The world is getting the best of New Zealand while we're eating cheap imports

New Zealand is exporting much of its premium product - and then importing cheaper options for New Zealand shoppers, economists say.

Pak'nSave's move to sell United States butter more cheaply than local butter has prompted conversations about how it is possible for imported items can be offered at a lower price than those produced in the country.

But trade data shows that butter is far from the only item that has a higher price when it's made in New Zealand.

Cat and dog food was cheaper when imported. Dog biscuits - most imported from Australia, Canada, and China - were 87.6 percent cheaper than the export price of New Zealand products.

Water with added flavouring was also 25 percent cheaper when brought in from countries like the United States than the local product was exported.

Jams and marmalades were 21.9 percent cheaper when imported - often from Chile and Poland.

We also import cheaper wine than we export - among still wines, imported products were 25 percent cheaper. Australian wines were 54 percent of imports.

Confectionary, including white chocolate, was 37.8 percent cheaper when imported, mostly from Australia and China. Sweet biscuits were 64.4 percent cheaper imported, usually from Australia,

Some beef and lamb cuts imported for New Zealand consumers were also cheaper than those exported.

"We're quite often exporting premium products to a premium market segment, whereas we're importing the commodity stuff for the mass market," economist Shamubeel Eaqub said.

"It's picking up that difference in what we export versus what we consume. But it still begs the question, if we're so good at making these things, why is it that we can't have some of those other products, as well? Why is it that we're reliant on imports? It's not necessarily a good or bad thing, it's just a question.

"I think to me it raises the question of is it really not possible to produce pet food for our pets in New Zealand given all the bobby calves we have? The fact we're importing beef from Aussie and lamb from Aussie... I'm driving through Southland at the moment and seeing a lot of cows and sheep."

He said there was a "spaghetti junction" of food going out and food coming in to meet different needs.

Westpac chief economist Kelly Eckhold said it was probably driven by economies of scale.

"It could be that these things are being manufactured in large facilities in Australia or up in Asia. They just have that economy of scale, perhaps reflecting lower input costs as well if these are energy-intensive products.

"Canned vegetables, fruit juice things like that... you wouldn't automatically think that these would be energy-intensive processes but they kind of are. Countries like China are quite competitive because their costs of production are lower."

He said New Zealand wine would be more of a premium product than much of the product that was being imported more cheaply.

"If you had it broken down by colour, I bet you would find that if we export red wine it's probably pinot noir, but it would be more expensive than the typical red wine that would be imported into this country.

"In some of these industries if we're exporting it's because we're a niche or premium end of the market."

ANZ economist Matt Dilly said it would help to think of how competitive New Zealand was in various products. "I'd say most of our wine exports are in a category that I'd call affordable luxury. A typical bottle maybe $20 a bottle, maybe a bit less, maybe a bit more. But we do import a lot of cheaper wine from Australia. I think that's a situation where we have a competitive advantage. We make excellent wine and export a lot of it but that doesn't mean there are zero imports.

"We do import beef and lamb even though we're really great at that. We import some cheese and some of those varieties we don't make ourselves, especially European varieties.

"This framework about what we're competitive in and what's easily traded, there's always going to be exceptions."

"We import a lot of wheat, a lot of pork, vegetable oil. So these are things that are really tradable that, we don't have a great competitive advantage in like we do for dairy and some of our other large products.

"Then there's those other things that are naturally very difficult to trade, especially from an island country. So we make really good eggs, but we don't export them because they're fragile and perishable… have a (pretty robust two-way trade with Australia, going in both directions across the Tasman and, and that's a function of our shared food safety system. So that's something that's really good for processed food products rather than the raw materials."

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