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How is the New Zealand economy going to look three years from now?

In January 2005, three years ago, I wrote a philosophy about how New Zealand agriculture might look ten years on. I thought I had taken a huge risk at the time in outlining what I foresaw.

In this article I will cover off initially what I saw as the issues then and then I will cover off how I see the issues coming in over the next three to five years.

What I predicted:

  • Big corporates and dynasties would own much of our farm land.
  • There would be more leasing and share farming and 50:50 sharemilking would be a thing of the past. That is very true. Leasing is becoming a huge part of all agriculture.
  • This is so much so that Fraser Farm Finance and Consulting has set up another business unit around it. We are completing rental assessments and lease negotiations are everywhere. We have even tagged the rent to the percentage of dairy cheque.
  • There will be more regulations and controls by government. You will need to complete a nutrient budget to apply fertiliser. A number of farms will be toxic from excess NPK.
  • Production will have increased marginally.
  • Farm land will be almost unprocurable for the average person as land values will have almost doubled.
  • More urban sprawl gobbling up our good land.
  • Gene marking of livestock and who will own the information?
  • Fonterra will no longer be the giant. There will be a number of other small companies and boutique dairy companies.
  • Milk will likely be supplied to these factories under contract and milk pricing schemes.
  • Farm staff will be largely transient foreign labour.
  • There will be more automation and robotic milking.
  • Computers will run our lives and our farms.
  • The United States could become a weak economy and no longer a world dominating power.
  • There could be queues of people trying to immigrate to New Zealand to get away from the northern hemisphere pressure.
  • We will be suing each other as they do in the United States.
  • Water will be expensive and a very scarce resource.
  • The gap between the 'haves' and 'haves not' will widen so much that the New Zealand that we know will vanish.
  • We will need security everywhere to protect our assets.
It is quite frightening really to realise that all those predictions that I made three years ago have actually come true.

Looking forward

Three to five years from now we will see the following:
  • There will be further expansion in all the issues that I have already identified but more importantly, the following things have occurred and will continue to evolve.
  • The availability of food in the world is now short to extremely short.
  • There will be wars over food.
  • Lack of food in some countries will destabilise their political system.
  • Fuel and oil will become short and we will be looking at economising everywhere.
  • Water will be precious.
  • The world credit crunch will continue to pay out and the world could go into recession as distinct from depression.
  • New Zealand will fare very well because we are net exporters of food.
  • The Chinese will be more involved in our country and will be buying up our assets.
  • New Zealand will see the further expansion between the rich and the poor.
  • New Zealand will have a more magnified two tier economy with those owning property and farmland being wealthy and those on wages and salaries in town not so wealthy.
  • A number of companies will go to the wall under the economic pressure.
In summary this is all very sobering stuff. We need to take a realistic look at ourselves and realise that it is going to be a difficult time. We need to protect our assets with family trusts and be prepared for change. The change that is coming will be so fast it is frightening.

I predicted then that the US economy was likely to collapse and that collapse would affect the rest of the world. I also said then that if it does happen New Zealand would probably be one of the best nations to weather the storm, and that's true too.

It's scary but we need to take a realistic view on it.

New Zealand's isolation, distance from the heavily populated continents and its ability to produce goods at a realistic price will be a huge advantage for us.


 

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