Revolution or evolution? New Zealand agriculture since 1984

Abstract

Agriculture was the primary target of moves to deregulate the New Zealand economy in 1984. Within twelve-months all production subsidies had been removed, including those for fertiliser and other inputs, as well as funding for drought relief, floods and other natural weather disasters. Whereas at the start of 1984, subsidies were estimated to represent as much as 33% of farm income, by 2003 this had fallen to less than 2% with most of this spent on agricultural research. The anticipated shift of thousands of people off the land did not appear to occur, and by conventional measures at least New Zealand agriculture in 2003 is a major success story. At the core of the changes imposed on agriculture was a commitment to remove all state or government distortions from the system and to fully expose the agricultural sector to market forces. This included wide-ranging and fundamental changes in the broad institutional context within which agriculture must operate. All this was achieved at great social cost and with a significant impact on the environment. In many respects New Zealand agriculture is now very different from that in 1984. Some sectors, such as dairying, have grown and become increasingly industrialised. On the other hand, sheep farming, particularly for wool has struggled to maintain its market share, while other enterprises have emerged as significant sources of income, including horticulture, viticulture and fruit. It is argued here that the trends evident in New Zealand agriculture since 1984 pre-existed the reform period and that the apparent success of the reforms evident at a national scale have not addressed or removed the fundamental problems which face New Zealand agriculture, just as they do modern agricultural systems elsewhere.