Guy Nathan: Annual Review Debate — In CommitteeText is incorporated into the Bound VolumeGuy Nathan: Annual Review Debate — In Committee[Sitting date: 03 May 2016. Volume:713;Page:10698. Text is incorporated into the Bound Volume.]Hon NATHAN GUY (Minister for Primary Industries): Can I thank Stuart Smith for his contribution. I would like to take a call this evening on the Appropriation (2014/15 Confirmation and Validation) Bill covering the primary sector. It is a huge part of the New Zealand economy. We have set an aspirational target out to $64 billion by 2025—Hon David Cunliffe: How’s that going for you? How’s that going?Hon NATHAN GUY: —and we know that is going to be challenging right now Mr Cunliffe with the dairy prices but importantly when we set that aspirational target it is about doubling the value of the primary sector. If Mr Cunliffe had been listening this afternoon he would have heard me talking in the House at question time about how the horticulture sector is going gangbusters.A new report out from Plant and Food Research shows it is worth about $4.3 billion of exports. Now Mr Cunliffe has gone quiet. Actually the Trans-Pacific Partnership (TPP) agreement which Mr Cunliffe—I am not sure where he sits personally but his party is all over the place on it. It cannot come out and support the Trans-Pacific Partnership agreement whereas in the past the two big political parties in the New Zealand Parliament have supported free trade and market access opportunities. So here we have Mr Cunliffe who is saying “How’s it going for our aspirational target of doubling the value of our primary sector exports?” when on that side of the Chamber the Labour Party cannot support what we want to do which is to open up new market access opportunities to 800 million consumers. The biggest benefactor of the Trans-Pacific Partnership is the primary sector so I think it is fantastic that a lot of the primary sector is actually doing very very well.What else is doing well? The red meat sector. We have just come back from a very successful trip with the Prime Minister into China where we have made some rapid progress on the chilled meat protocol. That is going to be fantastic. Instead of our meat products going into the chilled market frozen we have an opportunity to put them in the best restaurants in Shanghai Beijing and all the other cities in China to continue to add value. Also on that trip we made significant progress and further discussions have been had in terms of tourism and it is great that Amway has signalled plans to bring a whole lot of its professional staff down into Queenstown in the off-season shoulder peak. We have an opportunity with these air links coming down to New Zealand planes full of tourists to put some of this wonderful chilled meat product into the back of the planes. The seafood industry is also growing and so is the forestry sector so actually a big part of the primary sector is going pretty well.Importantly it is pretty tough right now for the dairy industry but a lot of the things that are happening in the dairy sector are beyond the Government’s control. I have just been to an OECD meeting up in Paris with a whole lot of other agriculture Ministers. When I talked to my colleagues in many of the bilateral meetings that I had they said that their farmers are feeling the strain as well with the global milk price. Actually the European farmers who are subsidised are finding it very very tough even with subsidies. The milk price is below the cost of production for European farmers just like it is for New Zealand farmers and we know the reasons for that. Of course the Russian ban means that European products that used to go into that market like butter and cheese are now going into other markets. We also know that the oil-producing countries have less buying power. We also know that the European farmers since their quotas have come off are producing more milk—up by about 2.2 percent in the last 12 months and forecast to grow by another 1 to 1.5 percent. That is a 157 billion-litre market so it is significant.The fundamentals of the dairy industry across the world with global population increasing—when you get back to the China market it is fascinating when you see that 250 million to 300 million people are now in the middle class in China and that is forecast to grow by another 150 million people in the next 10 years. When you think about China’s softening of its one-child policy where it is forecasting 38 babies to be born a minute from memory—that is about a New Plymouth a day. So they are significant—the opportunities in China. It was a very successful visit by the Prime Minister and the Minister of Trade up there leading a strong trade delegation.We also heard when we were up there from Jack Ma who is the founder of Alibaba. Alibaba is an online trading mechanism—goods in goods out; people buying and selling—and he is very focused on New Zealand products being showcased there. There are 407 million consumers in China who shop on Alibaba. The New Zealand Trade and Enterprise - Alibaba memorandum of understanding was signed when we were up there and this is going to be significant to showcase New Zealand products through Alibaba. As we know we produce a premium product. We know that we are world leading in our food safety standards and our overall systems. We know that our animals are predominantly farmed outdoors all year round hormone-free—all of those things. We have got an opportunity to add more value particularly in these markets like China.What I also want to talk about—and it was touched on a little bit earlier by Stuart Smith—is the focus that this Government has on doubling the value of our primary sector exports out to 2025. The important point here is the value—there is no way that we will be able to go and double the production. You think about our oceans. There is no way that we can go and catch sustainably double the amount of fish. The opportunity for us is to continue to add value. The opportunity for us is to have more water storage projects. We collect and store only 2 percent of the rain that falls in this country. The rest of it gets in the local streams and rivers and heads out to sea. We have got a huge opportunity to store more water in this country and to use it reliably. Right now you just look at the Tararua Ranges—the average rain up there is about 5 metres a year. Look at Martinborough; from memory it is about 700 mm a year. You could almost throw a stone if you were a good cricket player from the Tararuas and hit Martinborough. So on one end we have got huge amounts of water but not at the right place at the right time.That is why this Government is very focused on water storage projects. I know the Greens hate it when I talk about water storage projects being good for the environment. They are good for the environment because you take the pressure off groundwater aquifers. That is hugely important. Look at Central Plains Water recharging into Lake Ellesmere/Te Waihora. We know that we have got an opportunity to store more water in this country and we know that it is good for the social fabric of society we know it is good for economic growth and we know fundamentally it is good for the environment.What we have also done as a Government is we are investing more in biosecurity and I am very proud of the fact that we are investing more. I am very proud of the fact that we have got more dog detector teams now. Actually for those interested any school pupil in New Zealand can get involved and name one of the beagle puppies right now. I think from memory it is the “G” litter so they are out there talking to every school in the country and it is a wonderful opportunity for schoolkids to get on board. These beagle puppies and others that we have now got trained are an important part of the overall multilayered biosecurity system that we have in New Zealand. We are investing more in terms of dogs. We are investing more in terms of people.We have brought in the border levy which now means that passengers—and about 55 percent of passengers who travel are foreigners—need to pay for our border services. As we have an increase in passenger numbers which we are experiencing at about 3.5 to 4 percent a year that means that the cash will follow and we can do more in terms of those very important biosecurity services particularly at our airports and for cruise liners.Also we are out there consulting right now on animal welfare regulations. This is hugely important for us as an exporting nation. It is worth about $23 billion and I know that about 66 percent of New Zealand families own a pet so it is important that we strengthen our animal welfare regulations. It is fundamental to us as an exporting country and I know that New Zealanders care about their animals. So in summary it is a great opportunity to be able to talk about the primary sector which is a big part of the New Zealand economy. Actually fundamentally the primary sector is doing pretty well and we are doing what we can to support our dairy farmers through a pretty tough patch.