The decline in dairy commodity prices should be a call to action for the Government to massively step up its investment in research and development (R&D), the Green Party said today.
The key dairy commodity, whole milk powder, plunged further, putting pressure on Fonterra to reduce its forecast milk pay out to farmers. Whole milk powder fell by 7.1 percent overnight following a 5 percent drop a fortnight ago. A pay out to farmers below $5 per kilo of milk solids could knock nearly $6 billion from the New Zealand economy.
“Falling dairy prices abroad are a call to action for our Government to massively ramp-up our investment in R&D and diversify our economy away from its dependence on one export commodity,” said Green Party Co-leader Dr Russel Norman.
“National’s ‘one product to one market’ economic strategy is failing and jobs will be at risk if we don’t diversify our export base.
“We can fast-track the transition of the New Zealand economy towards hi-tech, value-added exports by stepping up Government funding of R&D and by adding R&D tax credits to the mix.
“The Government can’t control the prices of exports, but it can control the economic direction of the country through creating incentives to innovate and diversify. Businesses, including farmers, will do the rest.”
New Zealand invests roughly half what most other developed countries do in R&D, and considerably less than other small advanced economies like Denmark, Finland, and Israel.
“National’s inertia on R&D puts our long-term prosperity at risk,” Dr Norman said.
“In real terms, National is planning on cutting research investment by 10 percent over the next three years and by 21 percent out to 2023/24.
“This is exactly the opposite direction our economy needs to be heading if we want to avoid building an economy that rises and falls with dairy commodity prices.”