Trap or Treasure: An economic history of primary production in Hawke's Bay province, 1945-2010

Abstract

Comprised of a broad range of primary activities, Hawke’s Bay is one of New Zealand’s foremost agricultural provinces. Consequently, the province provides an excellent template by which to assess New Zealand agriculture and test differing perspectives of staples-led development. Importantly, the province provides a positive example of staples-led growth and this thesis argues that adjustment within, rather than abandonment of, existing primary production structures has been a rational response to changed economic, social and political circumstances since 1945. Most particularly, two essential adjustment mechanisms existed. First, a dynamic process of land use inter-changeability provided the flexibility required for diversification and delivered strong relative investment returns. Second, levels of corporatisation and internationalisation increased significantly as participants sought productivity enhancements, greater scale and additional capital. Crucially, although aspects of classical staples theory are evident in Hawke’s Bay after 1945, the development of the province’s primary sector does not support interpretations of classical theory as a ‘staples trap.’ Therefore, Hawke’s Bay’s multi-polar model of staples-led economic development challenges the notion, typified by Sutch, that primary sector led economic development is undesirable. It is similarly significant that scholars have not previously considered staples theory within a dynamic system of land use change.

The history of the Hawke’s Bay primary sector since 1945 enables the consideration of broader issues in New Zealand’s economic history. Tariffs, regulation, deregulation and agricultural subsidies played a prominent role in the province after World War Two, the impact of which permits one to locate the Hawke’s Bay story in the wider history of the New Zealand economy. But most importantly, Hawke’s Bay illustrates the distortions of productivism, a concept backed in the first instance by New Zealand farmers and later pursued by the New Zealand government as a remedy for declining agricultural commodity prices and farm profitability. Historical evidence from Hawke’s Bay suggests that productivism and its policy offspring, most notably Supplementary Minimum Prices, rendered the task of structural adjustment to declining commodity prices and changed market conditions substantially more difficult.