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Explain why New Zealand is an exporter of dairy products such as butter and cheese.
Since 2012, China has developed over 40 large dairy farms, including one with 38 000 dairy cows in Bengbu, China. Large Chinese dairy farms are expected to grow rapidly, allowing large economies of scale and high levels of safety and milk quality.
Source (adapted): https://news.cgtn.com/news/2019-11-08/Feeding-1-4-Billion-Inside-China-s-largest-dairy-farm-LrIKqxumOI/index.html
On Graph One, show the impact of an increasing number of dairy farms in China on the dairy product market.
Referring to Graph One and the resource material, explain the impact of an increasing number of dairy farms in China on New Zealand’s dairy farm revenues and profits from dairy products.
In the context of the global dairy market, explain the possible trading relationship between New Zealand and China in the future, if China successfully continues expanding its own dairy-product production. Refer to the two-country model.
Total world apple production is about 85 million tonnes, of which New Zealand provides about 500 000 tonnes. A new variant of New Zealand-bred “Envy” apples contributed about 90 000 tonnes in 2020. This amount is expected to triple within four years as more orchards of the “Envy” variant are planted and mature.
Source (adapted): https://www.ruralnewsgroup.co.nz/hort-news/hort-general-news/new-nz-apple-has-international-competitors-green-with-envy
Why is New Zealand a price taker in the world apple market? Refer to the resource material, above.
On Graph Two, show the impact of New Zealand “Envy” apple orchards increasing production over the next few years.
Referring to Graph Two, explain the impact of “Envy” apple orchards increasing production on both the quantity of exports and export receipts for “Envy” apples grown in New Zealand.
Explain how increased production of apples may impact resource allocation between the New Zealand apple industry and other agricultural export industries.
Explain how the New Zealand current account balance may improve (export receipts and import payments) by negotiating or expanding free trade agreements.
Explain how the New Zealand current account balance may improve (export receipts and import payments) by a depreciation of New Zealand’s currency exchange rate.
Why are free trade agreements more likely to lead to a sustained improvement in New Zealand’s current account balance, in the long run, when compared to depreciating the New Zealand currency?