27 Aug 2015

Tourism to eclipse dairy as top earner

6:26 am on 27 August 2015

Tourism looks set to overtake dairy exports as New Zealand's number one export earner.

The latest trade figures show a dramatic annual drop in dairy exports, with tourism set to become New Zealand's number one export earner.

Queenstown Airport against the backdrop of The Remarkables mountain range.

Queenstown Airport against the backdrop of The Remarkables mountain range. Photo: Queenstown Airport

Latest trade figures show a dramatic annual drop in dairy exports in the 12 months to July. The figures show exports of milk powder, butter and cheese fell 24 percent, compared with the previous 12 months. In the same period, logs and wood products fell nearly 12 percent.

In terms of buyers, exports for the same period to Australia fell four percent, while they dropped 27 percent to China.

Infometrics senior economist Benje Patterson said the economy had reached a turning point.

"We've got some of the staples over the past couple of years that were really driving up export activity - dairy and forestry - they've come off the boil, and that's dragging down exports to China primarily.

"And then the other side, we've got some exports that are beginning to do really well. Meat exports are soaring, as are fruit exports."

The figures also showed a more than 30 percent increase in exports to the United States, which accounted for part of the rise in meat products.

Mr Patterson said service exporters were beginning to shine, partly to do with with international air connectivity with New Zealand and the lower New Zealand dollar.

"The tourism sector looks like it will overtake dairy by the September quarter as New Zealand's biggest earner of export dollars."

Berl chief economist Ganesh Nana said there was too much focus on the volume of exports, not the value of them.

He said efforts needed to be made to turn the resource bounty into something the rest of the world was willing to pay for.

"It's a matter of turning that bounty of resources that we have into not just products but into products that are of high value, that employ high skilled people that will turn the New Zealand economy around, otherwise we will, I suspect, continue to meander along."

Annual visitor numbers reached 3 million last month.

Simon Milne, director of the New Zealand Tourism Research Institute, said the industry had set itself a lofty target of of domestic and international tourism spend reaching $41 billion by 2025, about double where it is at now.

Professor Milne said to reach that goal, visitor numbers would need to double, or the industry had to get tourists to pay more. And to increase tourist expenditure, local communities had to be on board and not feel overwhelmed by increased visitor numbers.

"Tourism and its impacts are felt ... at the park that you travel to with your family and find it crowded with visitors, they're felt as you walk down the main street of your town and it's parking, they're felt when you walk out of your door and you see rubbish that's been left by a freedom camper.

"All of those things are the day to day ways in which visitors and communities interact."

Professor Milne said the industry created about 100,000 jobs directly, and in many cases were low-skilled, low-paid workers.

But there are also many types of jobs in the industry which do represent good job and living prospects.

However, he pointed out that as tourism destinations grew, so did price pressures.

"You create through tourism a housing price bubble, a living standard bubble that becomes impossible for local communities to be able to cope with... that's another one of the management issues, another one of the challenges that we face."

Professor Milne said as more pressure was put on resources, other forms of revenue generation which will helped communities needs to be thought about.

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