Annex One: Historical Performance Sector-by-Sector
This Annex presents information on the growth performance of various sub-sectors within the primary sector. The information presented is not exhaustive; instead, it attempts to outline key developments and trends pertinent to an understanding of the primary sector’s performance as a whole.
Red Meat and Wool
Early History
The New Zealand climate is favourable for beef and sheep farming. In most areas New Zealand has reliable rainfall and moderate temperatures – neither very hot in the summer nor very cold in the winter – which are conducive to near all-year-round pasture growth. This provides New Zealand with a comparative advantage over many (but not all) of its competitors, who need to rely on feed such as grain, and who need to provide shelter for stock during winter months.
Another appeal of beef and sheep farming as an industry to generate foreign exchange after European settlement was that its products were relatively easy to export: before the advent of refrigeration in 1882, the distance between New Zealand and its markets required trade in non-perishables. Wool and hides were ideal, with considerable demand for wool in Britain as an industrial raw material.
With the development of refrigeration, trade in meat emerged as a profitable enterprise. Exports were expanded to carcasses, and a processing industry quickly emerged, with freezing works established close to ports. Farmers selectively bred stock to develop sheep suitable for both meat and wool, and particularly to tap into the lucrative United Kingdom lamb market. Further improvements were made to transport, as early refrigeration techniques were improved upon and made more reliable and faster ships were introduced.
The United Kingdom bought all that New Zealand farmers could produce, through bulk purchase arrangements first used during the First World War and subsequently on the open market. Partly to combat the chaotic state of post-war commodity markets and the market power beginning to be exerted by United Kingdom buyers, the New Zealand Meat Producers’ Board (the Meat Board) was established in 1922 and given power to control the export of meat. The Meat Board was also involved with various other market interventions and regulatory functions such as managing the slaughter of stock for meat intended for export and maintaining a minimum price for meat. Export marketing itself was left to the private sector. The Wool Board was established in 1945 and given responsibility for wool promotion and generic research and development to counter the developing threat of synthetic fibres.
New Zealand farmers were helped by the British Empire Economic Conference held in Ottawa in 1932. Amongst other things the conference agreed to set high tariffs for non-British Empire countries, which particularly benefited New Zealand red meat exporters.
Through until the 1950s, farmers were able to capture around 80% of the wholesale price of lamb (Taylor, 1982, referred to in Bollard and Pickford, 1997). Given the profits to be made through exporting carcasses, there were incentives to simply expand production and little reason to seek to add value through further processing the carcass into premium cuts.
Expansion of red meat and wool production continued through into the middle of the twentieth century. The hill country was developed and initial soil fertility was raised through burn-offs and subsequently through increasing application of fertiliser, with cheap phosphate being sourced from Nauru, and, in a key technological breakthrough, applied through aerial topdressing following World War II. Mechanisation was introduced (e.g. tractors and developments in processing), improvements were made in animal husbandry and economies of scale were exploited.
Attempts at farming in the pumice lands of the central North Island had been frustrated by stock developing a wasting disease known as “bush sickness”. Scientists discovered in 1937 that the disease was due to cobalt deficiency in the soil, which was easily addressed through fertiliser application. This breakthrough opened up significant tracts of land to farming.
