Retro vision won’t make regions great again
Dr Bryce Edwards suggests that the coalition Government is going to have to position itself on the "future side" of the regional economy fault line.
Many people outside the United States are shaking their heads as the Trump administration seeks to turn the clock back in order to "make America great again". It’s a transparent attempt to return US society to the 1950s, when the US ruled the world with coal and steel production and the population was overwhelmingly European, including migrants.
New Zealanders might need to pause to think before we get too smug. The major debates in this country around our economy – especially the regional economies based on primary industries – also appear to be backward looking.
Unfortunately, many of our leaders’ first instincts are, like Trump, to pander to nostalgia. However, for this and future governments, a great leap forward into new technologies like renewable energy and plant-based alternatives to both meat and milk is required.
In the weekend, West Coasters protested in large numbers demanding the Government open up the conservation estate to coal mining. No one would argue with the desire for the West Coast communities for employment and economic activity, and it’s understandable that these communities look to what has sustained them in the past – particularly coal and gold mining.
They also feel, understandably, that by having huge tracts of their region locked out of development for the sake of preserving these unique areas, they are paying an unfair price on behalf of the rest of us.
Disinvestment in fossil fuel
In Taranaki, the very gradual winding-down of oil and gas exploration over the next few decades has provoked cries of economic disaster. Shane Te Pou has written about the fears and frustrations of a friend whose job depends on oil and gas but who now feels the only option is a move to Auckland. The choices for regional economies have to be better than fossil fuels or bust.
Whether even that stark choice will be available for too much longer is highly debateable. Globally there has been over US$6 trillion of disinvestment in fossil fuel in the past five years and Forbes reports that even meeting the modest targets of the Paris Climate Agreement will see trillions more steer away from higher cost fossil fuel exploitation.
At the same time, massive public and private investment is going into alternative energy sources as major industrial nations, particularly in Europe and China, realise that the environmental cost of coal and other fossil fuels is simply too great. New Zealand has exploited renewable hydro to capacity and land-based wind generation is getting to the same point, but there remains huge potential for wave, tidal and solar generation to replace fossil fuels in the economy.
Sadly the political and economic leadership to develop this potential is far behind that of most other nations. The will to nurture and develop the infrastructure and markets to support them is missing in action. A good example is the way the current Government appears to be siding with power companies against the “threat” from consumers who locally generate their own renewable power.
For the West Coast in particular the answer seems obvious. Tourism is now New Zealand’s number one overseas income earner and is already a huge part of the West Coast economy. Certainly, tourism brings its own economic, social and environmental issues, but if those can be managed, there is theoretically no limit to the economic potential.
Conservation land kept as unique pristine native forest is likely to have far greater long-term value than digging it up for a one-off fossil fuel hit, to both the West Coast and New Zealand. Of course that would require some long term planning, commitment and political leadership, beyond the next election campaign bus tour through “heartland” New Zealand promising to make [insert your region’s name here] great again.
While there is much angst and debate about the future of fossil fuel industries, a more imminent threat could well have much greater impact across the whole country. The meat and dairy sectors, under pressure over the environmental, ethical and health costs of their industries, face a major challenge as plant-based alternatives come to the market.
A plant-based future?
As with alternative energy sources, there is now huge investment and research into plant-based alternatives to both meat and milk. The scoffing of producers and marketers at how early versions of plant-based meat substitutes will never replace “real meat” are the beginning of a rearguard defensive strategy.
Scorn and derision at plant-based food substitution will quickly turning to anger, dismay and despair as both the health, environmental and, ultimately, economic advantages become impossible to resist.
Rosie Bosworth has an excellent article in Noted that looks at the big names and big money picking plant based protein as the way of the future – see: Is fake meat really a threat to New Zealand’s economy?
As with fossil fuels, she points out that investment will flow directly from animal-based agriculture according to a major report: “Plant-based Profits: Investment Risks & Opportunities In Sustainable Food Systems” , is backed by a coalition of 57 large and institutional global investors with more than US$2.4 trillion in assets under management – nearly 13 times larger than the size of NZ’s 2016 GDP. It says global livestock production presents “significant reputational and market risks for companies over-reliant on animal proteins to drive revenue”.
The demand for animal-based meat and milk products will undoubtedly continue, perhaps indefinitely. Longer term it is inevitable they will become expensive luxury items.
New Zealand producers could fulfil that market but, while glossy brochures and puff pieces in the media highlight high-end, value-added products, the reality is the vast majority of our exports are bulk, basic commodity containers full of milk powder, butter and frozen meat.
While the world has changed dramatically in the last 100 years, most of what we send to the world has not. Bosworth points out that "more than 60 percent of this country’s primary-sector export revenue – about $23 billion – is dependent on low-value animal-derived commodity products (dairy solids, hamburger meat and wool)".
And, if our political and industry leaders can get their fingers out of their ears we are actually well placed to lead the world according to The Herald’s Jamie Morton - see: NZ plant-based future foods could be ‘hero’ of dinner plate. Our food science is world leading and can continue to be if we focus on what the world wants and needs in the future, rather than what we have been comfortable selling them in the past.
The focus on traditional production and quantity over quality actually threatens what will likely be one of the few enduring advantages we could have – a “clean green” brand. The resistance from many in the farming sector (and their allies in local and central government) for so many years about the degradation of our rivers, streams and lakes does not bode well for future challenges.
We don’t need to look outside of home to see a bleak future in action. As synthetic fibres have improved in quality and durability they have taken a heavy toll on the wool industry in New Zealand, once as much a mainstay of our economy as meat and dairy. In 1960 wool made up over 70 percent of sheep farm income – by 2010 it was only 16 percent. The 2017 wool export was the lowest in volume for one hundred years.
The situation is so grim currently that many farmers claim they can barely recover the cost of harvesting. To survive some farmers have adapted to focus on specific very high value markets where wool has not yet been replaced, such as fine merino wool. The emphasis here is on quality and unique properties of the wool that is produced to maintain and grow the market share.
Similarly, gas, oil, coal, dairy and meat sectors will continue to be a huge part of our economic life for many years to come, but massive change in the markets are clearly on the way and it will be a case of adapt or die (probably a bit of both in most cases). It wasn’t Air New Zealand daring to serve a plant-based burger that we should have been alarmed by.
The sight of industry, Government and opposition leaders decrying them as heretics, wilfully ignoring the blindingly obvious was the truly frightening spectacle.
- Dr Bryce Edwards is a Research Associate in the Institute of Governance and Policy Studies, and this article was originally published on the Newsroom website