Feeding the world: the role of NZ food exports

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Feeding the world the role of NZ food exports
Caroline Saunders Professor Trade and the
Environment Director AERU Commerce Division
Lincoln University
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Introduction

• NZ in the world
• Trade and NZ
• Modelling impacts of trade policy on NZ
• Modelling impacts of changing world food prices
• US and EU policy and food production
• NZ in the world

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NZ in the world

• NZ production is small compared to the world
• NZ built on exports to UK in meat and milk and
  diversified to supply other markets
• Concentrates upon high value exports
• NZ fall in ranking in OECD due to reliance on
  agricultural exports
• Main chance of staying a developed country is
  high value sustainable agricultural exports

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share of world production
11 in 1970s
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PRODUCTION minus CONSUMPTION - CEREALS
Quantity in tonnes
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PRODUCTION minus CONSUMPTION - MEAT
Quantity in tonnes
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PRODUCTION minus CONSUMPTION - MILK
Quantity in tonnes
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Change in NZ land use

• If all NZ land class 1, 2 and 3 was converted
• to wheat we would only still be supplying 1.3
  per cent of world supply (assuming 8 t/ha
  compared to 2.5 t/ha in US)
• (generally only land class 1 and 2 thought
  suitable for arable)

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How Important is Trade to NZ?

• Exports account for a third of our annual income
• Compared to 8 in the US 30 in the UK
• Land-based products account for 70 of this trade
• Most of this trade is with developed countries
• Trade access important for NZ and value of
  exports

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Lincoln Trade and Environment Model

• Non-spatial, partial equilibrium international
  trade model
• Based on SWOPSIM, later VORSIM (Roningen)
• Synthetic model parameters from literature
• modelling comprised
• 18 countries or regions (incl. ROW)
• 22 commodities (three for oilseed complex, five
  for dairy industry, four livestock, plus corn)

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Impact of additional US biofuel policy

• Prices in US rise by around 10
• Production in US increases by between 10
• and 16
• Exports from US fall by between 25 and 50
• Around 24 million tonnes of maize
• Increase in world corn prices by 9 15

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Rises in Food prices

• Supply side
• Weather factors (drought in Australia)
• Decreasing stock levels (cereals)
• Rise in energy prices and inputs
• Demand side
• Growth in India and China
• Demand for biofuels
• Growth in urban populations
• Policy factors

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Description of scenarios

• Drought in Australia, Canada, USA and EU using
  2004/5 2006/7 data
• Growth on Brazil, India and China using per cap
  predicted growth and Income E of D for livestock
  products
• Rise in biofuel production in EU, USA, Canada,
  Brazil, China and India
• Combination of all the above

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Results changes in world prices
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Growth on Brazil, India and China
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Biofuel production
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Combination
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Discussion price impacts

• Weather had main impacts in 2006 2007 on wheat,
  maize and oilseeds prices
• Growth in livestock demand in Brazil, India and
  China impacts on beef and veal, sheepmeat and
  butter prices
• Biofuels predicted to have greatest impact on
  maize with a 75 rise in prices in 2006 and 108
  in 2007

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Trade policy impacts on Australia and NZ
increases in producer returns
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US Conservation Policy

• Conservation reserve programme takes land out of
  production 36.7 million hectares in 2007
• Estimates range from 4 million to 18 million
  hectares which could be used
• 4 million hectares 10 million tonnes of wheat
• 18 million hectares 45 million tonnes of wheat

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EU CAP Policy

• EU policy stressing environmental concerns and de
  intensification
• Large areas of land under agri-environmental
  programmes 27 of EU area
• Single Farm Payments requires cross compliance
  for payment
• Milk Production quota

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Impact of EU agri environmental policy

• Scenarios
• 1. Base scenario
• 2. EU reduces stocking rate and N fertiliser
  application
• NZ systems remain the same
• 3. NZ and EU both reduce stocking rate and N
  fertiliser application
• These results are compared with the base scenario
  in 2010

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Raw Milk Producer Returns ( change from base in
2010)
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NZ in the world

• NZ cannot feed the world
• NZ should concentrate upon high value niche
  market exports and maintain first world status
• This helps to fund Research and Development into
  agriculture and associated systems
• Helps fund aid
• Use international influence to reduce distortions
  to trade which affect developing countries

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Sustainability Market Access issues

• Carbon emissions and Food miles
• Lower meat and dairy consumption
• Local food and seasonal consumption
• Traceability
• Health and nutrition
• Ethical food - fair trade and organic!
• Biodiversity and wildlife
• Water quality and quantity

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NZ Brand

• NZ levered off low population and natural
  scenery- However, this brand is vulnerable
• Other countries are catching up on market access.
  Chile,
• China and Uruguay has meat accepted by GlobalGAP
  
• market access audit system
• GlobalGAP incorporating gradually other
  countries schemes such as Thai Gap - 80,000
  producers in 80 countries
• Need to increase our sustainability credentials
  to maintain market access and premium prices
• Productivity increase which increase intensity
  will not feed the world nor enhance
  sustianability