Future of New Zealand agriculture lies in move away from commodities: study

Expanding New Zealand's economy requires the agriculture sector to shift its focus from producing food commodities to producing finished food products, said a study out Monday.

The agri-food sector contributed around one fifth of the country's gross domestic product (GDP), according to the study from Lincoln University, which has been published as plunging dairy prices push the country's pillar dairy industry into one of toughest seasons yet.

Agri-food produce grown from natural resources made up more than 70 percent of New Zealand's merchandise exports.

In the 2011-2012 season, the growing and harvesting of products contributed 6 percent of GDP, or 12 billion NZ dollars (8.12 billion U.S. dollars), to the economy, while processing those products doubled the sector's value to 12 percent of GDP.

"These primary and processing activities themselves then draw on additional goods and services across the whole economy," report co-author Professor Caroline Saunders said in a statement.

"If you take these indirect effects into account, the total size of the agri-food sector was 40 billion NZ dollars (27.07 billion U.S. dollars) in 2011-2012. That's nearly 1 NZ dollar (68 U.S. cents) for every 5 NZ dollars (3.38 U.S. dollars) spent in the economy that year."

The study found continued commercial success required a combination of industry leadership, effective science, skilled people and cooperative investment working towards production of high-value products, rather than low-cost commodity items.

"The findings underscore how critical the industry is to our economic health, and the future opportunities for New Zealand as a high profile country-of-origin for quality food and beverages," co-author Professor Paul Dalziel said in the statement. Endit