It's The Margins That Matter
OPINION: It appears to be difficult for people who haven’t tried to run a business to understand the difference between assets and cash.
And when the US, Japan and Canada lower tariffs, New Zealand will be able to take advantage, he says.
Luxton attended the final Trans Pacific Partnership (TPP) talks in Atlanta as DairyNZ chairman; he retired from the role at its annual meeting last week.
He predicts the Japanese dairy industry will continue to decline with an aging farmer population, the Canadians will find that its management system cannot continue forever and the US will grow its exports.
"So these changes in the protagonists we have ultimately will work to NZ's advantage," he told Rural News.
He say the recent TPP deal signed in Atlanta was "disappointing" given that negotiations had started in a positive way five years ago. "That's the reality of the world we live in.
"NZ's dairy industry will now have increased incentive to look at new markets. So, it's not all negative; there are little incremental gains but over time they will be reassessed.
"China and Korea are keen to join and when it comes time for renegotiations there will be more gains for us."
Addressing the DairyNZ annual meeting, Primary Industry Minister Nathan Guy agreed the TPP deal was disappointing for the dairy industry.
NZ was up against three highly protected industries – Canada, the US and Japan, he says.
"Our officials pushed as hard as they could; this is a significant and small step and we hope opportunities for dairy will continue to grow," says Guy.
Small openings for dairy include getting some infant formula and Egmont cheese into the US; there is also an opportunity to export whole milk and skim milk powders into Mexico.
However, for other primary sectors, the TPP has resulted in solid gains.
Guy pointed to beef's access to the lucrative Japanese market. Beef exports to Japan currently attract 39% tariff; under TPP it will drop to 9%.
Guy says the deal opens NZ to 800 million consumers and one-third of the world economy.
He shrugged off calls by some for NZ to pull out. "Some are saying that we should step away; the reality is that we have tried to open access into the US for about 30 years. So, we needed to be there, working alongside the 11 other countries.
"We signed the China FTA and now it has grown well above everyone's expectations; indications are that the TPP will continue to grow and evolve."
The US is the world's number one market, Japan 3 and Mexico 11. These markets will present growing opportunities for our products, Guy says.
