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There is Life after Subsidies

New Zealand’s experience shows that it is possible for farmers to move from a highly distorted regime through a massive adjustment process and prosper.

That’s the message Federated Farmers of New Zealand (Inc) President Tom Lambie is taking to the International Federation of Agricultural Producers’ (IFAP) Policy Conference in Pretoria today. This meeting is part of IFAP’s Annual Commodity Conference and Executive Meeting.

“The wide distortion of market signals almost destroyed the New Zealand economy and led to an exchange rate crisis in 1984,” said Mr Lambie.

“Labour, social, monetary and fiscal adjustments lagged behind agricultural adjustments and undermined the cost-competitiveness of New Zealand agriculture.

“Today New Zealand farmers are consumer focused and innovative, concentrating on higher a value, higher return production.

“The removal of subsidies has created an environmental benefit from the retirement of marginal land, and opened up opportunities for commercial recreation and tourism.

“New Zealand farmers reject any return to Government support as it undermines competitiveness and distorts market signals. New Zealand farmers have captured the benefit of being more in charge of their own destiny and less at the mercy of government price/subsidy fixing.

“There is no room for complacency. The Uruguay Round took some small steps to multilateral deregulation but huge steps are still required in many other countries to decouple subsidies from production levels in competing markets.”

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