In the New Zealand Herald last Saturday (28th August) Mark Lister of Craigs Investment Partners wrote a very thought-provoking piece about the potential of the Chinese market to our agricultural sector. China is expected to become a major importer of food and as incomes rise so does their demand for more dairy products and meat. He states that the main indicator to look out for is the growing Chinese middle class. GDP/Capita is approximately US$4,000 but there are 120 million who have income greater than US$70,000. This trend should increase the demand for higher-value food products such as dairy and meat. One of the reasons that China has had to start importing food is the fact that they only have one-third of the freshwater per capita of the global average and with a higher proportion of China’s water being required for residential consumption there will less available for agricultural purposes.
New Zealand water
Mark Lister says that Our rainfall averages 2m a year, more than double the world average of 0.8m. What is sometimes overlooked is that food production is water intensive. One litre of water is required to produce a calorie of food, and 2000 litres to 3000 litres is required to satisfy one person’s daily dietary needs.
You could argue that when New Zealand exports food, we are essentially exporting water.
As well as being relatively close to China, New Zealand has become a world leader in agricultural productivity and produces safe food in a stable and regulatory environment. Click here to view the full article from the Craig Investment Partners website.