Embrace change or risk extinction

As the world economically stumbles in 2024, there are some predictions of an economic recovery. That is good for NZ as we rely on our exports and visitors for our financial survival. Many organisations are winding back the clock to pre-Covid days and expecting business and life will return to that pre-Covid normal. I don’t think that will happen. There is a new norm being established both in business and personal relationships.

Beyond economic concerns, there is widespread commentary on the post-Covid world portraying people as less tolerant and an overall increase in global anger. Ongoing armed conflicts are not only affecting millions of lives but also wreaking havoc on the world's economies, eroding the sense of safety for many. The enduring impacts of long Covid and sporadic outbreaks further contribute to the prevailing unease. For horticulture exports, the outlook is challenging. Our premium-priced products face diminishing returns as changing consumer behaviours and pricing dynamics drive down demand. Simultaneously, growing,
packing, and shipping costs are exponentially rising, creating a precarious financial situation for our producers.

Historically resilient to market fluctuations, horticultural products, such as hops, are now grappling with surplus due to the unforeseen drop in demand brought about by Covid. The craft beer industry for example, which is a significant consumer of New Zealand hops, is experiencing a sharper decline compared to mainstream beer consumption. Restoring equilibrium will likely hinge on an improvement in both economic conditions and public health. The same can be said for all horticultural exports. Adapting to this shifting landscape, New Zealand's horticultural exports must innovate in sales and contractual strategies. Forward contracts and strengthened business relationships are essential for securing bank finance. For profitable survival there needs to be greater consolidation among growers, exporters, distributors, and brewers, as the pre-Covid laissez-faire approach will not support growth,
investment and survival. 

The need extends beyond merely establishing new contracts or spot markets. A fundamental restructuring of industry models into cohesive and cooperative frameworks is imperative. This transformation must navigate anti-competitive legislation, requiring astute business relationships that respect each country's legal frameworks.

Arguably, the pre-Covid open competition model appears antiquated. To surmount contemporary challenges, I believe industries must undergo structural metamorphosis, in conjunction with governments reevaluating and adjusting competition laws. General Douglas MacArthur's insight aptly captures the essence of this paradigm shift: "New conditions require, for solution – and new weapons require, for maximum application – new and imaginative methods. Wars are never won in the past." 

In this altered world, adaptation is not optional; it is the prerequisite for survival. Industries and governments alike must embrace change or face the risk of extinction.

Mike Chapman,
Chair New Zealand Ethical Employers Inc