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Wed Feb 11, 2009
The Marlborough Regional Development Trust (MRDT) is keenly
awaiting the opportunity to engage with the minister of economic
development, Gerry Brownlee and his associates, in order to
understand the new government priorities for regional economic
development.
Graham Lindsay, MDRT executive chair, wants the opportunity
to discuss its recently completed Progress Marlborough economic
development strategy, which not only looks ahead to 2016.
It also includes impacts - and recommendation.
MDRT’s advisers predict winegrowing production will
grow by up to 100% by 2016, as recent vine plantings reach
maturity. The emerging and developing sectors of engineering,
natural products and information technology are projected
to exceed 50% growth.
Tourism’s growth of between 20 to 50% is predicted
to be similar to aquaculture/seafood, aviation and forestry
for the period to 2016.
Pastoral, other horticulture and fishing are projected to
grow ten to 20% over the decade.
The economic downturn will affect activity and employment
in the short term but in the longer term, over the coming
decade, sector growth trends are anticipated to be re-established,
predicts MRDT adviser Nelson based economist John Cook.
MRDT outlines the anticipated impact on the region’s
key economic drivers from the global credit crunch and looming
economic downturn.
Winegrowing Sector
• A halt to expansion in the hectarage under grapes,
but replacement of older vines is expected to proceed (20
year vine life)
• Reduction in vineyard contract services – demand
for posts, wires, laid irrigation, etc
• Possible reduction in grape prices as harvest volumes
increase from good sets and recent plantings (7000 hectares)
coming on stream
• Consolidation of vineyard holdings as smaller operators
quit the industry
• Increased storage capacity will be for grape juice
(tanks) and bottling (aging of aromatics and reds)
• An increase in the workforce will be required to harvest
and prune the already planted vineyard hectarage that will
be coming on stream.
Aquaculture
• Little increase in marine farm production anticipated
• Improved productivity at processing stage
• Move to ready-to-eat consumer products enhancing value
and margins.
Forestry
• Increased plantation forest planting from Emission
Trading Scheme policy, particularly on pastoral holdings.
(This outcome is dependent on the review of the evolving ETS
policy)
• Small-scale saw millers under threat
Construction
• Residential construction likely to reduce substantially
• The focus on affordable housing will intensify
• Public and private commercial construction anticipated
to be maintained with on-going work in the pipeline in the
short term
• Some cancellations in private sector investment projects
anticipated
• Public sector construction projects anticipated to
be increased as a result of counter-cyclical investment spending
by government
Engineering
• Continued activity in agricultural and commercial
construction should provide an ongoing base of work.
• Expansion in wine volumes from increased harvests
from 7,000 hectares of vines coming on stream will maintain
demand for storage tank capacity
• Establishing an Engineering Technologies Cluster group
could provide a useful base for tendering for work outside
the region (aquaculture, irrigation, etc)
Retail
• Downturn in car sales, appliances and big ticket items,
and discretionary spending on hospitality/recreation
Finance and Investment
• Credit conditions to become more stringent
• Key industries could be affected by credit crunch
• Winemakers likely to experience difficulty in maintaining
high debt/equity ratios.
External constraints
External constraints that are impacting the regional economy
are changing as the New Zealand dollar depreciates. Factors
such as the drop in global demand and reduced prices for the
region’s exports may become a greater constrain.
External constraints such as the exchange rate, shipping
costs, climate change and oil, minerals and commodity pricing
that have had an impact on the region’s economic development
are abating.
Among those external factors that have had a significant
impact on the region’s export and domestic market businesses,
the most influential is currency fluctuation says John Cook.
New Zealand’s exchange rate with its trading partners
is cyclical and subject to substantial fluctuation during
those cycles. The majority of the Seafood sector production
is denominated in US$. Pipfruit exports principally to Europe
and the USA, had been hard hit with the appreciation of the
NZ$ against these currencies. Wine exports, which are able
to be differentiated by brand and district and maintain a
premium market price, have been less affected by currency
appreciation than commodity products.
MRDT’s report outlines feedback from industry in what
they consider is the likely/potential increase in production.
Forecasting future returns to a sector were, in the current
situation, at best, fraught, Graham Lindsay and John Cook
say.
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