New Zealand’s primary industries buy most of their inputs from each other, because the various forms of pastoral and livestock farming, and some types of horticulture, are interrelated. They also buy business services like accounting, finance and banking, and there are significant inputs from the chemicals industry in the form of fertiliser.
Inputs of wages and equipment
New Zealand’s primary sector employs relatively few people, and paid just $4.2 billion in wages out of the total $70 billion national wage bill in 2008.
Economists call land ‘physical capital’. Much of the value added in agriculture is received by the owners of land in the form of a return (profit) on farmers’ labour and the equipment they use.
The logging and forestry industries, and the mining, oil and gas extraction industries, also have high levels of physical capital in the form of land and equipment.
Sheep and cattle were the first animals to be commercially farmed in New Zealand, and still make up the largest stocks farmed for the primary sector. In the 1960s farmers looked for new ways to make money from their land. New Zealand became the first country in the world to successfully farm deer on a large scale.
Changes to inputs
There were few changes to the inputs of the primary sector after the 1960s. The main change was an increase in imports. New Zealand agriculture has imported a relatively small amount of its inputs, but the proportion increased in the early 2000s as secondary, or manufacturing, industry reduced in size. Machinery and equipment for the primary sector were no longer produced locally and had to be imported. The proportion of machinery and equipment imported directly, instead of being made locally, grew from less than 25% to nearly 50% by 2008.
In the past the primary sector sold most of its output directly to overseas buyers as exports. After the 1960s this changed. In 2009 primary industries sold most of their output locally, to the primary processing industries of the secondary sector. Those industries then sold the processed primary products to overseas buyers. As a result, the amount New Zealand earned by exporting directly from the primary sector was reduced.