Predicting end of cash is bananas
New Zealand lamb exports just hit a new record — $369 million worth in the month of May. If you don’t know why that is amazing perhaps you aren’t old enough to remember the early 1980s when sheep farming was widely accepted to be a “sunset” industry.
New Zealand’s economy rose to great heights on the export of wool and sheep meat — we used to say we lived off the sheep’s back.
At the peak there were 70 million sheep in this country, now they number just over 25 million.
So a record monthly sales figure, the first since 2009, even not inflation adjusted, is an amazing result.
Once the industry began to decline after the UK entered the European Union, everyone quickly assumed it was doomed.
Attempts to save sheep farming — like then Trade Minister Mike Moore’s plan to promote lamb burgers in the US — were a widely shared joke.
The smart money started to chase so called “sunrise” sectors such as angora goats, alpacas and kiwifruit.
The future proved kinder to some of these than others.
But one thing almost everyone could agree was, with the removal of government subsidies, sheep meat was a goner. Its current success is a testament to the New Zealand agriculture sector, the scientists, the marketers and, of course, the farmers who stuck at it.
The average Kiwi sheep is more than 25 per cent heavier than in the 1980s but is leaner and ready for the works sooner.
The productivity improvements are off the chart. The amount of meat per animal, the quality, its positioning as a premium product — all add up to a grossly underappreciated success story.
My favourite bit of the story is the reminder it provides of how wrong the doomsayers can be when they predict the demise of an industry or technology.
I’m biased, of course. The doomsayers have been writing off my industry since I was at journalism school more than 20 years ago. Yes, the internet is killing newspapers and it probably always will be.
My other bias is I’m a big fan of records — remember those old vinyl things killed off by CDs in the 1980s?
In 2017 they had their 12th straight year of growth and now account for 14 per cent of all physical album sales and 8.5 per cent of all album sales including streaming. I can assure you the profit margin on vinyl is enormous compared to streaming. Record sales are a bright spot in an otherwise deeply disrupted industry.
Bananas are another great example of overly enthusiastic doom saying. Their predicted extinction within the next five to 10 years was in the news recently, as it has been every couple of years since at least 2003.
Because of the lack of genetic diversity, bananas are vulnerable to disease. But the ability of the industry to a) find new ways to combat disease and b) develop new varieties if required is always underestimated in the extinction stories.
Nothing in the ever-decreasing price of bananas suggests a shortage — let alone an extinction — is on the horizon.
I find the capacity of humans to extrapolate worrying facts or trends to overly dramatic end points kind of reassuring.
Extinctions happen, behaviour changes and lovely old things fall out of use — but almost never as quickly or as definitively as predicted.
Video didn’t even kill the radio star.
When big, rapid change does occur it is seldom well forecast, either.
Imagine travelling back to the 1960s and predicting The Rolling Stones would outlast the Soviet Union.
Lately the most fashionable target for predicted extinction is money — at least the hard cash variety.
The rise of digital payment technologies like mobile banking and payWave, as well as the investment boom in digital
Despite the arrival of Eftpos more than 30 years ago the Reserve Bank has to print more cash than it ever did.
blockchain currencies, has some predicting we’re approaching a cashless society.
A survey out last week from accounting software company MYOB found 78 per cent of small to medium-sized businesses predicted the local economy will be cashless within 20 years and 36 per cent think it will be gone in a decade.
I hardly ever use real cash so I find it a tempting forecast to believe. As with all these trends, it might come true one day.
But despite the arrival of Eftpos more than 30 years ago the Reserve Bank has to print more cash than it ever did — the amount in circulation continues to grow by about 5 per cent a year.
The Reserve Bank notes New Zealand is not unique — this is a global trend.
The Reserve Bank also put out a report on the future of money last week. It took a look at the threat blockchain currencies pose to the financial system and considered whether New Zealand needed to issue its own.
The conclusion: not yet.
I don’t doubt the tech experts who tell me blockchain technology has the potential to change the world one day. But I doubt digital currency will be in common usage any time soon. In fact, I’d bet a bunch of bananas on it.