When it comes to market liberalization no one can quite match New Zealand for speed and brutality. New Zealand supported a heavily subsided agriculture industry for the longest time that cost the tax-payer billions. When it became clear in the eighties that the budget deficit was unsustainable, the labour government cut the subsidies in 1984 to nil, overnight! This created a life-or-death experience for farmers and many feared for their future. The effects of the regime change were drastic and New Zealand became a study for many market liberalizations (we studied it at university). The drastic medicine turned out to be a success and New Zealand nowadays is the biggest dairy exporter in the world. And this is why.
Before 1984 sheep farmers got enormous subsidies per sheep. That led to a huge increase in the sheep population and unsustainable practices in farming like chopping down of trees, depletion of water and erosion. At times New Zealand had up to 60m sheep. Due to the cut of subsidies farmers had to diversify into deer and diary farming. The number of sheep was reduced to under 37m and they started to export their produce all over the world. Deer meat (called venison) is nowadays sold to Germany, Belgium and France and merino-wool clothing has become a household item. At the same time due to improvement in efficiency the number of people working in farming has dropped dramatically.
The success of New Zealand agricultural products of late is largely due to the enormous demand from China. Farming has risen from the ashes like a phoenix but there are some dark clouds on the horizon. Diary farming for milk uses a lot of water and fresh water has become a sought-after commodity on the South Islands. With more droughts and more unstable weather New Zealand is also affected by global warming. So cows might have been increasing in numbers on account of sheep, but the race is not finished yet.
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