact design and timing of such a pricing mechanism remains to be seen, pricing has been shown to be the most efficient ways to reduce GHG emissions.

• At the same time, farmers must adapt to a changing climate and a growing frequency and intensity of weather-related adverse events. In addition to its engagement in climate-change related research and adaptation planning, New Zealand could consider an enhanced measurement of adaptation outcomes and resilience-oriented measures, beyond short-term responses to adverse events.

• With its strong trade focus, underlined by the country’s laudable absence of formal trade barriers and its engagement in many FTAs, New Zealand’s IHS are key to its biosecurity vis-à-vis imported products. However, some livestock products (including eggs, fresh chicken meat, and honey) cannot be imported into New Zealand because no IHS has been developed for them. While these products represent a small share of New Zealand’s agricultural output and consumption, the development of relevant IHS would provide consumers lower prices and larger choice without compromising biosecurity.

• Kiwifruit exports to markets other than Australia by entities besides Zespri (the main company) continue to be subject to regulatory authorisation by Kiwifruit New Zealand. New Zealand should ease these restrictions, as they burden participation in kiwifruit exports by other firms wishing to do so, reducing competition and efficiency in the kiwifruit trade.

Development of support to agriculture

Figure 20.1. New Zealand: Development of support to agriculture

Table 20.1. New Zealand: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	4 067	6 371	21 988	24 609	21 508	19 849
of which: share of MPS commodities (%)	72.09	73.07	75.43	76.03	75.63	74.63
Total value of consumption (at farm gate)	1 624	2 589	10 172	11 026	9 693	9 797
Producer Support Estimate (PSE)	424	33	154	180	130	152
Support based on commodity output	54	15	98	138	97	58
Market price support¹	53	15	98	138	97	58
Positive market price support	53	15	98	138	97	58
Negative market price support	0	0	0	0	0	0
Payments based on output	1	0	0	0	0	0
Payments based on input use	179	17	34	39	29	33
Based on variable input use	2	0	0	0	0	0
with input constraints	0	0	0	0	0	0
Based on fixed capital formation	154	0	0	0	0	0
with input constraints	0	0	0	0	0	0
Based on on-farm services	23	17	34	39	29	33
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	26	1	22	3	4	61
Based on Receipts / Income	26	1	22	3	4	61
Based on Area planted / Animal numbers	0	0	0	0	0	0
With input constraints	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	165	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	0	0	0	0	0	0
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	0	0	0	0	0	0
Based on long-term resource retirement	0	0	0	0	0	0
Based on a specific non-commodity output	0	0	0	0	0	0
Based on other non-commodity criteria	0	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0	0
Percentage PSE (%)	10.16	0.52	0.70	0.73	0.60	0.76
Producer NPC (coeff.)	1.01	1.00	1.00	1.01	1.00	1.00
Producer NAC (coeff.)	1.11	1.01	1.01	1.01	1.01	1.01
General Services Support Estimate (GSSE)	119	85	380	412	360	368
Agricultural knowledge and innovation system	60	46	159	186	147	144
Inspection and control	31	28	200	201	189	211
Development and maintenance of infrastructure	27	11	21	25	24	13
Marketing and promotion	0	0	0	0	0	0
Cost of public stockholding	0	0	0	0	0	0
Miscellaneous	0	0	0	0	0	0
Percentage GSSE (% of TSE)	20.97	71.98	68.59	67.06	70.94	67.97
Consumer Support Estimate (CSE)	-53	-14	-89	-120	-98	-49
Transfers to producers from consumers	-51	-14	-97	-137	-97	-58
Other transfers from consumers	-2	0	-12	-6	-19	-13
Transfers to consumers from taxpayers	0	0	21	23	18	22
Excess feed cost	0	0	0	0	0	0
Percentage CSE (%)	-3.36	0.53	0.87	-1.09	-1.02	0.50
Consumer NPC (coeff.)	1.03	1.01	1.01	1.01	1.01	1.01
Consumer NAC (coeff.)	1.03	1.01	1.01	1.01	1.01	1.01
Total Support Estimate (TSE)	542	118	554	614	507	541
Transfers from consumers	53	14	110	143	116	71
Transfers from taxpayers	491	105	457	477	410	483
Budget revenues	-2	0	-12	-6	-19	-13
Percentage TSE (% of GDP)	1.50	0.21	0.22	0.25	0.21	0.22
Total Budgetary Support Estimate (TBSE)	489	103	456	476	410	483
Percentage TBSE (% of GDP)	1.36	0.18	0.18	0.19	0.17	0.19
GDP deflator (1986-88 = 100)	100	137	228	216	228	241
Exchange rate (national currency per USD)	1.71	2.25	1.54	1.41	1.58	1.63

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for New Zealand are: wheat, maize, oats, barley, milk, beef and veal, sheep meat, wool, pig meat, poultry and eggs.

Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

Agricultural support in New Zealand is limited largely to expenditures on general services, primarily in the form of agricultural research and biosecurity controls for pests and diseases. A significant share of the costs of regulatory and operational functions, including for border control, is charged to beneficiaries (e.g. farmers) or those who create risks (e.g. importers).

Market and trade regulations

Practically all New Zealand’s agricultural production and trade is free from economic regulation. Export rights of some dairy products to certain markets with import quotas have been allocated to dairy companies based on the share of milk solids collected from farmers. Export regulations are in place for kiwifruit: the New Zealand company Zespri has the default right, although not an exclusive right, to export kiwifruit to all markets other than Australia.1

New Zealand currently has 13 Free Trade Agreements (FTAs) in force, which cover approximately 65% of the value of New Zealand’s agro-food exports and 60% of its agro-food imports during 2021-23 – shares that are slightly lower than those for its total trade (67% and 66%, respectively).

Biosecurity and food safety

All agro-food business operates under the Food Act 2014, which applies a risk-based approach focused on safe and suitable food. It avoids using prescriptive regulation and aligns the domestic food system with the risk-based approach of other New Zealand food statutes that have more of an export focus and with international trends in food regulation.

Together with the Animal Products Act 1999, the Agricultural Compounds and Veterinary Medicines Act 1997, and the Food Act 2014, the Biosecurity Act 1993 defines the legal obligations of food importers. Import Health Standards (IHS) issued under the Biosecurity Act set the requirements for importing risk goods into New Zealand.2 Risk goods, including animal and plant products, can be imported only with an IHS in place for the product, and with the product meeting all relevant IHS measures. For some products (e.g. table eggs, uncooked chicken meat, honey), no IHS is in place. These products therefore cannot be imported, leading to some market price support as their domestic prices are above the world market level.

The Government Industry Agreement for Biosecurity Readiness and Response (GIA) established an integrated approach through voluntary partnerships between the government and primary industry sector groups to manage pests and diseases that could damage New Zealand’s primary industries, economy, and the environment. Signatories share decision-making responsibilities and costs in preparing for and responding to biosecurity incursions. In total, the number of industry groups partnering with the Ministry for Primary Industries under GIA now stands at 23.3

Farm assistance services

Under the Commodity Levies Act 1990, “industry good” activities (such as research and development, forming and developing marketing strategies, and providing technical advice) are managed by industry organisations and funded by levies collected from producers.4 Levies can only be imposed when approved by producers, who also decide how to spend them.

Policies for Indigenous peoples

Introduced in 2015, the Māori Agribusiness: Pathway to Increased Productivity (MAPIP) framework supports Māori primary sector asset owners on a one-on-one basis5 to increase the productivity of their primary sector assets, including land, agriculture, horticulture, forestry, and seafood. The Māori Agribusiness Extension Programme (MABx) additionally enables the government to partner with Māori to achieve economic, environmental, social and cultural aspirations through the sustainable development of primary sector assets. In 2019, the government committed NZD 12 million (USD 7.4 million) over a four-year period to facilitate MAPIP and MABx projects. Such projects may also be eligible for funding under the SFF futures fund (see section on Innovation for sustainable productivity growth below) and the Māori Agribusiness workforce skills and training programme (see below).

In addition, the government provides targeted funding to help Māori agribusinesses realise the potential value of their land and primary sector assets. This funding is available to eligible applicants and is typically used for measures such as land-use assessments and feasibility studies to lift the productivity of underutilised land. Targeted advisory services are also provided to Māori farmers and foresters, notably in the context of adverse events.

Sustainability policies

The Sustainable Land Management Hill Country Erosion Programme (HCEP) aims to protect New Zealand’s estimated 1.4 million ha of pastoral hill country classified as erosion prone. It funds regional councils to develop and deliver four-year erosion control programmes, co-funded by councils and landowners. The government approved a total of NZD 25.2 million (USD 15.5 million) for the period 2023‑27. Funded activities include:

• developing farm-scale erosion control plans in collaboration with landowners

• wide-spaced planting of poplars and willows as agroforestry

• land retirement from production to revert to native vegetation

• small-scale forest-based activities

• regional training and resourcing for delivering targeted erosion control programmes.

Although the main purpose of the HCEP is to reduce erosion and to build on-farm resilience, it also aims to reduce sediment loss to waterways, increase on-farm biodiversity, enhance climate change adaptation, and contribute to the sequestration of carbon.

Climate change mitigation and adaptation

Primary agriculture is responsible for about half of New Zealand’s gross greenhouse gas (GHG) emissions. This share is large relative to other OECD countries, due to the prevalence of livestock-based agriculture and the large share of renewable sources in the electricity mix. Most agricultural emissions are in the form of methane from dairy, sheep, and beef cattle.

In its 2021 Nationally Determined Contribution (NDC) to the Paris Agreement, New Zealand committed to halve its national net GHG emissions by 2030 relative to gross 2005 levels. This economy-wide target covers, among others, agriculture and other land use sectors and corresponds to a 41% reduction on a multi-year emissions budget for 2021-30.

The Zero Carbon Amendment Act 2019 (Zero Carbon Act) sets separate long-term emission reduction targets for long-lived and short-lived GHG emissions, including a target for biogenic methane. In particular, the emissions reduction targets set out in the Zero Carbon Act aim to reduce all GHG emissions, except biogenic methane, to net zero by 2050; and reduce gross biogenic methane emissions to 10% below 2017 levels by 2030 and 24-47% by 2050.6

The New Zealand Emissions Trading Scheme (NZ ETS) is the main emissions pricing tool for the New Zealand economy and a key component of New Zealand’s climate change response. It currently requires companies in the agricultural supply chain (e.g. meat processors, dairy processors, nitrogen fertiliser manufacturers and importers) to report their agricultural emissions, although these companies are not required to pay for their emissions at this time.7 The NZ ETS also imposes a cost on emissions from transport fuels, electricity production, synthetic GHGs, waste and industrial processes, including in primary sectors. Eligible forests can be recognised for their carbon sequestration in the NZ ETS.

As part of the One Billion Trees programme aiming to double previous tree planting rates over the decade 2018-28, the One Billion Trees Fund was launched in November 2018. For the financial year ending 30 June 2023, the fund provided NZD 37.7 million (USD 23.1 million) for tree planting grants to landowners including farmers and NZD 83.2 million (USD 51.1 million) for partnership initiatives to help overcome the barriers to tree planting. The fund closed to new applications in June 2021, but the programme will continue until 2028 for grants that have already been approved.

The New Zealand Government researches and develops mitigation technologies to reduce agricultural GHG emissions. It does so primarily through the Centre for Climate Action on Agricultural Emissions (CCAAE, see section on Innovation for sustainable productivity growth below), as well as in co‑ordination with the member countries of the Global Research Alliance on Agricultural Greenhouse Gases (GRA).

The GRA, a network of 68 member countries and 29 partner organisations, was established in 2009. New Zealand hosts the Secretariat and GRA Special Representative, and co-chairs its Livestock Research Group. The GRA facilitates collaborative and evidence-based dialogue and knowledge sharing. GRA members collaborate on research, development and extension of technologies and practices to deliver more climate-resilient food systems without growing GHG emissions. New Zealand builds future capability and capacity through running training programmes and supporting GRA scholarship programmes in developing countries, including in South-East Asia and southern and eastern Africa. New Zealand also funds international collaborative efforts to accelerate global research in mitigating GHG emissions from agriculture, especially for pastoral livestock farming, and co-funds and participates in several international research calls designed to decrease agricultural emissions.8

New Zealand’s first National Climate Change Risk Assessment, published in 2020, sets out the priority and significant risks New Zealand faces from the impacts of climate change. The first National Adaptation Plan listing actions to address these risks was published in August 2022. The new government elected in October 2023 is considering priorities to deliver a strategic adaptation framework to ensure that New Zealand’s policy and other system settings provide for an enduring, efficient and affordable climate adaptation response while addressing wellbeing, fairness, transition, and specific Māori interests.

Land rights policies

The Overseas Investment Act 2005 makes acquisitions of “sensitive land” involving “overseas persons”, as defined under the act, subject to consent of the Toitū te Whenua Land Information New Zealand. Most of the country’s land is considered as “sensitive” under the act. The criteria that apply depend on the land being acquired and on who is purchasing the land, for instance overseas investors must demonstrate how their investment will benefit the country.

Innovation for sustainable productivity growth

As indicated above, agricultural GHG emissions, and specifically methane, are a key challenge for New Zealand. Many its programmes thus focus on reducing emissions through new technologies, genetics and breeding programmes, and fertiliser reduction, among others. New Zealand also experienced strongly declining productivity growth and high nitrogen balances (see the Policy context section below).

Research and innovation

The Centre for Climate Action on Agricultural Emissions (CCAAE) was launched in November 2022. It brings together efforts to accelerate research in developing new tools, technology and practices to lower on-farm emissions. and ensuring farmers have equitable access to affordable tools to cut their emissions while maintaining efficiency in on-farm practices and land use. It comprises AgriZero^NZ – a public-private joint venture with key industry agribusinesses − and the New Zealand Agricultural Greenhouse Gas Research Centre (NZAGRC).

Funded from the Climate Emergency Response Fund with an allocation of NZD 339 million (USD 208 million), by December 2023 the CCAAE has made more than NZD 54 million (USD 33.2 million) in investments, which are co-funded by industry. Projects include developing a methane inhibiting bolus,9 increasing the pool of researchers with skills in agricultural greenhouse gas mitigation, and building a new greenhouse gas testing facility for large cattle.

The NZAGRC, funded by the Ministry for Primary Industries and the Ministry of Business, Innovation and Employment, brings together nine organisations that conduct research to reduce agricultural GHG emissions. The research focuses on practical ways to reduce on-farm methane and nitrous oxide emissions while improving productivity and sequestering soil carbon, as well as Māori-focused research and future farm systems’ research. Industry partners co-invest in some of the research led by NZAGRC.

Another key pillar of this work is the Sustainable Food and Fibre Futures (SFF Futures), a public co-investment programme that finances projects to create value and improve sustainability in the food and fibre industries. SFF Futures has a budget of NZD 60 million (USD 36.8 million) per year and enables farmers, growers, harvesters, and industry to apply for funding for a range of projects that deliver economic, environmental and social benefits. SFF Futures projects can range from less than NZD 100 000 to multi-million-dollar, multi-year programmes. Community projects require co-investment from the partner organisation of at least 20% of costs. Commercially-driven projects require a co-investment of at least 60% of costs.

One of the SFF Futures funded programme brings the horticulture, wine, and arable sectors together to find ways to meet consumer demands for food produced through more sustainable pest management practices. It shifts away from traditional crop protection to integrate biological and ecological processes.

New Zealand is also placing an increasingly greater focus on technological solutions to increase productivity and reduce emissions. NZ Sheep of the Future is an SFF Futures programme launched in August 2023 with funding for seven years, that focusses on new farm system approaches for a range of sheep breeds, using genetics to help future-proof the industry, breeding sheep with optimum meat and wool production as well as a greater tolerance for hot weather and with lower methane emissions.

Programme implementation

The Ministry for Primary Industries’ Productive and Sustainable Land Use package promotes improved value creation and environmental outcomes. One part of the programme, Extension Services, supported and enables producers to improve environmental, social and wellbeing outcomes in their communities by helping them design their own solutions. Extension Services, which ran from July 2019 to June 2023 with a total budget of NZD 35 million (USD 21.5 million), partnered with farmers through catchment groups, regional stakeholders and agricultural professionals to ensure services are relevant to the needs and priorities of local communities.

Recent policy developments

Domestic policy developments in 2023-24

Responses to biosecurity threats and adverse events

The 10-year programme to eradicate the cattle disease Mycoplasma bovis (M. bovis), launched in 2018, is being transitioned to the disease management agency OSPRI. Background surveillance continues to monitor the disease status of the national herd. M. bovis has resulted in significant production losses for dairy and cattle farmers. Compensation payments are provided to farmers impacted by the eradication programme.

The agricultural sector and rural communities were impacted by a series of severe weather events: Cyclone Hale, the Auckland Anniversary weekend floods (both in January 2023), and Cyclone Gabrielle (February 2023), which caused widespread flooding and landslides that damaged critical infrastructure and resulted in substantial losses of horticultural crops and agricultural assets around the North Island. The Ministry for Primary Industries (MPI) reacted by supporting the primary industries and rural communities’ response to the event, drawing on its on-the-ground presence to help regions actively manage the risks they face.

The clean-up and recovery costs are estimated to reach about NZD 1 billion (USD 614 million), half of which are in the horticulture sector with the remainder in the sheep and beef, dairy and forestry sectors. Initial funding available to the agriculture sector from central government included Farmers and Growers grants (NZL 64 million for more than 4 700 farmers); a mobilisation fund for urgent response and support projects (NZD 3.9 million in funding across 25 projects, including aerial surveys, mental wellbeing initiatives, recovery advice, transport and logistics); and the North Island Weather Event (NIWE) Regional Recovery Funding (NZD 35.4 million) (USD 39.3 million, USD 2.4 million and USD 21.7 million, respectively).

Restoration of productive land in the North Island east coast is dependent on the removal of silt, sediment and woody debris dislodged during the weather events. To date, NZD 240 million (USD 147 million) has been earmarked to clear remaining waste materials from lowland orchards, pasture, and catchment areas. Cost-sharing arrangements were implemented for the removal of silt and debris from commercial properties.

Farm services and workforce initiatives

The Ministry for Primary Industries is establishing an on-farm support service to deliver assistance to farmers and growers. Public sector organisations provide resources, advice, funding opportunities and extension services. As of January 2024, the service had 43 staff in the regions and has been allocated NZD 55 million (USD 33.8 million) over four years.

The New Zealand Recognised Seasonal Employee Scheme (RSE) scheme allows employers in the horticulture and viticulture sectors to recruit seasonal workers from eligible Pacific Island countries. The RSE underwent several changes in 2023. Specifically, the annual cap was increased by 500 places to allow access to 19 500 workers from September 2023, the minimum wage for RSE workers was indexed to 10% above the general minimum wage from October 2023, and provisions for access to sick leave entitlements were modified from October 2023. A multi-stakeholder review of the RSE scheme made recommendations for further scheme changes. Reduced working holiday makers in New Zealand as a result of COVID-19 (although numbers are now recovering) and persistent global workforce shortages have further added to workforce tensions.10

Animal welfare

A ban on the sale of eggs raised in conventional (battery) cages came into effect in January 2023, after a phase-out period that had started in 2018. A ban on the export of live cattle, sheep, goats and deer by sea came into effect in April 2023 following a 2022 amendment of the Animal Welfare Act 1999.11 Livestock exports by sea represent less than 1% of total primary sector exports.

Natural resource policies and organic farming

The Sustainable Land Management and Climate Change Freshwater Mitigation fund (SLMACC FM) is wrapping up in June 2024. SLMACC FM is a four-year project aimed at quantifying the effectiveness of mixed species and soil cover-based management approaches that avoid or reduce the transfer of contaminants from soil to water.

In April 2023, the Organic Products and Production Act became law. The act aims to help develop new standards for organic products, and to set requirements for businesses in the organic sector from production through to sale.

Policies for Indigenous peoples

Targeted funding to help Māori agribusinesses realise the potential value of their land and primary sector assets is anticipated to total approximately NZD 5 million (USD 3 million) in the year ending June 2024. The government also contributed NZD 6.1 million (USD 3.7 million) to help Māori landowners and primary producers develop and implement local solutions to improve freshwater quality.

Targeted advisory services to Māori farmers and foresters provided support in the regions most impacted by Cyclone Gabrielle, which have large Māori populations and high proportions of Māori-owned land. Māori agribusiness advisors connected with tribal entities and isolated communities in the impacted regions, to identify needs and encourage equitable access to government cyclone recovery funding and support.

Policies to mitigate emissions from agriculture

An independent Climate Change Commission advises on setting carbon budgets and policies to meet them. In December 2023, it released its “2023 Advice” (Climate Change Commission, 2023[1]) to inform the strategic direction of the government’s second emissions reduction plan (ERP) covering 2026‑30. The report contains 27 recommendations covering a wide range of policy actions. The second ERP will be published by the end of 2024.

Trade policy developments in 2023-24

The New Zealand-United Kingdom Free Trade Agreement came into force on 31 May 2023. The new FTA removes customs duties for a range of food products, such as wine, honey, onions, kiwifruit, and a range of dairy products. Dairy and horticultural products will be 100% tariff free within seven years of the agreement’s entry into force. Trade in beef and sheep meat will be liberalised over a longer time frame of 10 years and 15 years, respectively.

The New Zealand-European Union Free Trade Agreement, signed in July 2023, was ratified by New Zealand in March 2024 to enter into force on 1 May 2024. For horticultural products, 99.9% of New Zealand’s current trade with the European Union will enter tariff free at entry into force. Dairy and meat will see a reduction in tariffs, as well as new FTA quota access, some of which will be duty free. Other agricultural products, such as wine, honey, and seeds, will see duties on 97% of tariff lines eliminated as of entry into force, rising to 99.5% on full implementation. This agreement includes a Sustainable Food Systems chapter, one of the first FTAs globally to do so.

Both the New Zealand-United Kingdom and the New Zealand-European Union FTAs include Māori trade and co-operation chapters. These chapters are expected to increase trade opportunities for Māori primary producers in the UK and European markets. These chapters also allow the government to make differentiated arrangements for Māori businesses without breaching the free trade agreements, around matters such as intellectual property over heritage species. Both agreements also recognise the status of Te Tiriti o Waitangi, a treaty signed between representatives of the British Crown and Māori in 1840. All New Zealand’s free trade agreements since 2001 have included a Tiriti o Waitangi/Treaty of Waitangi clause to reflect the Treaty’s constitutional significance to New Zealand.

Policy context

Key economic and agricultural statistics

New Zealand is a relatively small and sparsely populated country with a per capita GDP that is slightly above the OECD average. Its high degree of market openness is related to its dependency on international trade. Agriculture has a comparatively high, albeit slowly shrinking, importance to the economy, accounting for around 6% of both GDP and employment. Moreover, agro-food products account for more than two-thirds of New Zealand’s total exports.

With little arable land, grass-fed livestock products represent the backbone of the agricultural sector, and livestock products account for 80% of its total production value. New Zealand is the world’s largest exporter of sheep meat, and among the largest exporters of dairy products. Beef, fruit and horticultural products also contribute significantly to the country’s agro-food exports.

Table 20.2. New Zealand: Contextual indicators

	New Zealand		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	83	265	0.2%	0.2%
Population (million)	4	5	0.1%	0.1%
Land area (thousand km2)	263	263	0.3%	0.3%
Agricultural area (AA) (thousand ha)	12 340	10 175	0.4%	0.3%
			All countries1
Population density (inhabitants/km2)	15	19	52	64
GDP per capita (USD in PPPs)	21 459	51 636	9 363	25 965
Trade as % of GDP	24.5	20.5	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	8.3	6.1	2.9	3.8
Agriculture share in employment (%)	8.5	6.0	-	-
Agro-food exports (% of total exports)	50.7	68.6	6.4	8.0
Agro-food imports (% of total imports)	7.9	11.2	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	17.7	21.5	-	-
Livestock in total agricultural production (%)	82	79	-	-
Share of arable land in AA (%)	3	6	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

New Zealand has a stable economy having experienced growth and relatively low inflation for most of the past decade. However, after rebounding from the COVID-19 related recession to a growth rate above 6% in 2021, the globally difficult economic situation due to Russia’s war of aggression in Ukraine reduced GDP growth in 2022 and 2023 to rates around 2%, while inflation peaked at close to 7.2% before declining to 5.7%, still well above levels seen in recent decades.

New Zealand is a consistent and growing net exporter of agro-food products, which after some drops in 2015 and 2016 due to, among others, lower dairy prices, have picked up again since 2017 and reached new record levels in 2022. Most of New Zealand’s agro-food trade, and in particular of its exports, is processed food for final consumption. On the import side, however, intermediary products represent nearly half of the trade basket.

New Zealand’s growth in agricultural output over the 2012-21 decade has been below the global average, driven by low productivity growth: at less than 0.1%, the estimated average growth in total factor productivity (TFP) is well below the global average. It is also well below the TFP growth measured for the 1990s.

Agriculture is responsible for half of New Zealand’s GHG emissions. This is due to the dominant role of dairy and ruminant meat production and to the large share of renewables in electricity generation, among other factors. Almost three-quarters of agricultural emissions are in the form of enteric methane from ruminant livestock. Nutrient surpluses are also well above the respective OECD averages, although the phosphorous balance has declined somewhat from its levels in the 1990s. The sector is also the main user of freshwater as irrigated land has expanded, partly in response to climate related uncertainties. Nonetheless, its overall level of water stress, while higher than in the 1990s, is relatively low.

Table 20.3. New Zealand: Productivity and environmental indicators

	New Zealand		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	2.1%	0.1%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	36.7	62.6	32.1	28.2
Phosphorus balance, kg/ha	13.2	11.8	3.3	2.3
Agriculture share of total energy use (%)	3.6	5.1	1.7	2.0
Agriculture share of GHG emissions (%)	49.5	49.2	8.7	10.1
Share of irrigated land in AA (%)¹	3.7	7.3	-	-
Share of agriculture in water abstractions (%)	..	61.7	47.0	49.5
Water stress indicator	0.7	3.0	8.7	..

Note: * or closest available year.

1. Data are not comparable between time periods due to change in methodology.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Prior to the 1970s, New Zealand exported more than half its agricultural production to the United Kingdom and support for agricultural producers was largely non-existent except for some import-competing sectors such as eggs and poultry. At the same time, New Zealand’s Statutory Marketing Boards, operating since the end of World War I, enjoyed significant rights to regulate the supply and trade of several key export products. Overall, relative to the more protected manufacturing sectors, agriculture was implicitly taxed (Anderson et al., 2008[2]).

The accession of the United Kingdom to the European Economic Community in 1973 weakened New Zealand’s access to its most important market, and the oil shock of the mid-1970s generated significant foreign exchange shortfalls given the country’s dependence on oil imports. In response, the government introduced policy measures to support agricultural production (MPI, 2017[3]). These included input subsidies, minimum prices supported by import barriers and export incentives, tax concessions, low-interest loans and development grants (MPI, 2017[3]; Harris and Rae, 2004[4]).

In response to macroeconomic problems, including the substantial fiscal burden of these support measures, a new government implemented significant economic reforms during the second half of the 1980s. By the end of that decade, production and trade distorting policies supporting the farm sector practically disappeared (Table 20.4). In the context of these reforms, New Zealand’s Statutory Marketing Boards lost most of their authority or were dissolved (Nayga and Rae, 1993[5]).

Table 20.4. New Zealand: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
Prior to 1975	Export-oriented agriculture with little policy intervention. Implicit taxation notably of exporting agriculture relative to the manufacturing sector	Statutory Marketing Boards with significant authority to regulate production and trade of key export products Agricultural and manufacturing import tariffs Limited farm support, including some input subsidies
1975-1984	Incentivising agricultural production	Introduction of significant farm support measures: price support, input subsidies, tax concessions, low-interest loans, development grants
Late 1980s	Reforms to market and trade liberalisation	Dismantling of price support and most other forms of direct farm support, along with economy-wide reforms liberalising the manufacturing industry as well Restricted function or dismantling of the Statutory Marketing Boards. Exit packages and debt restructuring programmes for farmers who had to stop operating
1990-present	Continuing trade liberalisation	Focus on general services and disaster aid

Since the policy reforms of the late 1980s, New Zealand’s level of support to agricultural producers has been the lowest among OECD countries (Figure 20.7). For the last almost 20 years, PSE has been consistently below 1% of gross farm receipts. While this low support has been dominated by SPS-related market price support, most of the budgetary producer support has consistently been provided for livestock disease control. Most of the support for the sector, however, has consistently been in the form of provision of general services to the sector, notably through the agricultural knowledge and innovation system and related to the country’s biosecurity controls for pests and diseases.

References

[2] Anderson, K. et al. (2008), “Distortions to Agricultural Incentives in Australia and New Zealand”, Agricultural Distortions Working Paper, No. 09, World Bank, Washington, DC, https://openknowledge.worldbank.org/handle/10986/28184.

[1] Climate Change Commission (2023), 2023 Advice on the direction of policy for the Government’s second emissions reduction plan, https://www.climatecommission.govt.nz/public/Advice-to-govt-docs/ERP2/final-erp2/ERP2-Final-Advice-for-web.pdf.

[4] Harris, D. and A. Rae (2004), “Agricultural Policy Reform and Industry Adjustment in Australia and New Zealand”, Conference paper for International Agricultural Trade Research Consortium, Philadelphia, 6-7 June 2004, https://doi.org/10.22004/ag.econ.15762.

[3] MPI (2017), New Zealand Agriculture. A policy perspective, Ministry for Primary Industries, New Zealand, https://www.mpi.govt.nz/dmsdocument/27282/direct.

[5] Nayga, R. and A. Rae (1993), “New Zealand’s statutory marketing boards: Their history and some recent developments”, Journal of Food Distribution Research, Vol. 24, pp. 94-100, https://core.ac.uk/download/pdf/6988122.pdf.

[6] NZIER (2007), Productivity, profitability and industry good activities. Report to Dairy Insight, New Zealand Institute of Economic Research, https://nzier.org.nz/static/media/filer_public/11/cb/11cb415e-a97b-4ac9-b86c-a0b238de9b61/productivity_profitability_and_industry_good_activities_feb_2007.pdf.

Notes

← 1.  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.

← 2.  Risk goods are any items that may constitute, harbour, or contain an organism that may cause unwanted harm to natural or physical resources, or to human health in New Zealand (https://www.mpi.govt.nz/import/importing-into-nz-how-it-works/import-health-standards).

← 3.  Three more industry groups, which have not signed the deed, are represented by other signatories.

← 4.  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[6]).

← 5.  The one-on-one approach focuses on tangible support by working with Māori landowners to develop funding applications including advice to address individual problems, in contrast to the one-on-many approach offered by the MABx programme working with clusters of Māori landowners and agribusinesses.

← 6.  The 2050 bionic methane target is currently being reviewed by the Climate Change Commission as well as an independent ministerial advisory panel.

← 7.  In June 2024, the government has announced its intent to remove these agricultural and fertiliser reporting obligations and to ensure that agriculture would not enter the NZ ETS.

← 8.  Other funders of the GRA include the Climate Change, Agriculture and Food Security programme of the Consultative Group on International Agricultural Research (CGIAR-CCAFS) and the government of the Netherlands.

← 9.  A large capsule filled with the methane-inhibiting substance that is released over a longer period of time.

← 10.  Working holiday schemes allow young adults from other countries that participate in the programme to work and take holidays in New Zealand for between 6 and 36 months depending on the nationality.

← 11.  However, in June 2024 the new government, elected in 2023, has signalled its intent to introduce an amendment to the Act in 2025 that would overturn the ban.