Friday, 22 June 2012 15:00

NZ’s future made in China – experts

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DEMAND FROM China will still probably keep the primary sector buoyant despite world volatility. That’s the key message from a number of industry leaders and economists at last week’s National Fieldays

Economically the “world is a mess” and “Europe is in chaos” the Minister of Primary Industries David Carter told Rural News at the Fieldays.

But China was still looking strong enough to keep up demand for our primary products, Carter said, a theme reiterated by other keynote speakers at a Fieldays KPMG Breakfast.

Carter told Rural News that to say Europe was “in chaos” was not too strong, and the US was still subdued although he believed the latter would pull through. New Zealand also could be affected by the slowdown in China from 9% to 7% GDP growth per annum, but he said this growth was still “outstanding”.

As the Chinese people became wealthier their diets became more Westernised. They were now even drinking wine, and they were talking about New Zealand wine, he said. New Zealand products were held in high regard everywhere in China.

Fonterra chairman Henry van der Heyden told Rural News they were not seeing any change in demand from China at present and they still wanted “safe, high quality food”.

Asked about its growth strategy in China should TAF (trading among farmers) be rejected by the shareholders’ vote, van der Heyden said it would be “really hard executing strategy” without TAF.

At a presentation later in the day, ANZ rural economist Con Williams said the Europe crisis was bringing some decentralisation of growth and this could provide opportunities for New Zealand produce and for FTAs (free trade agreements) in Asia.

Although China was going from a “gallop to a canter” he said an example of continued growth was McDonalds talking about a new restaurant every day in China for the next five years.

“Every burger has a slice of cheese in it. Traditionally Asia Pacific didn’t eat a lot of cheese, now McDonalds and food service is expanding in that part of the world they are eating a lot more cheese.”

Butter and cheese to China jumped 20% in the last year. Williams says the 13% price increase at the last Global Dairy Trade auction was driven by China and the Middle East.

China now represented 20% of our lamb exports which was a huge shift over the last two years. This was only 10% of the value because China took cheaper cuts, but those cheaper cuts had tripled in value in the last couple of years. 

However Williams warned of ongoing volatility in commodity prices because the world situation was “very fluid”.

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