The deregulation of New Zealand agriculture : market intervention (1964-84) and free market readjustment (1984-90)

Abstract

The impacts of deregulation on New Zealand's agricultural sector are examined. Economic liberalization of all sectors of economic activity is the hallmark of current economic policy designs in New Zealand. This is in sharp contrast to previous policies reliant on massive government assistance to and intervention in agriculture. The study provides insights into the cumulative and distortionary extent of previous assistance policies, discusses the rationale in removing public financial assistance, and reviews the readjustment process. As a case study, New Zealand's experience reveals difficulties which may confront farmers in other economies where policy makers seek a return to free market conditions. Economic policy observers ponder the efficacy of making gradual and incremental changes in the policy mix versus a strategy of more sudden abrupt change with little adjustment assistance to those affected. These were the alternatives which confronted the New Zealand government in the mid-1980s when it became evident that social assistance economic policies, for which the country had been well known during the post-World War II period, had both distorted economic sector performances and imposed unacceptably expensive support costs. A revision of the agricultural support policy was underway in 1983 under the then National government, but in 1984 a Labour government