29 Oct 2010

Processed foods key to NZ earnings rise - report

6:35 pm on 29 October 2010

Tapping into the rapidly-growing infant milk formula market is identified in a Government-commissioned as one of the ways New Zealand can boost the value of its food exports.

The report, commissioned by the Economic Development Ministry, says New Zealand will need to double the value of its exports if it's to reach the Government's goal of lifting per capita GDP by more than 60% in 15 years, to catch up with Australia.

It says a key to that is processing more farm products into added value foods before they're exported.

The report, from Coriolis Research, focuses on Australia as New Zealand's biggest export market, and analyses the potential for increasing returns from processed foods such as infant formula.

Economic Development Minister Gerry Brownlee says a kilo of infant formula is worth ten times the value of a kilo of milk powder, so it's obvious which product New Zealand should be selling.

The report says New Zealand earned more than $750 million from milk formula exports last year - three quarters of the value of wine exports - and suggests there's the potential for New Zealand to export five times as much infant formula as it does now.

Chinese interests seeking to buy the Crafar farms want to make infant formula here for export to China. The Synlait-Chinese joint venture in Canterbury will also be processing infant formula for that market.

The report says chocolate and confectionary alone should be boosted by five times their current value, to nearly $700 million a year.

Mr Brownlee says exporters stand to gain more money from processed products than raw commodities.