Massey University vice-chancellor Steve Maharey has joined the admirers of “Get off the Grass”, the recently published book by physicists Shaun Hendy and the late Paul Callaghan that offers advices on how New Zealand can become a prosperous nation. But he cavils with the authors, too.
Hendy and Callaghan argue that New Zealand should move away from its land- and sea-based industries and promote a high-tech future in which NZ prospers by becoming a high-wage, high-value, high-productivity economy.
But getting off the grass would be a mistake, Maharey contends. The primary sector and the science that underpins it have an important role to play in shaping a more prosperous future.
In a recent book review in The Listener, economist Tim Hazledine quibbles, too. “Get off the Grass” is a classy, spirited, intelligent book, he says. But its central claims are wrong.
Maharey’s starting point is the Fonterra food safety scare. In the wake of it, he notes, (see here) a number of soul searching questions have been asked. Among them: are we too dependent on one sector of the economy?
Yes, he replies. Any economy that rests too heavily on one activity is vulnerable when something goes wrong.
Commentators have agreed that it is time to more aggressively diversify our economic base, although there seems to be little agreement on what this might mean in practice.
If they want a sensible suggestion they could do no better than turn to the books Wool to Weta by Paul Callaghan and Get off the Grass by Shaun Hendy. Callaghan and Hendy are physicists who worked together until Callaghan’s untimely death. Both are of the view that New Zealand needs to “get off the grass” and into “high-tech niches” to ensure we have the means to become a prosperous nation.
There is much that is attractive about the Callaghan/Hendy argument. Value not volume is what we should be aiming to export. High-tech offers a way forward.
They are right also to argue that New Zealanders should be aiming to be more prosperous. Not as individuals, but as a community. Only if we are prosperous, they argue, will it be practical to achieve everything from world class health care to a clean environment to an efficient transport system. A commodity producing nation is not going to be able to be prosperous in the 21st century. We need to change the economic formulae.
Maharey, however, recalls that in the 1980s, agriculture was painted as a sunset industry offering a limited future.
New Zealanders accepted the argument and within a very short period of time turned their back on anything with culture in the title. This changed in the early 2000s when it dawned on enough people that a mistake had been made and we have seen growing interest in the “rural” sector ever since. The price farmers receive for milk solids has reinforced the view that perhaps agriculture has a future after all. New Zealand is a food producing nation. We do it very well if only because we have many natural advantages arising from our climate and access to a lot of land and sea. Denying ourselves something that we do well is not a good idea.
Maharey does agree NZ must realise there are limits to how much it can achieve through its traditional land and sea industries.
Just producing more volume will not do. This is a recipe for environmental degradation and failure to maximise the benefits of our core economic strength. If we want to make real money we have to start exporting a lot of branded products to consumers who can afford to pay for them.
This is not what we do today. According to Statistics New Zealand, we produce around $18 billion of value from land and sea, add some processing on-shore, sell mostly commodities off-shore and watch others make very significant profits from what we produce because they add value.
It is this that has to stop. And we can make it stop if we apply the Callaghan/Hendy recipe for success to what we do best.
So let’s check out the formula.
At the end of “Get of the Grass”, the authors argue that if prosperity is our goal we need to:
• Take science seriously (meaning spend a lot more);
• Embrace the weird (meaning experiment with high-tech innovations);
• Connect, collaborate and open up;
• Learn to value knowledge as well as nature.
Trouble is, Maharey observes, the authors have applied this thinking to everything but agriculture.
Yet if we are really smart the formulae should be applied to agri- and aquaculture as well. And we have a head start because know how to produce the food in the first place.
This is not an argument for using knowledge to produce more. Rather, it is an argument for ensuring we are doing better right through the value chain. From molecule to mouth or whatever other saying suits.
Maharey argues NZ must add value through traceability, resource management, processing, packaging, distribution, retailing, marketing, branding, exporting, consuming, policy, finance, technology, computing, skills, management, research and development.
This means spending more on research, making use of high-tech innovations, working collaboratively and valuing what knowledge can do to increase the value of what nature allows us to produce.
If all of this was done in New Zealand, or under New Zealand control off-shore, jobs, businesses, wealth and reputation would grow. Prosperity would be an achievable goal.
None of this excludes the Callaghan/Hendy vision of a high-tech economy. In fact lifting the value of what we already do best could result in many high-tech innovations.
In short, rather than get off the grass we must make “grass smart”.
Maharey wants to see New Zealand become the food capital of the world because at every step of the value chain we are the standard setter.
Tim Hazledine is a professor of economics in the University of Auckland Business School.
In his review of “Off The Grass” (here) he challenges two of the authors’ claims:
* First, that the income gap between NZ and Australia and other economies is caused by a “knowledge gap” marked by our relatively low output of patented intellectual property, to be cured by more and better government spending on research and development; and
* R&D efforts are inappropriately biased towards our traditional land-based activities, especially agriculture, instead of focussing on developing IT and other advanced manufacturing and services activities.
In rebuttal, Hazledine contends:
You simply cannot build a well-grounded explanation of international income variations on differences in R&D or IP or patents. And the view of land-based activities as producing boring “commodities” is simplistic and misleading – there is a heck of a lot of “knowldge” built into the modern agricultural supply chain, for example.
Read and enjoy, Hazledine advises. But don’t take it all on.
“Get off the grass: kickstarting New Zealand’s innovation economy”, by Shaun Hendy and Paul Callaghan (AUP, $34.99).