NZ's agritech exports enjoy growth but still underperform peers
New Zealand's agritechnology exports, worth $1.2 billion annually, appear to be on a roll despite historically underperforming when compared to key competitors.
New Zealand Trade and Enterprise commissioned a Coriolis report analysing the size, value and future potential of the agritech sector in order to better understand export opportunities. Although New Zealand has a long history in agriculture, which contributes more than half of the country's total exports, its performance in agritech has previously been poorly defined.
The sector includes a diverse range of products and services from animal and seed genetics to fertiliser and agri-chemicals, fencing supplies, farm tools, machinery and systems, and pumping and irrigation industries.
The report found agritech exports have grown at a 4 percent compound annual growth rate (CAGR) over the past five years from 2008 to 2013. While the growth rate is good compared to its peers, it is still underperforming relative to other advanced agricultural nations in terms of size. For example, Israel, a tiny desert state the size of the West Coast, exports approximately 10 times as much agritech as New Zealand. The report said the peer comparison indicated potential upside for New Zealand of five to 10 times the current export levels.
New Zealand's best performers include animal health products worth $311 million in annual exports and fencing supplies and equipment worth $307 million. Animal genetics is growing at an annual CAGR of 32 percent to $48 million per annum following recent live cow exports to China, while plant genetics are growing at 10 percent CAGR to $233 million, including grass seeds and vegetables for sowing.
Economic Development Minister Steven Joyce said New Zealand's agritech systems provide an opportunity to deliver much more for New Zealand.
"Australia and the United States are our top agritech export destinations but the research reveals that exports to Canada, China, South Korea and Saudi Arabia are showing double digit growth," he said. "Europe, China and South America stand out as the biggest areas of potential growth."
The removal of the dairy quota system opens up new opportunities across Europe while the need to increase farm efficiencies in South America drives export growth from New Zealand, the report said.
New Zealand's free trade agreement with China, plus its sizeable demand for meat and dairy products, provides Kiwi agritech firms with an opportunity to be the "go-to" provider in that market.
According to the report, New Zealand's agritech sector has a robust product mix with most areas showing strong growth potential.