Meat & Livestock News

Exploring Economic Threats to New Zealand Agriculture: A Look at Future Risks


  • The Productivity Commission examines the economic effects on New Zealand’s agriculture from possible trade restrictions and the advent of synthetic dairy products.
  • An oil crisis could initially hit GDP hardest, but job losses might be more severe from trade disputes and technological shifts in dairy production.
  • Adapting to these potential threats by finding new markets and innovations is crucial for the sector’s resilience.

A recent study by the Productivity Commission has thrown light on how New Zealand’s agricultural sector might fare under two speculative scenarios: a trade standoff involving certain Asian countries and the emergence of cost-effective synthetic dairy products. This inquiry also considered the ramifications of a significant oil price hike, emphasising that these scenarios are not predictions but exercises to gauge the economy’s shock preparedness.

The commission’s findings, unveiled this month, suggest that while an immediate oil price surge would severely dent the nation’s Gross Domestic Product (GDP), the hypothetical trade and technological shifts pose a more substantial threat to employment within the agricultural domain.

Specifically, the GDP could tumble by 7.5% in the first year post an oil shock, a stark contrast to the 1.5% dip anticipated from either a trade skirmish or the introduction of cheaper dairy alternatives. However, the economic downturn from a trade conflict or oil crisis is expected to be ephemeral. In contrast, the dairy sector’s technological upheaval could lead to enduring job losses unless the economy pivots towards new export avenues or products.

The spectre of synthetic dairy rivals looms large, with a potential short-term job loss tally reaching 111,000, dwarfing the figures from an oil crisis (33,000) and trade tensions (24,000). The dairy industry itself could witness up to 15,000 job cuts, with additional losses across dairy factories and related agricultural services.

Nonetheless, the commission posits a silver lining, suggesting a significant portion of the displaced workforce could transition to burgeoning sectors within agriculture, thereby mitigating some employment shocks.

The analysis also zeroes in on regional impacts, with Auckland, Waikato, and Wellington bracing for the brunt of job losses. Yet, it’s the West Coast and Waikato that could experience the most acute relative effects.

Despite the low probability of these scenarios materialising, they underscore the persistent challenges from technological innovation and global trade dynamics. For New Zealand’s agricultural sector, flexibility and innovation emerge as key tenets for weathering potential economic storms, ensuring its enduring vitality and economic contribution.