Farm­ing’s im­por­tance re­flected in sta­tis­tics

South Waikato News - - RURAL DELIVERY -

Like blood to the body, agri­cul­ture is crit­i­cal to the New Zealand econ­omy. The sec­tor makes eco­nomic con­tri­bu­tions in di­rect and in­di­rect ways, al­though mea­sure­ment of such can be a tricky busi­ness.

The lat­est na­tional ac­counts show agri­cul­ture GDP grow­ing 7.5 per cent through the year to March 2012.

And yet all that showed up in the na­tional ac­counts for agri­cul­ture GDP growth in the year to March was not much more than a bounce back from the pre­vi­ous year’s 5.6 per cent de­cline.

To be clear, we do not know if agri­cul­ture GDP has been un­der­stated or not over the past year. Our mus­ings es­sen­tially stem from the re­verse sit­u­a­tion that oc­curred dur­ing the 2007-2008 drought.

As re­cently as March this year, the of­fi­cial agri­cul­ture GDP fig­ures re­flected a down­turn, but not a par­tic­u­larly harsh one for such a wide­spread event. For ex­am­ple, in March this year agri­cul­ture GDP was con­sid­ered to have fallen by 4.5 per cent be­tween March 2007 and March 2008.

Sta­tis­tics New Zealand has since com­pleted a ma­jor over­haul of the na­tional ac­counts. Suf­fice it to say, the his­tory of New Zealand agri­cul­ture has been sub­stan­tially rewrit­ten, es­pe­cially for the late 2000s drought pe­riod.

For ex­am­ple, ac­cord­ing to the new data, agri­cul­ture GDP be­tween March 2007 and March 2008 now shows an 18.6 per cent de­cline.

We sus­pect the bulk of these ma­jor re­vi­sions re­sulted from the in­clu­sion of new an­nual bench­marks to 2009, from 2007 pre­vi­ously.

This raises the ques­tion of where agri­cul­ture GDP growth might sit for the 2011-2012 sea­son when the an­nual bench­marks for that year are even­tu­ally in­cluded over the com­ing years.

If in­deed agri­cul­ture is a lot stronger than cur­rently shown in the na­tional sta­tis­tics, New Zealand as a whole could prove more re­silient or stronger than the cur­rent na­tional fig­ures would have you be­lieve.

The GDP re­vi­sions will flow through to of­fi­cial pro­duc­tiv­ity cal­cu­la­tions.

As the pro­duc­tiv­ity fig­ures stand, they show agri­cul­ture has been a stand­out per­former.

Mul­ti­fac­tor pro­duc­tiv­ity in agri­cul­ture ex­panded more than 170 per cent be­tween 1978 and 2010, or 3.2 per cent per an­num on av­er­age. Mul­ti­fac­tor pro­duc­tiv­ity growth es­sen­tially rep­re­sents the change in real GDP that can­not be ac­counted for by changes in mea­sures of labour and cap­i­tal in­puts.

A re­cent re­port by the Min­istry for Pri­mary In­dus­tries (MPI) ti­tled Pas­toral In­put Trends in New Zealand: A Snap­shot high­lighted some chal­lenges of mea­sur­ing such things as pro­duc­tiv­ity, in­ten­si­fi­ca­tion and re­source use in the dairy, beef and lamb in­dus­tries. While a num­ber of datasets were ex­am­ined in that study and it il­lus­trated pro­duc­tiv­ity growth, MPI fully ac­knowl­edged that ‘‘data re­lat­ing to the area of in­ter­est were lim­ited’’. Fair enough. But this pa­per along with the na­tional GDP re­vi­sions just goes to show how dif­fi­cult it is to mea­sure what has oc­curred over­all in such an im­por­tant sec­tor of the econ­omy. This is true even a few years af­ter the fact let alone for those try­ing to un­der­stand it in real time.

BNZ Ru­ral Wrap

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