In 1984 the newly elected Labour government devalued the New Zealand dollar. The immediate impact was positive for exporters because it led to increased returns in New Zealand dollars.
However, the next six years were traumatic for farmers. The dollar was floated in March 1985; high interest rates drew money into New Zealand, raised the dollar's value, and reduced returns to exporters, who were usually paid in US dollars. The government phased out most support for agriculture, including fertiliser subsidies, tax concessions, concessionary interest rates, and help controlling rabbits and noxious weeds. Crown agencies began to charge for services such as meat inspection, animal health inspections, quarantine and farm advisory services. By 1990 the farming sector was one of the more deregulated sectors in the economy.
Benefit of deregulation
Deregulation did reduce the costs farmers paid for imported materials and equipment, and from the mid-1990s it became clear that this had made some primary industries, especially the dairy industry, more internationally competitive.
Changing role of government agencies
As a consequence of deregulation, the Ministry of Agriculture and Fisheries became primarily concerned with agricultural policy and some regulatory functions. It divested itself of responsibility for fisheries in 1995, but took up forestry in 1998.
In the early 1990s the government split the research sections of the former Department of Scientific and Industrial Research (DSIR) and Department of Agriculture to form Crown research institutes, which had to seek private backing and compete for state funding. Two of the old producer boards disappeared – the Dairy Board was swallowed up in the creation of Fonterra in 2001, and the Wool Board was disestablished in 2004.
Growing international trade and tourism, which partly resulted from deregulation, further exposed New Zealand to the introduction of unwanted animal and plant pests. Environmentalists, and those who worked with animal diseases and quarantine, joined to protect New Zealand’s biosecurity. Biosecurity aimed to comprehensively exclude or manage risks posed by pests and diseases to the economy, environment, or humans. In 2004 the government created Biosecurity New Zealand within the Ministry of Agriculture and Forestry.
Resource Management Act
In 1991 the Resource Management Act became the country’s main environmental legislation. It determines how New Zealand’s natural resources should best be managed or protected. Regional councils became responsible for a range of tasks previously performed by ad hoc bodies such as catchment boards and rabbit boards.
Administering the act sometimes causes conflicts with developers (including farmers) and conservationists. Water, in particular, has become a contentious issue in many parts of the country. Farmers extracting irrigation water from rivers or underground aquifers are sometimes opposed by local communities concerned that these resources are overstretched.