Story: Economic history

Page 10. External diversification after 1966

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End of British market

From the early 1930s it was clear that Britain could not take unlimited quantities of New Zealand’s pastoral exports. During and after the war, Britain subsidised its own farmers. By the early 1960s it was expected to join what is now the European Union, which was much more protectionist towards agriculture. Facing the loss of unrestricted access to its traditional market, New Zealand intensified the search for alternatives.

New markets

The collapse of the wool price in 1966 and the general weakening of dairy and meat prices accelerated diversification of markets, adding strong price incentives to the public policy objectives. New Zealand went through the strongest export diversification of any OECD economy between 1965 and 1980 by product and destination (the OECD is a group of 30 developed economies).

In 2008 more was exported in value to (in order) Australia, the United States, Japan, and China than to Britain. Exports to all other European countries were more than twice those to the British market. In terms of imports Britain was 12th, behind Australia, China, the United States, Japan, Singapore, Germany, Malaysia, Qatar, South Korea, Thailand and Indonesia.

New trading partner

 

In 2008 Qatar, which most New Zealanders have not visited and know little about, sent New Zealand $1,523 million of trade; the United Kingdom sent about two-thirds of that – $1,084 million. Almost all the Qatar imports were oil. Qatar is an oil-rich Arab emirate with under two million people and has one of the highest per capita gross domestic products (GDP) in the world.

 

New products

Up to the 1960s pastoral products such as meat, butter, cheese and wool were over 90% of merchandise exports. In 2008 the single biggest generator of foreign exchange was tourism, and the entire service sector generated a quarter of total export revenue. Merchandise exports were led by dairy products and meat, while returns from base metals, fishing, forestry, horticulture, and general manufacturing all exceeded wool.

There was diversification within traditional categories. By the early 2000s meat exports were more likely to be cuts rather than carcasses. Exports of milk powders exceeded the combined value of the traditional butter and cheese. Pharmaceuticals derived from milk fractions and offal were another form of diversification. Some fine wool was exported as garments.

By the early 2000s there were about 5 million dairy cows and 4 million beef cattle. Following the extension of irrigation at the end of the 20th century, dairying moved south, and in 2007 Canterbury had the second largest dairy herd, as well as the largest sheep flock.

‘Think Big’

In the late 1970s and early 1980s ‘Think Big’ industrial plants using electricity surpluses and Taranaki gas were established, with the aim of reducing New Zealand’s dependence on hydrocarbon imports, and exporting some energy-intensive products. However the initiatives did not prove as successful as hoped, partly because of the fall in world oil prices in the mid-1980s.

How to cite this page:

Brian Easton, 'Economic history - External diversification after 1966', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/economic-history/page-10 (accessed 21 August 2017)

Story by Brian Easton, published 11 Mar 2010