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.
Faculty of Agribusiness and Commerce lecturer, Dr Eldrede Kahiya, says while the Trans Pacific Partnership (TPP) has dominated media recently, an equally significant trade-related development has gone largely unnoticed.
In August, New Zealand became part of the Global Procurement Agreement (GPA). Situated within the framework of the World Trade Organisation, the GPA is designed to make it easier to compete for foreign government contracts.
He says this opens up a $2.65 trillion market for New Zealand exporters willing, and able, to exploit the opportunities it presents.
However, New Zealand exporters really need to lift their game and neutralise disadvantages they face, he says, such as the sometimes difficult process involved with accessing international markets, our smaller scale and lesser market presence, higher costs, and an innate favouritism towards domestic suppliers.
"Selling to an overseas government is not unlike playing on an unpredictable wicket which favours the home team," he says.
"Given that New Zealand is aiming to grow exports to 40 per cent of the GDP by 2025, the importance of the GPA to the Business Growth Agenda cannot be overemphasised."
The GPA presents opportunities in areas of public spending such as defence, health, education, customs and border control, aviation, transportation infrastructure, postal services, and information technology.
Kahiya says tendering and evaluation processes will be much more transparent to bidders, giving New Zealand exporters a fair chance to win foreign government business, however, success depends fundamentally on understanding and adjusting to the unique challenges of selling to foreign governments.
