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Insights into the Dairy Industry: New Zealand meeting the Future Global Milk Demands

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Authors: Srimal Fernando and Pooja Singh

Global demand for milk products is predicted to grow at an average rate of over 3.5% in the next few years. Today ,New Zealand is one of the largest dairy producing countries in the world accounting for more than NZ$13.4billion export revenue (Dairy New Zealand, 2017 ).This industry in the South Pacific Island nation has been able to sustain its top position in exporting dairy products and reflecting its dominance in the national economy. The dairy sector proved the largest employment among the traditional industries next only to tourism and fisheries, this sector provides employment to more than 47,000 New Zealanders (Dairy New Zealand,2017).

The Island nation’s farm activity is doing exceptionally good with on-farm innovation helping the dairy farmers to work smarter in becoming a top-notch entrepreneur with increased profitability. Over the years, New Zealand initiated a number of policies to facilitate the diversification of the dairy sector operation into new areas. The dairy sector of this Island country improved significantly as a result of measures initiated by the past and present governments from 1990sin order to support12,000 dairy farmers in stabilizing their earnings. Hence, this nation has come up with innovative programmes such as transforming the dairy value chain through development of rural professional capabilities and systems.

Going back to history to the dairy industry of the South Pacific Island, the countrymen referred milk as “white gold” where the records reveals that in 1875 the first processing factory was established. Seven years later, the refrigerated shipment of butter was exported from Dunedin. One of New Zealand’s oldest dairy producing factories, the Fonterra group a brand name attached to the Anchor milk powder products is one of the largest milk producers associated with 90% of nation’s milk requirement. Hence, Synlait and Tatua are the other two important companies with the dairy industry. In this context, the production of milk powder processing goes through several paces from the dairy farms to the manufacturing sites. In fact, spray drying of liquid milk in to milk powder and packaging the highly advanced scientific technology according to the global standards are some of the tedious processes involved in this sector. In New Zealand, the land has been important factor of production for the dairies. Waikato, Bay of plenty, Manawatu, Hawkes bay and Otagoare some of the well-known dairy farming areas. Out of these milk producing regions, Waikato contributes over 33% to the overall dairy sector. Considering the potential of the Island’s dairy industry, formal institutions like National Dairy Board, New Zealand Trade Ministry have provided immense support to uplift the nation’s farmers in collaboration with the dairy farming cooperatives societies.

There has been a rise in the demand of high quality dairy products from the emerging economies like Asia where people are showing interest in buying best quality dairy products such as cheese, yogurt, butter, powdered and liquid milk products. Over the last thirty years, New Zealand’s dairy industry has undergone rapid transition increasing the milking cow capacity from 2.7 million to 4.4 million cows. It is estimated that the production of liquefied milk quadrupled and reached to 18 billion liters annually in the recent years. Therefore, there has been a risein the demand for high quality dairy products from the emerging Asian economies such as China, United Arab Emirates, Japan and Sri Lanka. Hence, the South Pacific Island nation’s dairy products to China has quadrupled from USD1.4 billion to USD4.1billion, (Dairy New Zealand,2017). Surprisingly, Sri Lanka being a middle income nation from South Asia is the fifth largest importer of milk powder from New Zealand. Trade in Island nation’s milk products is a primary income generator creating employment for the social well-being of this South Pacific Island nation. In the recent years, the North American nation of Canada has opened 3% of the dairy sector for global competition under Trans Pacific Trading (TPT) partnership agreement. However, Canada has ended their dairy quota with New Zealand that makes it difficult for New Zealand’s dairy farmers to access this market.

Dairy specialists worldwide argue that New Zealand’s dairy production capacities will be doubled in the next 50 years to meet up the global dairy production demands. It is clear that the South Pacific Island nation has been in the forefront for the last 150 years in the dairy industry. There is no doubt that the global dairy demands will be met by New Zealanders in the next coming years due to its pragmatic, progressive dairy farming technologies.

*Pooja Singh, a scholar of Masters in Diplomacy, Law, Business at Jindal School of International Affairs, India.

Research scholar at Jindal School of International Affairs, India and an editor of Diplomatic Society for South Africa

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Economy

The Bust: WeWork’s diminishing stature of the perfect “start-up”

Sisir Devkota

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Until recently, the globally acclaimed startup, WeWork was transforming the future of office spaces and staff hiring processes. Truly, it was transformational in the sense that the startup was providing a vital service point to many multinationals around the world. However, Mark Dixon, the cofounder of IWG, another workspace solutions company, was not getting the trick. Here was IWG, a decently profitable startup with consistent annual growth, still unable to compete with the superstar of the industry. Soon after SoftBank poured cash into the company, WeWork was valued for more than $40 bn. Then, it was making headlines for overwhelm; now, WeWork is in a state of awe. As market reports suggest, WeWork even lacks the cash to fire its existing employees.

As Adam Neumann, the chastened cofounder of the dwindling company once proclaimed, co-working was the future and that employees would prove to become more productive and efficient. In his own words, different cultures and organizational goals would inspire the entire floor. Much as the concept is about renting an office space, Mr. Neumann deliberately did not elaborate on the nuisances of dealing with office neighbors, as seen from a tenant’s perspective. The idea would have charmed many organizations; it was a great opportunity to redeem operating costs or dealing with unwarranted office culture problems. Or, as many renting executives thought, WeWork would define the ground rules, aptly in accordance with global standards. For many, it was also an experiment for the future. Also, nobody could take away the fact of losing varied insights from “not” participating in what at first seemed like a once in a time revolution.

SoftBank, a Japanese conglomerate investing fund is writing the most important plot in the story. Strangely, both the rise and fall of WeWork has been catalyzed by SoftBank. However, the fact that WeWork was blessed by an investing fund is not strange, or surprising. Amongst sovereign funders, there is competition to stay one foot ahead of another. The Europeans have long stressed on how very few startups from their region go onto becoming a global giant. SoftBank’s associations elsewhere is a testimony to its deliberate strategy of staying ahead in the future. Notwithstanding the fact that the Japanese investors would have loved the idea of co-working space more than others. In early 2017, WeWork’s market value, shot over $40 bn, even though the company was registering profits below what Mr. Dixon’s firm were accounting to. There was a strange gossip in the market around why other investors were not jumping to what the SoftBank deemed as highly profitable. For many like Mr. Dixon and other investors, answers were soon to be found. If it could only be timely, Japanese angels would have anticipated why Mr. Neumann would sell his rights of the name, “We” in WeWork. It was a five million dollar (plus) exit for the charismatic man, whose venture was taken over by those who thought of multiplying their fortunes. SoftBank will be sorry for its decision to trust the hierarchy in Mr. Neumann’s leadership. Nevertheless, post takeover, Mr. Dixon will not be contemplating any further on why it has decided to appoint two CEO’s. Nor will there be any sort of contemplation on why the new appointees have secured their severance package before paying out dues.

As it stands, IWG is not doing a bad business in comparison to WeWork’s downfall. The American start-up was destined for success from its early years. Co-working will still be a grand idea in our times but filthy abundance in a short period of time has brought a winning project to a standstill. There will be other co-working competitors for IWG, but it will learn from the mistakes of a competitor who was bigger than the entire industry. If anything, Mr. Dixon will be smelling opportunities ahead.

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Alibaba on Platform Economy

Naseem Javed

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Alibaba on national mobilization of entrepreneurialism on platform economy: today, Alibaba sold $38 Billion within 24 hours: Around the world, currently, there are 100 nations with less than $38 Billion dollars in annual GDP. Imagine if this single company performed at the same rate for next 365 days, it would equal to annual GDP of Japan, Germany, India, France, UK and Canada all combined.  Bravo Alibaba, well done, the world in shock is now fondling in own toolboxes. 

Are Nations Awake: Are there enough reasons to explore how national mobilization of entrepreneurialism on platform economies and how it will uplift local grassroots prosperity?  Are there enough trade-groups, Chambers of Commerce, Trade Associations with enough skills to play in these AI centric digitally advanced and globally friendly market-places? Outside a miniscule number most seriously out-dated trade-groups are in rapid transformation so they too would become shiny butterflies for the new global-age.

Old days of old ways are now new days of new ways.

Salvaging of exportability lost during last decade: Nation by nation, the grassroots medium-size economy was basically, ignored, abandoned and rejected, killing exportable goods and services. So long the trade groups around the 200 nations stuck in their old fashioned comfort zones spanning a century, outside handful organizations most nations are in deep trouble. Observe how nations with riots have the most disorganized, disconnected trade-groups, not due the lack of funding but due to lack of poor leadership with little or no global age skills.

Uplifting working-citizenry after a lost decade on skills: So long the national leadership assumes that MBA degrees are the saviors of their next economy and so long the corporations feels comfortable that all their management is being well trained on YouTube, no additional proof of this fallacy is necessary other than decimated economies and chaos on the streets.

Understanding The Third Economy: During the first economy; rules of engagement and rules of balancing the books were established, the second economy; where fancy jargon was invented to cook the books to balance with political agenda and now the upcoming third economy where real numbers will balance the real books with real columns all managed by artificial intelligence and block-chain delivering honest picture instantly to all and all the times.

Alibaba proves the direct benefits of a Third Economy; such prosperity can only assured by respecting the balancing of pennies and cents with mobilizing millions of abandoned small and medium enterprises and using free technologies as starting base.  Such deployments are only possible when leadership is skillfully equipped to understand global-age and able to serve the special transformation demands, by firing the first person for incompetence for saying they have no new funding to change and firing the next person for disorganization for saying they are too busy and have no time to change.

Public sector around the world had almost all these resources available to deploy since last decade. Nation by nation, outside the top business sectors rest of the small medium enterprise players systematically abandoned and crushed were replaced by too big to fail nonsensical hype. Now national races in the age of digital platform economy will demand clarification on their internal conflicts of “digital-divide and mental-divide” and explain dysfunctional imbalanced spending on trade expansion without “national mobilization of entrepreneurialism” …it is also a fact that majority nations need massive in-depth-training at all top leadership levels to understand the new language of the new days.

It’s time to choose; either build world-class export promotion agencies, vertical trade groups to foster trade by global-age showcasing on platform economies and bring home some grassroots prosperity or allow restless citizenry and rise of populism.  It time to balance, that where public sectors mostly all over the world failed on such progressive affairs, technology has now blossomed as salvage operation with dramatic tools and deployment options. Is your national leadership ready now?  Not to sidetrack, this is not an exclusive IT issues; this is global age expansion and entrepreneurial mobilization issues. Deeper studies and debates are essential.

The world is changing fast is no longer just a cliché, now growing into a warning

National Transformation: Futurism of ‘creating local grassroots economy’ demands two distinct national mobilizations.  Firstly, creating skilled citizenry capable to swing with global-age demands and secondly, creating massive digitization of midsize economy to enable global-speed-performance to match trading with 100-200 nations. Mostly not new funding dependent but execution starved. Nations with such mastery will thrive and lead; generational transformation at magical speed with full deployments of platform economy is a prerequisite. Sounds rocket science, it is, but very doable and easy.

Rules of National Mobilization of Entrepreneurialism: To deploy such blueprints, launch a nationwide business-uplifting lifelong learning agenda for the entire export promotion bodies, Chambers, trade associations and also the entire small-medium-exporters base. Review this process meticulously every 100 days. Under right situation, the export promotion of the nation can easily quadruple within a year. It is necessary to keep asking what is blocking this and who is stopping this?

How do you mobilize public and private sector leadership after a lost decade on global-age expansion? With some 100 elections in 2019 alone and million promises on podiums the realities are hidden in creating real grassroots prosperity, now pending Presidential Elections of 2020 USA the mother of all elections will provide massive debates amongst calls of Impeachments, while December 12th Election of UK amongst calls of Brexit and European Union with loud and restless citizenry, a new world is unfolding. The public is informed, and slowly realizing what’s working and what’s not… deep silence at the public sector is not good, a growing sign of lack of skills. Urgent debates needed as 2020 starts with some dramatic shifts of markets, ideas and visions. We are now in the age of national mobilization of entrepreneurialism and platform economies.

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China’s Descending Rise

Todd Royal

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China is in a sustained economic slowdown. This is causing malignant unease among the political and economic leadership of the communist party in Beijing that governs China. Investing in China will be different, because:

“The country’s first sustained economic slowdown in a generation. China’s economic conditions have steadily worsened since the 2008 financial crisis. The country’s growth rate has fallen by half and is likely to plunge further in the years ahead, as debt, foreign protectionism, resource depletion, and rapid aging take their toll.”

Chinese social structures are under duress over their aging society. Formerly in the 1990s-early 2000s: “China had the greatest demographic dividend in history, with eight working-age adults for every citizen aged 65 or older.”

Once societies age, marital numbers decrease, and overall productivity plunges. China’s explosion of older citizens versus working-age will bring unique circumstances for global consumers. Factual evidence of slower productivity is evident throughout China, and will have to be considered for any financial or economic decision for decades ahead. The Chinese economic miracle bursting is largely due to aging demographics.

No one in western or eastern economic analysis circles or think tanks realistically saw this coming former President’s Deng Xiaoping opening of China. This was termed, “Socialism with Chinese characteristics (and/or) ‘socialist market economy,’” still ongoing. This slowdown will have deep ramifications for the global investment community, liberal order in place for over seventy-five years, and Chinese financial wealth that now spans the globe.

When countries age, and use reproductive rights to control populations, they become more assertive abroad, and repressive to its citizenry; this describes China’s social, political and economic philosophies that govern over a billion people. Since its one-child policy was enacted, Chinese economic productivity will plummet, “because it will lose 200 million workers and young consumers and gain 300 million seniors in the course of three decades.”

Suppressive economies have difficulty innovating, producing enough goods domestically, and integrating into world economic mechanisms that intends to distribute wealth globally. But this isn’t the first time these warnings have been made publicly.

Former Premier, Wen Jiabao gave a prescient declaration in March 2007 during the long march of economic progress when Mr. Jiabao had misgivings about China’s growth model by stating, “(Chinese growth had become) ‘unsteady, unbalanced, uncoordinated and unsustainable.” Recent numbers indicated China’s official GDP “has dropped from 15 percent to six percent – the slowest rate in 30 years.”

Expansionary Chinese growth hasn’t experience this level of downturn since the end of the Mao into post-Mao era. What this does for the Belt and Road Initiative that is paving the way for investments into Central Asia up to the Arctic Circle is uncertain? Deep investment difficulties could witness China stopping the flow of billions of infrastructure projects into countries and continents such as Africa desperate for growth.

Public figures from the Chinese government generally have the economy growing at six percent, but many analysts and economists peg the number(s) at “roughly half the official figure.” China’s GDP has consisted of bad debt that typical financial institutions and western governments will transfer from the state to public sector and ultimately costs passed onto consumers. For China’s wealth to increase when so much domestic wealth is spent on infrastructure projects to increase GDP these official numbers need context.

China has bridges, and cities full of empty office and apartment buildings, unused malls, and idle airports that do not increase economic productivity, and if that isn’t the case then infrastructure increasing economic measurements will decrease. Unproductive growth factors officially known are: “20 percent of homes are vacant, and ‘excess capacity’ in major industries tops 30 percent.” According to official Chinese estimates the government misallocated $6 trillion on “ineffective investment between 2009-14.” Debt now exceeds 300 percent of GDP.

What’s discovered is the amount of China’s GDP growth “has resulted from government’s pumping capital into the economy.” Private investments have trouble overtaking government stimulus spending, and Foreign Affairs ascertains “China’s economy may not be growing at all.”

Chinese economic growth – post-Mao – saw the country’s self-sufficiency in agriculture, energy, and water almost complete by the mid-2000s. Through economic malfeasance, population control, and resource decimation, “water has become scarce, and the country is importing more food and energy than any other nation.” Environmental degradation is destroying the basic necessities for every day survival.

This is where the world community and financial resources of east and west can meet needs, and grow interconnected, global economies. Energy is one of the biggest areas that China will engulf global energy supplies

The U.S. Energy Information Administration believes China will continue being the largest natural gas user in non-OECD Asia, and by 2050:

“Expects that China will consumer nearly three times as much natural gas as it did in 2018. China’s projected increase in natural gas consumption is greater than the combined growth of natural gas consumption in all other non-OECD Asian countries.”

Opportunities for liquid natural gas (LNG) facilities to be built globally, and in China to spur domestic and international economic activity are unlimited. As China goes, so goes Asia, and the world is now in the “Asian Century.” Investors, geopolitical strategists, and anyone concerned with global security should never believe it is wise to let China continue to falter economically and societally. Setting up investment mechanisms and diplomatic vehicles that benefit China, and the world community is a prudent choice.

When military choices defeat sound fiscal and monetary polices, the past 150 years have brought “nearly a dozen great powers experienced rapid economic growth followed by long slowdowns.” Normal, civilized behavior was pushed aside. What’s needed for Chinese economic growth is the free flow of information, managed wealth, consumer goods, and research/innovation.

Decades ahead, and current economic realities point to China being a great power that is under pressure, but still needs capital. A weak, unsecure China who isn’t satisfied with its place in the Asian hemisphere or global economic system isn’t good for continued prosperity. It would be smarter to engage and invest within China in the areas of energy, water, agriculture, and electricity where opportunities still abound.

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