Food markets: trade risks and trends

Abstract

The aim of this report is to address the effects on past and future primary sector returns due to trade policy, changing consumer behaviour, market access and commodity prices. The importance of providing products that consumers demand has never been clearer in New Zealand (NZ), and this requires the creation of new production systems, or at least innovation within the existing systems. As consumers increasingly express these changes in demand, the signals to producers will also change. This paper aims to provide a background for these trends and the underlying factors which are driving them. The following section begins the report with a background to the NZ agricultural sector and the developments it has undergone in the last 50 years. International trade policy, with a particular emphasis on the policies of the European Union (EU) is then described, and the section concludes with an outline of the components of farm gate prices. Section 3 covers eco-labelling, and discusses and describes the role of eco-labels as environmental and policy tools, as well as marketing communications. The section continues with an analysis of the market for eco-labelled products, including organic products. The paper provides a background to the rationale of the economic research objective of the ARGOS Programme. The main focus of the economic objective in ARGOS is the relationship between agricultural markets and resource allocation in New Zealand. This includes a detailed understanding of the economics at farm level, industry level, as well as on a global trading level. The economic objective links with the overall rationale of the ARGOS Programme, to better understand how the environmental, social and economic aspects of different farming practices will help New Zealand achieve an enduring accommodation with the New Zealand environment and continue to satisfy the demands of markets and community stakeholders. Thus, ARGOS is very much geared towards working with industry to respond to market drivers, both in terms of long term trends and more immediate issues. This paper is the first in a series of reports providing information to stakeholders, to help them respond to market drivers.