The agricultural sector in New Zealand : a joint farm-industrial perspective
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Authors
Date
1984-10
Type
Discussion Paper
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Fields of Research
Abstract
Two issues which have attracted the attention of economists and
policymakers in New Zealand in recent years are a decline in the size
of the farming sub sector relative to the New Zealand economy, and slow
rates of growth of real net output and labour productivity in New
Zealand when compared with rates achieved overseas.
Insight into the question of why the farming sub sector has
declined in size relative to the rest of the economy can be gained by
looking at the Agricultural Sector in New Zealand (consisting of
industries supplying inputs to farming, farming itself and the
processing, distributing and retailing of farm products). The relative
decline in the farming sub sector has reflected both a compositional
change within the Agricultural Sector, with the PDR sub sector becoming
relatively more important, and a decline in the relative size of the
Agricultural Sector itself.
In Sections 3 and 4 of this Discussion Paper some attempt is made
to explain why these changes have occurred. It is suggested that an
increase in the profitability of processing as opposed to producing
farm products, differences in the government assistance received and
differences in the nature and rate of technological change have been
responsible for the compositional changes noted within the Agricultural
Sector. A decline in the size of the Agricultural Sector relative to
the New Zealand economy is considered to be potentially due to
declining terms of trade for Agricultural Sector exports, increasing
protection overseas and again, to differing levels of government
assistance.
The Agricultural Sector is large in relation to the New Zealand
economy (e.g. producing 21 per cent of total real net output in
1976/77), hence, one can expect the growth performance of the
Agricultural Sector to be reflected in the growth performance of the
economy as a whole. It is found in Section 3 that the Agricultural
Sector has performed worse than the New Zealand economy in the two
periods 1959/60 to 1965/66 and 1965/66 to 1971/72, although the Sector
performed better than the New Zealand economy in the period 1971/72 to
1976/77.
It is also found that significant differences in the rates of
growth of real net output and labour productivity (and in changes over
time in these rates) have existed between the three sub sectors of the
Agricultural Sector. Although some work has been done on the
determinents of labour productivity in New Zealand, identifying the
factors responsible for the differences (and changes) noted requires
further research.
Attention is drawn to the possibility that rates of growth in the
Agricultural Sector may decline in the future. This is thought to be
likely given that rates of growth in the increasingly important PDR sub sector have declined over time. Further research into the
determinants of compositional change and growth is required however.
To complete the picture of the agricultural Sector, the three
sub sectors of the Agricultural Sector are disaggregated into component
industries and the relative size of these industries in terms of real
net output and employment is examined. In addition, estimated annual
rates of growth of real net output and labour productivity in these
industries are given.
A number of questions are raised in the study:
what factors have been responsible for the compositional change
which has occurred in the Agricultural Sector? What technological
changes have occurred, for example, and how have government policies
affected relative profitability?
what factors have had
Agricultural Sector relative
profitability, the relative
policies as they have affected
the most effect on the size of the
to the New Zealand economy relative
stability of profits, or government
each of these?
what factors have determined rates of growth of labour productivity
in the three sub sectors of the Agricultural Sector? Has technological
change been important or has an increasing capital intensity exerted a
greater effect?
It is proposed that these questions be addressed in future
research.