What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The study, released by the Agribusiness and Economics Research Unit (AERU) at Lincoln University, says there are some key actions to keep that contribution strong.
The Land and the Brand report, authored by Professor Caroline Saunders and Professor Paul Dalziel, aimed to measure the sector's economic impact and to analyse how the sector can (and must) continue to grow to support the wellbeing of New Zealanders.
Agri-food produce grown from the country's natural resources make up more than 70% of New Zealand's merchandise exports. This includes dairy products, meat and wool products, forestry and wood products, horticulture products and seafood.
The study found that in 2011/12, the growing and harvesting of products contributed 6% of GDP, or $12 billion, to the economy. Processing those products doubled the sector's value to $25 billion or 12% of GDP.
"These primary and processing activities themselves then draw on additional goods and services across the whole economy," explained Professor Saunders. "If you take these indirect effects into account, the total size of the agri-food sector was $40 billion in 2011/12. That's nearly $1 for every $5 spent in the economy that year."
The Land and the Brand study looked at not just the economic data but also the future of the sector, setting out a vision for future growth. Continued commercial success requires a combination of industry leadership, effective science, skilled people and cooperative investment – all working towards production of high value products from the agri-food sector, rather than treating our agri-food products as low-cost commodity items.
"The findings underscore how critical the industry is to our economic health, and the future opportunities for New Zealand as a high profile country-of-origin for quality food and beverages," said Professor Dalziel.
"We need to continue to move away from New Zealand being known as a low-cost provider of agri-food commodities, to being known as a high value provider of agri-food products.
· The Land and the Brand report will be discussed at a free public lecture at Lincoln University on 22 March (4.30pm, C2 in the Commerce Building).
