“Very simply, we are losers and the EU and the US are the winners in that game of competitive devaluation,” he told a Co-operative Business seminar in Wellington last month.
His comparison of currency devaluation based on the first three months of 2009 and the same period this year showed by printing cash to revive business the European Union and US had effectively exported their unemployment.
“The domestic agriculture in those sectors is now on steroids,” he said. “It’s looking at export markets as a way of getting out of jail – they are expanding and doing a lot with it.”
Morrison, a former Fonterra head of strategy, said American dairying was an example.
While dairying in the US was once seen as an inward-looking, subsidised joke, exports had doubled and product value had tripled in the past five years.
“The West Coast of the US is now producing milk as competitively as we are and they’re targeting the same markets,” he said.
“And it’s not just about dairying – it’s the whole primary sector.”
Similarly, devaluation of the Euro in that period had allowed Dutch onion growers to expand their production 40%.
“They are taking onions to the world,” Morrison said.
“Now, they’ve always been good at onions, but they are squeezing NZ onions out of the rest of the world.”
Meanwhile, Australia’s potato industry was being killed by the Belgians, he said.
“What are the Belgians doing, exporting frozen potatoes to Australia?
“The fact is that under this currency regime they can do it and they can do it more competitively than the Australian industry can do. In fact, they’re displacing some of our crop.”
NZ was realising it would have to prove its position as a sustainable food security solution for affluent consumers, convincing shoppers buying NZ goods was a safe and responsible choice, he said.
Green credentials
Retailers like Walmart were pushing commodity traders hard to show their green credentials but NZ co-ops, owned and operated by suppliers, were in a strong position to respond.
However, it was important the push into new markets wasn’t just about ramping up production and layering it in clever marketing.
In dairying, for example, there was a fine balance between sustainable and destructive growth, Morrison said.
Rising land values as a result of higher dairy payouts usually encouraged more production, helping a co-operative expand and do more for shareholders.
“You get this great, virtuous circle, and going back decades that is what made the NZ dairy industry great.”
Morrison’s questioned whether NZ dairying could afford to continue this circle if it involved more cows on farms.
“It’s a question we may think we have an answer for, but we don’t have the same answer that some of our colleagues in the Green Party have.”
The primary sector had done terrific things in sustainability but co-op leaders would have to keep convincing shareholders that making progress in this field was an imperative, not an option.
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