High dol­lar re­quires col­lab­o­ra­tive ac­tion

ANZ’s chief econ­o­mist calls for a rise in pro­duc­tiv­ity and co-op­er­a­tion, Ali Tocker re­ports.

South Waikato News - - RURAL DELIVERY -

All sec­tors of the econ­omy, in­clud­ing agribusi­ness, have to ad­just to the re­al­ity the New Zealand dol­lar will be high for at least the next two years, a lead­ing econ­o­mist says.

ANZ chief econ­o­mist Cameron Ba­grie said busi­ness, the unions, and cen­tral and lo­cal government need to jointly de­fine a strat­egy to lift com­pet­i­tive­ness and pro­duc­tiv­ity.

‘‘The bot­tom line is the New Zealand dol­lar is go­ing to re­main el­e­vated for an­other cou­ple of years. That’s what peo­ple need to get their heads around.

‘‘Peo­ple are talk­ing about in­ter­ven­ing, print­ing money and cut­ting in­ter­est rates – but that is not go­ing to do a thing. We need to iden­tify a real­is­tic so­lu­tion we can achieve rather than tak­ing pot shots at the Re­serve Bank.’’

The ‘‘bru­tal re­al­ity’’ was the New Zealand econ­omy had a mis­match of about 10 per cent be­tween lo­cal fun­da­men­tals and where the cur­rency resided.

To re­align the New Zealand cur­rency with lo­cal fun­da­men­tals, all sec­tors had to give and take.

‘‘The prob­lem we have at the moment is if you put those four groups in a round room, they will find four cor­ners to sit in.’’

Busi­nesses needed to be at the fore­front, iden­ti­fy­ing what they could do to lift com­pet­i­tive­ness, he said.

The unions then needed to say what they could do to lift pro­duc­tiv­ity, and government needed to ease the reg­u­la­tory bur­den, ‘‘par­tic­u­larly on the farm’’, Ba­grie said.

‘‘If we don’t get that com­pet­i­tive lift, we’re go­ing to see the trad­ing sec­tor slowly bleed­ing.’’

Rabobank’s flag­ship Agri­cul­ture in Fo­cus 2013 report, out this month, said com­pet­i­tive­ness and in­creas­ing pro­duc­tiv­ity was vi­tal for our agri­cul­ture sec­tor.

‘‘En­hanc­ing the in­ter­na­tional com­pet­i­tive­ness of New Zealand agribusi­ness is be­com­ing in­creas­ingly chal­leng­ing,’’ the report said.

‘‘Where pos­si­ble, th­ese chal­lenges must be tack­led in 2013 to mit­i­gate the im­pacts of the el­e­vated New Zealand dol­lar.

The main op­por­tu­ni­ties were pre­sented by the ‘‘press­ing global need to pro­vide food se­cu­rity’’ for a grow­ing mid­dle class, par­tic­u­larly in de­vel­op­ing Asian economies. New Zealand was well-placed to in­crease agri­cul­tural ex­ports to Asia, Rabobank said, due to ad­van­tages such as strong trade links.

‘‘How­ever, it is not the only coun­try eye­ing the op­por­tu­ni­ties pre­sented by the in­creas­ing food de­mand from a ris­ing mid­dle class in Asia. Main­tain­ing com­pet­i­tive­ness is vi­tal,’’ se­nior an­a­lyst Hay­ley Moyni­han said.

Other key is­sues fac­ing the agri­cul­tural sec­tor in 2013 iden­ti­fied by the Rabobank report in­clude the need to con­tinue to de­velop trade re­la­tion­ships and agree­ments, in­clud­ing free-trade agree­ments.

The report also says for­eign in­ter­est in our agri­cul­tural as­sets looks set to con­tinue in 2013, ‘‘with the coun­try’s rep­u­ta­tion for qual­ity food pro­duc­tion mak­ing it an at­trac­tive des­ti­na­tion for in­vestors’’.

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