New Zealand farmers are some of the most innovative, hardest-working people around. They don’t need handouts to be successful, and neither should the rest of the world. New Zealand farmers are able to compete with subsidised farmers globally on price, quality, and environmental impact even after shipping our product halfway across the globe. The world can learn a lot from New Zealand farmers.
This extract from a European review of farm subsidy scrapping in New Zealand seems very pertinent for ongoing debate among international development aid interests about the future of strategic food support systems.
The review underlines how dependent Kiwi farmers had become on public handouts with more than 30% of a farmer’s income given directly from the taxpayer in the form of cash subsidies. It notes the problems associated with dependency saying that the government support payments significantly reduced the incentives to innovate, restructure and diversify as farms were allowed to survive on secure incomes even though they weren’t creating value.
A vital part of the story confirms that today, 40 years on, New Zealand farmers receive no subsidies yet continue to contribute significantly to GDP. Dairy earnings growing more than tenfold since the removal of subsidies is highlighted as just one example of New Zealand’s primary industries becoming more profitable, productive, and efficient following these changes.
Environmental benefits were boosted by the removal of fertiliser subsidies in New Zealand. This saw sheep and beef farmers halve its use from 1985 to 1986 yet production remained strong. Autonomy forced productivity improvements and encouraged farmers to carefully consider where and how to apply fertiliser the most effectively.
Farmers were incentivised by market forces to adapt and innovate. Some were forced to “recognise the stark reality” that they weren’t productively using their land. Despite widespread fears that they would go bankrupt, less than 1% of farmers left the industry.
The European review continues by stressing that four decades ago the removal of distortionary subsidies sparked a long-term wave of innovation and diversification across the sector. Land was changed to its most profitable use, often seeking out new and untapped niche markets.
Agricultural autonomy led to the number of sheep in New Zealand dropping by 53.6% yet production has remained similar. Efficiency and productivity are underlined as game changers with farmers focusing more on genetics, pasture quality, improvements in processing, and technology allowing output to increase despite reducing inputs.
Austria’s review of New Zealand’s success also offers other enlightening and inspiring insights, such as the fact that CO2 equivalent emissions for sheep and beef have been reduced by 30% without any need for legislative stringency. For countries looking to reduce agriculture’s impact on the environment, removing subsidies is seen by the Austrian Economics Centre as a good start.
