The world is getting the best of New Zealand, but at what cost to the local economy? This is the question raised by the recent revelation that New Zealand is exporting premium products while importing cheaper alternatives for local consumers. The case of butter is a prime example: Pak'nSave's decision to sell US butter at a lower price than local butter has sparked conversations about the possibility of imported goods being offered at a lower price than locally produced ones.
But it's not just butter. Trade data shows that cat and dog food, water with added flavouring, jams and marmalades, wine, confectionary, and even some beef and lamb cuts are all cheaper when imported. This raises a deeper question: if New Zealand is so good at making these things, why are we reliant on imports? It's not necessarily a good or bad thing, but it's a question that needs to be asked.
Economist Shamubeel Eaqub points out that New Zealand is exporting premium products to a premium market segment, while importing commodity goods for the mass market. This is a result of the difference in what we export versus what we consume. It's a spaghetti junction of food going out and food coming in to meet different needs.
Westpac chief economist Kelly Eckhold suggests that the lower prices of imported goods are driven by economies of scale. Large facilities in Australia or Asia are manufacturing these products at a lower cost, reflecting lower input costs and energy-intensive processes. Countries like China are competitive because their production costs are lower.
ANZ economist Matt Dilly adds that it's important to consider New Zealand's competitive advantage in various products. While we excel in dairy and other large products, we don't have a great competitive advantage in wheat, pork, vegetable oil, and other easily traded goods. Some products, like eggs, are naturally difficult to trade due to their fragility and perishability.
The question remains: is it really not possible to produce pet food for our pets in New Zealand, given the abundance of bobby calves? The fact that we're importing beef and lamb from Australia raises a deeper question about our reliance on imports. It's a complex issue that requires further analysis and a broader perspective.
In conclusion, the world is getting the best of New Zealand, but at what cost to the local economy? It's a question that needs to be asked and answered to ensure a sustainable and prosperous future for New Zealand.
