NZ rural sector holds its own

The New Zealand Herald last Saturday had a useful article on the importance of the rural sector to the growth of the economy. Brian Gaynor talked of the confidence of the rural environment compared to that of their urban counterparts who are struggling in a very competitive environment. New Zealand’s exports have increased from $7.9bn in 1983 to $46.7 bn today whilst the contribution of meat, dairy and wool have decreased from 53.8% to 37.5%. Although this gives the impression that the rural economy is not holding its own one has to remember that:

Meat, dairy and wool’s contribution has increased from 34.5% to 37.5% during the last 10 years.
If logs, oil, fruit, wine, fish, casein and Tiwai Point’s aluminium are added then exports from the non-urban sector accounts for around 60% of total exports.

The rural sector has a trade surplus with the rest of the world but the urban sector runs a substantial deficit. The increase is residential house prices has been 8 fold but the problem here is that in borrowing to buy a house they are accessing overseas banks. This means that we need to export more and more rural products just to pay the interest on these overseas loans.

2 thoughts on “NZ rural sector holds its own

  1. Simon

    Brian Gaynor clearly has the experience and street credibility to be able to reliably sniff out an early but significant trend. I happen to agree wholehartedly and am very pleased to have this sort of confirmation. The future is very bright for New Zealand soft commodities and the real potential to add value and export to the very large emerging markets on our door step is seriously there.

    Reply

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