Speech to Fonterra UHT plant opening in Waitoa
It’s great to be here today at the official opening of Fonterra’s new UHT milk processing plant.
This is a $126 million project which has been completed in just 12 months, and has created 100 new local jobs.
It’s a real vote of confidence in New Zealand’s dairy industry, which continues to be a major contributor to our economy. Dairy is our biggest single export earner.
Our farmers produce a quality product that ends up in over 100 countries around the world. The primary sector is the backbone of our economy that generates around $4 million an hour. This helps the Government get back into surplus and invest in things like schools, hospitals and roads.
As a Government we have an ambitious goal of doubling the value of our primary sector exports to $64b by 2025.
We won’t get there with business as usual. I want to talk briefly about how we’ll get there.
There are many opportunities in front of us.
Investing in Research and Development projects like the Primary Growth Partnership which sees industry partner with Government on 16 programmes right through the value chain.
A good example is Pioneering Precision which is focussed on the most efficient application of fertiliser. Clearview Innovations is finding new ways to tackle nitrogen and phosphorous run-off.
Opening up new markets and reducing tariffs. That's why I'm excited about TPP that is estimated to be worth $ billions to our primary industries.
Korea is all but done and the Gulf States and Latin America also have much promise. Next week I will be leading a trade mission to Sri Lanka and India which also has potential.
This week I saw first-hand Central Plains irrigation scheme under construction. This $400 m project is massive and will see 60,000 hectares under irrigation. The Waikato has seen some big droughts and we know as a Government that water storage projects can really boost exports and maintain summer river flows, which is good for the environment.
We need to keep strengthening our food safety, biosecurity and animal welfare standards so we can continue to be the best in the world. Our consumers are demanding more of us and we are responding.
Lifting the performance of iwi-owned land will result in our regions having more jobs and being more prosperous. There are many examples of high performing Maori farms and these are certainly role models to be followed.
The Government’s focus on infrastructure investment through Roads of National significance, regional roading improvements and rural broadband will help connect our products and services more efficiently to our consumers.
As well as opportunities, we have a number of challenges in front of us.
The Global market will always have fluctuations and this will impact on the milk price. Farmers are extremely resilient and they know the average milk solid price is $5.25 kgMS over the last 15 years.
Moving products up the value chain is another challenge.
Fonterra’s co-investment with Chinese company Beingmate is a good example of this, and another vote of confidence in the dairy industry. This combined with new processing capacity in the Waikato and in Southland is well over $1b of new investment.
Industry needs to keep building their 'social licence' credentials to prove to Kiwis and international consumers we farm sustainably. As part of that we need to keep improving water quality by adhering to national standards for freshwater management.
Fonterra have fenced over 22500km of waterways and I want to acknowledge and thank them for this commitment.
Reforming the RMA will provide more certainty and timeliness in important resource allocation decisions.
Continuing to attract the brightest employees into the primary sector will be vital to reach our export double target. We need more food scientists, robotic engineers and environmental planners as agriculture becomes more sophisticated.
The Fonterra led PGP programme “Transforming the Dairy Value Chain” aims to achieve this through building capability and knowledge with potential benefits of $2.7 billion per annum by 2025.
The mid to long term outlook for dairy prices is positive. Recently I’ve had a Briefing to the Incoming Minister, prepared by MPI. It will be publicly released soon, but it’s worth quoting the second paragraph in full:
“At a high level, New Zealand’s primary producers face a bright future. By the year 2025, some forecasts predict global food demand may increase by 40-45 percent, driven by a rising global population and the emerging middle classes of Asia.
So congratulations again to Fonterra on this fantastic new plant and to everyone involved in its construction.