New Zealand shooting itself in the foot with anti-farming policies

Currencies

Roger J Kerr says the environmental/climate change lobby is enforcing impositions on our major industry that if continued will lower economic growth and living standards in New Zealand

20th Jan 20, 7:48am by Roger J Kerr

The Kiwi dollar has traded within a 0.6600 to 0.6660 band over this last week against the USD and has been unable to scale the heights of 0.6750 reached in illiquid holiday market conditions over the first few days of January.

There has been no domestic economic news of any note to influence the exchange rate significantly up or down, apart from a marginal improvement in business confidence in the NZIER quarterly survey results.

The manufacturing PMI Index fell in the December month to 49.3 from 51.4 in November. The result was less than prior market expectations, so was a negative factor on the Kiwi dollar, pulling it back from 0.6650 to 0.6615 on Friday 17 January.

The local economic performance remains mildly positive with retail, construction and housing improvements countering off against a decidedly flatter trajectory for tourism and manufacturing currently.

The one disappointing and concerning development in the NZ economy as a new year commences is that confidence, spending and investment levels in the dominant agricultural sector are poor despite record high prices for livestock and produce.

In normal times of super high export commodity prices, our farmers would be buoyant and upbeat. Typically, there would be a major economic impulse coming out of the rural regions with plenty of cash sloshing around.

Sadly, today many farmers are grumpy and disillusioned as they face multiple bureaucratic interventions on how they farm their land and run their businesses.

The current Government and other agencies are forcing unknown costs and compliance regimes on farmers from water to methane to health/safety to pointless resource consents.

The environmental/climate change lobby is enforcing impositions on our major industry that if continued will lower economic growth and living standards in New Zealand.

The mainstream media centred in the cities generally has a poor understanding of the significance of these farming issues, however the sector still powers the economy.

Spending and investment levels in the dairy sector are also muted despite the milk-solid pay-out returning to near record high levels.

Bank lenders are requiring debt reductions ahead of re-investment in productive capacity.

The horticulture industry however goes from strength to strength with kiwifruit and apple exports continuing to increase.

Unfortunately, rural New Zealand has diminishing political clout (due to population changes) to challenge several current Government policy initiatives that appear to be anti-farming.

RBNZ to remain “on-hold” for all of 2020

The next piece of data in the local NZ economic jigsaw is the inflation outcome for the December quarter on Friday 24 January.

Consensus forecasts are for a 0.40% quarterly increase, which will lift the annual inflation rate from 1.50% to 1.80%. Hardly a trend that justifies any consideration from the RBNZ of further interest rate cuts or money market forward pricing of such. A result above +0.40% will be positive for the Kiwi dollar.

We will hear next from the RBNZ on 12 February with their Monetary Policy Statement.

A feature of their updated economic prognosis should be the material reduction in global economic risks with a truce in the China/US trade war and Brexit finally happening.

No doubt they will find some other economic headwinds elsewhere to be overly cautious about.

However, in reality there is no economic trend or forecast to be negative about currently.

The flip-flopping of the RBNZ from overtly dovish to not dovish on the economic outlook has caused a good deal of the volatility in the NZD/USD exchange rate over the last 24 months. It is past time that they display some consistency in their outlook as our actual economic growth performance has been much more consistent in the 2% to 3% area than the central bank’s changeable viewpoint!

I do not expect the RBNZ’s decisions this year with monetary policy to impact NZ dollar movements at all as they are “on hold” with interest rate changes and will stay that way all through 2020.

AUD under-valuation over due for recognition

The Australian dollar has not matched the Kiwi dollar's impressive 6% recovery upwards against the USD over recent months.

The AUD exchange rate against the USD has only appreciated 2.7% from a low of 0.6700 in early October to 0.6880 today.

Currency speculators in the AUD have not unwound short-sold positions as much as the Kiwi dollar speculators did in late December.

Despite the terrible bushfires causing some minor uncertainties for the Australian economy at the moment, their outlook is also positive with global trade and industrial production expected to improve now the trade war and Brexit risks have reduced.

On many counts the Australian dollar is considered undervalued today as investment funds moved out of the AUD 12 to 24 months ago and have not yet returned. It only seems a matter of time before the undervalued position of the AUD is more fully recognised and funds rotating out of safe-haven currencies like the Yen and USD will buy the Aussie.

The Australian economy is heavily dependent upon China. The Chinese Government has made policy changes to get the Phase 1 trade deal done with the Americans and they have also loosened monetary policy of late to keep the growth engine going. The Chinese are also continuing (as expected) to strengthen the Yuan currency value, now at 6.86 to the USD.

Over the first half of 2019 the vast majority of Australian bank and global investment bank economist forecasts were for the Australian housing market to plummet, the economy to go into recession and the RBA to slash interest rates to zero. They were all wrong, none of those things happened.

The Australian dollar is over-due for a re-rating upwards against the USD.

The Kiwi dollar’s out-performance of the AUD against the USD has driven the NZD/AUD cross-rate up from 0.9230 in November to a high of 0.9700 on 8th January. Over the last five years the bottom of the NZD/AUD trading range has progressively lifted upwards from 0.9000 to 0.9100 to 0.9200. The local AUD exporters who have maintained a discipline of increasing hedging percentages in the 0.9200/0.9300 area have again been well rewarded.

Over coming months, the NZD/AUD cross-rate is forecast to fall back to below 0.9400 as the AUD catches up and outperforms the NZD in the currency markets.

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Source: RBNZ

Source: CoinDesk

*Roger J Kerr is Executive Chairman of Barrington Treasury Services NZ Limited. He has written commentaries on the NZ dollar since 1981.

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59 Comments

by Andrewj | 20th Jan 20, 8:18am 1579461514

they just dropped a dollar off beef schedules and sheep are going to get the same treatment. Farms are being purchased by corporates at good prices pushing out family farms, its a recipe for disaster down the track.
I personally am struggling with needing consent from our regional council to continue to farm, as if councils somehow know what they are doing, or a 25 yr old advisor with no skin in the game somehow knows more than me. This new managed society has lots of negatives.

by Gatoperro | 20th Jan 20, 9:19am 1579465182

A 25 year old? You are lucky, you have someone with experience.

Don’t trouble yourself Andrew. I was talking to a Regional Council manager recently and he said that the corporate farms generally had a high level of compliance.

To his credit he understood the difference between compliance and stewardship and acknowledged that there is full compliance/poor stewardship and poor compliance/excellent stewardship.

I see the problem with these Farm Environment plans is they have become compliance documents. We get bogged down in the detail and miss the important stuff. Are they like building consents?

Its a few years since I needed to deal with a building consent. Dealing with two now. Big complicated documents. One has a sediment trap so when water runs up hill no harm is caused and the building dimensions don’t match the floor area. The other has a hallway you need to turn sideways to get through. The first is fully consented. So much box ticking that the stuff that matters is missed.

by Henry_Tull | 20th Jan 20, 5:04pm 1579493042

Trump: Government will never micromanage your farm...

https://youtu.be/a0a3E--mE84

by mikeeagle | 20th Jan 20, 8:51am 1579463497

The irony is New Zealand's agriculture is among the most efficient in the world. By becoming carbon neutral we may be reducing efficiency here. Our output falls and NZ agriculture is replaced by inefficient dirty agriculture overseas. Net effect is increase in world CO2 and Methane .

by Foyle | 20th Jan 20, 11:29am 1579472996

Like banning oil and gas, or offshoring other jobs and industries though regulation. Seems very rare for regulators to ever consider the true wider impact of the 'fixes' they impose, more so for emotive issues like environment, health and safety (grieving family sobbing on TV), and 'equality' issues. Could that be because if they did the fixes/changes (and their jobs) would not exist? It is exceptionally hard to change systems as complex as we have in our societies for the better. Sound-bite solutions almost never improve things.

by rastus1 | 20th Jan 20, 4:55pm 1579492536

No the real irony is NZ farmers hide behind this efficiently mantra as an excuse to do nothing. keep it up by all means Farmer Lobby groups, but the rest of the world is working to reduce their foot print. You will be caught napping.....once again...just like fonterror.

by Henry_Tull | 20th Jan 20, 6:23pm 1579497787

When you say footprint, what do you mean?

There is climate change
There is greenhouse effect
There are greenhouse gases
There is co2 by itself
There is carbon
There is energy.

NZ has a zero carbon bill.

Secondly, What do you mean caught napping?
The rest of the world is doing less.
No international buyer pays more for commodity spec plus carbon changed approved.

When James Shaw’s zero-carbon bill passed with bipartisan support in parliament on Thursday, New Zealand became one of the first countries in the world to enshrine its climate change targets in law.

https://amp.theguardian.com/world/2019/nov/08/we-are-a-role-model-how-j…

by Westminster | 20th Jan 20, 8:54am 1579463690

Great to see comment acknowledging the rural economic contraction Rodger
This goes on while the rest of NZ borrow and spend like no tomorrow

by rastus1 | 20th Jan 20, 4:58pm 1579492705

...as encouraged by the great bank economists. Push house prices up so the wallet opens ....the only thing they seem to lean at Uni. Any fool can see this is madness.

by Henry_Tull | 20th Jan 20, 9:05am 1579464323

Reduced revenue, Massive costs, No technical success.

The cash cost is massive:

https://nypost.com/2019/12/08/reality-check-drive-for-rapid-net-zero-em…

For New Zealand, the cost is similar to today’s entire expenditure on socialized education and health care. And getting all the way, rather than halfway, will likely cost 16 percent of GDP by 2050. That is more than New Zealand today spends on social security and welfare, health, education, police, courts, defense, environment, and every other part of government combined.

James Shaw says: The chances are slim of technical success. So low.

https://www.google.co.uk/amp/s/amp.theguardian.com/world/2019/nov/08/we…

On whether global heating can be curbed, he says: “I think the chances are slim.” But there’s no reason for not trying, he adds. “In fact, that’s all the more reason to try.”

by fmr ca | 20th Jan 20, 9:24am 1579465493

I don't understand why the current government are desperate for NZ to be world leaders in untested green policies. We already use over 80% renewable power, most of our farming is free range and we are about 3/1000 of the world's GDP. Why throw our economy under the bus when we can't afford to lose any economic advantages? We are a low income small population, trying to pay for aging, widely dispersed infrastructure, over difficult geography. We simply can't afford to be the poster child for radical theoretical UN climate change measures, no matter how well intended.

by consumer | 21st Jan 20, 1:45pm 1579567549

I was 100% with you until you used the words "radical theoretical"

by BS | 20th Jan 20, 9:01am 1579464103

The irony is that while we punish our carbon efficient farmers, Norwegian oil producers get a free hand to develop oil fields that will help pump billions of tons of CO2 into the atmosphere, while boasting of the country's green credentials. The system is screwed up.

by Gatoperro | 20th Jan 20, 9:20am 1579465244

by Grumpy | 20th Jan 20, 10:12am 1579468329

demagoguery - political activity or practices that seek support by appealing to the desires and prejudices of ordinary people rather than by using rational argument.
"the demagoguery of political opportunists"

This card has been well and truely played by the coalition government! The end result is the downfall of NZ's Rural Sector to the detriment of the NZ Economy and the fools within that have allowed this catastrophic set of events to happen.

Time to stand up and fight as the Dutch & German Farmers have just done!! Enough is enough!!!!
https://www.dw.com/en/netherlands-farmers-stage-tractor-protest-cause-h…
https://www.thelocal.de/20200116/traffic-chaos-as-farmers-on-tractors-p…

by Henry_Tull | 20th Jan 20, 10:27am 1579469239

The start of such is here and now.
Take a look at the comments section

https://i.stuff.co.nz/southland-times/southland-top-stories/118855668/f…

It's like the only channel of communication the government accepts is in the street with pitch fork & manifesto, remember the land march before Xmas.

Who is the kid in government who thought, let's tell the children in schools to eat less meat & dairy. All good everyone happy.

https://www.newshub.co.nz/home/politics/2020/01/james-shaw-clashes-with…

by mikekirk29 | 20th Jan 20, 9:57am 1579467422

"the sector still powers the economy"
City commentators don't get it.
Jesus sounds like Trump.
What % of economy is agriculture and what % of employment?
About 60% of "economy" is consumption, n'est pas?
Only industry where Right wing suck up is farming.
When other industries suffer in downturn or change in economy, media do not give a toss (steel, mining, railways)
And its not climate change, it is global warming.

by Grumpy | 20th Jan 20, 10:20am 1579468829

If New Zealand meets its promise of zero emissions in 2050 and stays at zero for five decades, then the greenhouse-gas reduction, according to the standard estimate from the United Nations’ climate panel, will deliver a temperature cut by 2100 of 0.004 degrees.

New Zealand is considering spending at least $5 trillion to deliver a physically unmeasurable impact by the end of the century.

The math is comparable for most economies: enormous costs and very small benefits. Of course, huge nations like China and America going carbon-neutral by mid-century would indeed generate measurable impacts by 2100, but the costs would also run into the hundreds of trillions, and in the case of China, mean more poverty. Unsurprisingly, most governments and presidential candidates shy away from publishing any real analysis of their promises.

The climate challenge will not be solved by asking people to use less and more expensive energy. A sensible middle ground must be found that could include policies like a low and rising carbon tax. But we must ultimately focus on the reality that the best way to fix climate change is innovation that lowers the price of clean energy below that of fossil fuels.

by Believer1980 | 20th Jan 20, 11:19am 1579472348

Primary industries are what NZ can and actually does trade with the rest of the world. and NZ depends on rest of the world for so so many things. Some that are absolutely essential. GDP masks this vital importance. look at NZ export composition, and you will see how important primary industries are for every thing.
For comparison, Iran is primary an oil exporter. Money from trading crude oil (and other oil related exports) is only a small percentage of the GDP, but without its oil export, Iran whole economy has come to a total halt. As crude oil export is what brings Iran the ability to trade for everything that other sectors use to produce the things they produce.
Primary industries are absolutely vital for NZ economy. I am sure most people would love for NZ to have another export ace in their sleeves, but this has not happened yet for very obvious reasons. So until then, primary industries will continue to be the bedrock of NZ economy.

by Larry76 | 20th Jan 20, 11:15am 1579472108

What are these costs imposed on the rural sector? (to be clear we all mean dairy farmers because carrot farmers don’t seem to cause so much grief).

Are these costs the need to prevent and clean up effluent in streams?

Are these costs the fact that fresh drinking water is not a free good?

Are these costs that streams are not a dumping ground for excessive nitrogen and phosphorus?

According to the prevailing economic theory in NZ for the last 35 years - if these businesses can’t survive without special treatment and handouts (in the form of depleted natural capital) then they shouldn’t be in business.

This is likely true for many of the dairy farms established in silly places over the last 2 decades...

by Foyle | 20th Jan 20, 11:41am 1579473689

It's not just dairy. Proposed nitrate regulations will make much/most irrigated farming effectively illegal. Even the highest-tech fertigated arable farms (using carefully controlled area-varied fertiliser application that ensures all areas get only what's needed) cannot meet the limits - the limits are about an order of magnitude lower than in many western countries. Urban drive to destroy farming is founded in ignorance, with a support base who don't have a clue about the scientific, economic or environmental realities.

by Larry76 | 20th Jan 20, 12:37pm 1579477049

Urban drive to destroy farming - deluded and afraid much?

The only folks destroying farming are those farmers who after decades of RMA and free passes from friendly local authorities still can’t measure up.

Every indicator we have says that water quality is the worst it’s been in our history.

These farmers will put themselves out of business when overseas buyers refuse to buy our dirty food.

Same with emissions - we don’t improve to fix the problem by some tiny %, we do it because if we don’t our farming industry will be uncompetitive within a decade.

by Henry_Tull | 20th Jan 20, 3:06pm 1579486005

What says our food, NZ food is dirty food.

Larry, you and who else?
NZ commodity spec milk powder sells at a premium.

Grass fed sells at a premium.

Larry, you and who else says food is dirty? Where are you international non-buyers?

by RickStrauss | 20th Jan 20, 3:45pm 1579488324

several current Government policy initiatives that appear to be anti-farming.

Yes, I'm curious as to the definition of "anti-farming" here. Would declining to allow a factory to discharge untreated waste into a waterway be also considered "anti-business"?

Which industries do folk suggest should be able to pass the cost of their pollution on to wider society rather than reducing their pollution?

Is asking for money to be spent (as it is being) to reduce overflow of raw sewage into urban waterways "anti-city"?

by frazz | 21st Jan 20, 3:58pm 1579575489

Your comment makes too much sense..only anti urban spitting comments allowed here and all pro farmer at all costs.

by Casual Observer | 20th Jan 20, 4:54pm 1579492499

Larry 76 'Every indicator we have says that water quality is the worst it’s been in our history.' Bollocks. Some maybe worse but some are better, and some fluctuate over times.

Waikato River: The Waikato River's water quality has improved a great deal. The country's longest river was, 60 years ago, one of the dirtiest.
http://www.waikatoregion.govt.nz/environment/natural-resources/water/ri…
Waipa River: Water quality in the Waipa River is much better than it was in the 1950s.
https://www.waikatoregion.govt.nz/Environment/Natural-resources/Water/R…

Some have had plans put in place to improve the water quality.
And some have already being improved:
Today, Harts Creek stands as a shining example of the incredible work a dedicated group of environmentally-conscious organisations can achieve. As a spokesperson for The Whakaora Te Waihora programme states: “the vegetation is lush, the water is clear, and fish and birds have returned to the environment. It’s a testament to the fact that patience and perseverance do pay off.”
https://www.agriview.nz/fact-check/2018/9/10/qa-the-selwyn-river

by wee willy winkie | 21st Jan 20, 9:27pm 1579595222

Larry - back in the day dairy sheds and piggeries were all placed on river banks so as to make effluent disposal simple. In Wanganui all the sewers used to empty into the river. The local freezing works flushed all its wash down water filled with blood etc into the river. The local abattoir did the same, as did a fish processing factory. Run off from the local fertiliser works entered a stream which flowed directly into the river. You get the drift. All these practices have stopped. Don't try telling us that water quality is the worst it's ever been, because back then it was a helluva lot worse and no one cared.

by Casual Observer | 20th Jan 20, 12:36pm 1579476992

The penny hasn't dropped yet Foyle with the eat less meat/eat more plant based food proponents, that under proposed enviro laws the plants will not be able to be grown in NZ - not at any scale.

by Independent Ob… | 20th Jan 20, 11:37am 1579473443

Roger, you know what else will "lower living standards" - unabated climate change. Short term pain, long term gain. And, yes, I'm in the agriculture industry. We have a huge opportunity here to continue to be the best in the world. And our size/scale is what makes that all the more possible. As soon as we as New Zealanders start to think "we've done enough" we will become irrelevant in every sense.

by Henry_Tull | 20th Jan 20, 12:06pm 1579475202

Have you got any numbers, what is the investment case.

by Larry76 | 20th Jan 20, 12:38pm 1579477119

Well said. A positive response instead of saying it’s all too hard.

by Foyle | 20th Jan 20, 4:10pm 1579489809

Impact of 1°C temperature increase in NZ is about the same as moving 100km north - eg from Napier to Gisborne, ie beneficial by most measures. Rain will change a tiny amount, but nothing near as much as typical ±30-50% annual variation. Sea level continues to rise at same 1-2mm/year (as measured at subsidence corrected tide gauges around NZ) as it has for last 100 years. Assertions of impending doom based on climate models using exaggerated RCP8.5 CO2 emission predictions, that can't model critical water physics (clouds, evaporation, condensation, convection, waves, ocean circulation...) and demonstrate no predictive skill are laughable. Measured ECS (from ARGO data) is around 1.7°C/CO2 doubling, which makes climate change a nothing-burger - very inconvenient for the merchants of doom.

by Dale Smith | 20th Jan 20, 12:46pm 1579477584

And yet one of the easiest fixes, and which can be justified, is to improve our very poor housing stock by making it far more energy efficient to obtain a warm, dry, health homes and all the other social and savings benefits non sick happy people bring.

And the reason it is easy, is that we have about 50% of the value of the land being non-value added rentier gain. This can be converted to value added benefit like the cost of building to a better standard, ie swap waste out for value.

Yes it would mean that there is no money to be made in land banking, but neither should there be.

Home values of new homes could remain the same but better value and higher quality and the older housing stock would be discounted back by amenity and age is it has always been.

This of course would mean having less restrictive land zoning to first cancel the rentier monopoly and then having a better building code to replace the rentier gain with the better building materials and design.

It's easier to hit the farmers because they are fewer in number, rather than the non value land banking adds. and the real and social costs poor housing adds.

by Foyle | 20th Jan 20, 5:22pm 1579494177

Not necessarily the most cost efficient choice. Installing double glazing and fully insulating, even on a new build can run to $30-50000, more to retrofit. Heating (heat pump) only costs a few hundred per year in north, maybe $1000 in south on top of a $5k heat pump. Double glazing has poor payback in much of the country but spending a few $k on insulating parts of house that can be easily insulated is a good step - though suspect almost all houses have been done now.

Increasing cost of building by $50k to meet draconian insulation standards is a really bad idea economically when heating a not-quite-as-insulated new house would be cheaper overall - makes housing less affordable and so keeps people in worse houses for longer.

Rather than over-the-top insulation requirements it would be more cost effective to put pv on roofs in sunny parts of country.

by Dale Smith | 20th Jan 20, 9:21pm 1579508474

To put in extra energy to justify poor build quality is throwing good money after bad, and makes you totally reliant on what the future cost of energy is, which is not going down.

And the costs of building right are a lot lower than what you quote.

Most of the insulation that is been retrofitted is not airtight and has a high moisture content. NZ houses have always had crap R values but at least the airflow was so great that they could dry out. Now what has happened they have increased the insulation but moisture still gets in and the extra insulation acts a s a sponge and holds it there. What is starting to happen is this retrofitted insulated is contributing to leaky homes v2.

by kiwimm | 21st Jan 20, 9:47am 1579553240

As someone who built a Passive House which is the gold standard of energy efficient housing, I call BS on your figures. To go to triple glazing, double thick walls, fully insulated slab, airtightness and heat recovery ventilation was $60k. The extra cost is mainly due to these items being small volume in NZ. If better standards were applied then the better products will drop in price. In other western countries the cost premium for Passive House is around 3%, in Germany it is 0%.

Your cost-benefit analysis is also flawed as you are only thinking about yourself and at current rates (similar to your climate change arguments). There is a massive health cost saving from better housing and a resulting productivity gain. Electricity prices also only go in one direction so you cheap-to-run heat pump gets more expensive every year vs house improvements which are fixed at the cost when they were done.

by Casual Observer | 21st Jan 20, 11:18am 1579558706

kiwimm, what was the sqm of the house, please.

by kiwimm | 21st Jan 20, 12:18pm 1579562338

It was 10% extra on the build cost

by The_4th_estate | 20th Jan 20, 12:51pm 1579477893

If there is a tangible factor adversely affecting agriculture I would suggest it is the free pass given by the previous govt to ignore emerging environmental concerns and run carte blanche over existing rules and reqs for the better part of a decade that is coming back to haunt the sector. Appalling stuff like winter grazing and irrigating avocado orchards from unsubstantiated aquifers in the far north as two examples. The sector is simply feeling the backlash of long overdue enforcement by relevant authorities who are charged with protecting our environment, something I support entirely.

by PocketAces | 20th Jan 20, 1:10pm 1579479043

Still this bloody obsession with growth. When do people like Kerr actually stop for a couple of seconds and understand that we cannot continue eternally growing? When? When? When?

by Henry_Tull | 20th Jan 20, 4:52pm 1579492374

What makes you think that good growth is unavailable?

by PocketAces | 21st Jan 20, 8:56am 1579550207

Describe it. I am very much in favour of a circular economy and population stabilization/reduction (as you know) but growth actually relies on using non renewables, increasing consumption and at the end of the day, more people. Without any of those things, growth as we know it is not possible. We need to get our heads around this before too much longer. There is of course, potential in intellectual property and creativity, but they will not be able to supported with traditional growth. If you think this through one of the first conclusions you come to is that big business and corporations will not operate well in the new environment.
But we still have to go with it, otherwise we run the risk of another major conflict to have a bit of a cull and destruction and then start all over again. We have the knowledge to do it.

by Noncents | 20th Jan 20, 4:19pm 1579490375

Brazil is now the biggest supplier of Soy. So now the Amazon will be cleared so that environmentally friendly folk can all get their soy lattes. Instead of their Carbon emitting Cows milk.

It's not the farms/farmers that's the problem.

There are simply too many of us, and we all want too much stuff.

by youngdumbandbroke | 21st Jan 20, 3:12pm 1579572729

Population is the big political elephant in the room, but who will address it?

by Noncents | 21st Jan 20, 7:43pm 1579589012

I know 120 people that won't

by bender | 20th Jan 20, 5:20pm 1579494020

Take a growth and income hit and survive or do not and don't. Simple. Long term thinking needed vs. today's profits.

by Chris Morris | 20th Jan 20, 6:02pm 1579496543

As others and previous articles have pointed out, the government downplays the importance of agriculture to our economy, by using only GDP or direct employment numbers. Because NZ is a trading nation, it is the export values, especially as a percentage terms, that need to be referenced. That is what pays for all the fuel we burn, the flat screen TV/ cellphones and overseas trips the city dwellers use. There will also be imported food to make up for the stuff not grown here. Almond milk better for environment than NZ milk - that is a Tui ad. If there is a real slump in agricultural prices or production, there will be a very rapid decline in the standard of living throughout the economy. For those that go on about growth not sustainable or the environment is the main thing that matters, ask how much of a pay cut they are prepared to take to achieve their aims. That sorts out who can't get thinking past Tee shirt slogans.
There also is mass hypocrisy by the "movers and shakers". Everyone bleats on about dirty rivers (which are a lot cleaner than they were, even if there are some that are worse and there are still some dirty farmers who need to be hammered.) but not a word about sewage closing swimming beaches. Could it be that they don't want to pay higher rates to fix their own problems but want taxpayers to bale them out. Why should Southland farmers pay to fix North Shore or Wellington Harbour toilet overflows? The money doesn't go the other way.
Farming needs to meet relevant sensible environmental requirements, but it needs to be well signaled and on a realistic timetable, compatible with the industries' capital replacement projects. Then upgrades can be then built in to the budgets. Anything else is just economic suicide, just at variable speed.

by wee willy winkie | 21st Jan 20, 9:45pm 1579596335

PDK is right- farming ceased to be sustainable when farmers stopped relying on horsepower. Replacing horses with machinery released a lot more land for food production for people instead of feeding the horses. Unfortunately if we were to return to those times we would not be able to feed our present population. Far more worrying for NZ farming is our reliance on imported fertiliser and the fragile nature of its supply. If we were able utilise the Chatham Rise phosphorite we would be a lot more secure.

by powerdownkiwi | 20th Jan 20, 6:41pm 1579498917

What a lot of cobblers up-thread.

One - farming as practices id the art of turning fossil fuels - finite fossil fuels - into food. It's not done very efficiently; it takes about 10 calories of fossil oil to produce 1 calorie of food. This is a temporary arrangement.

To be long-term sustainable (wait for the Tull-troll to conflate, obfuscate, twist), you must not be in draw-down mode. When you farmers, and the types who hang off your real work by creaming-off a percentage (what does Mr Kerr do which is actually contributory?) get around to understanding that our children and our grandchildren deserve the same resource-chance we had, let me know. I've looked long and hard at how we might run a long-term-maintainable food system.

Until then, realise that to the outsider, the above looks largely like bleating. As does the piece.

by Chris Morris | 20th Jan 20, 7:35pm 1579502156

It would help your case if you could actually use relevant facts PDK. The 10:1 conversion is for factory farming in the US and includes food processing and delivery. Do the same numbers for grass fed NZ meat or milk and the numbers are quite different.
And how really sustainable is your lifestyle - no reliance on fossil fuels or imported food? Or are you another that won't walk the talk?

by b21 | 20th Jan 20, 11:53pm 1579517618

New Zealand economy depends way too much on farming and a shift to secondary industries with higher added value would be positive, specially those that produce goods that are consumed within the country to reduce external dependency and effectively reduce prices.

by Chris Morris | 21st Jan 20, 6:01am 1579539714

No-one disagrees that we should diversify our industries, but all the solutions proposed are just buzzwords and clichés. Your statements are no different.
NZ is at the edge of the universe with very long supply chains and the consequential isolation issues. There is also a very small local consumer base. The only viable industries would be those based on resources that we have an abundance or inherent advantages in. These seem to be sunshine, rain, temperate weather, relatively clean environment. We are ideal food producers for the world. There might be niche high value produce markets, but they are small and unlikely to significantly grow. The major beneficiaries are multi-nationals. For those that offer alternatives, tourism is not a high added value industry - it is a third world low pay employment soak.

by youngdumbandbroke | 21st Jan 20, 9:56am 1579553772

In this day and age, we should be focused on IT and tech based industries. The advantage being that it can negate our geographic isolation and its associated issues.

by Chris Morris | 21st Jan 20, 6:07pm 1579583231

That is just a tee-shirt slogan and indicative of the low quality process people do when they haven't any answers. Why would NZ be any better than anywhere else? The government doesn't encourage risk taking, and the only venture capital is NZF slush fund. Governments can't pick winners. Our history is littered with disasters that folded when the subsidies ran out.
If you want to be considered more than just a poser, come up with reasoned thought.

by Westminster | 21st Jan 20, 10:46am 1579556794

Well said Chris
N Z needs an extra $10 billion industry but not at the expense of an existing one

by waymad | 21st Jan 20, 11:45am 1579560319

And b21's 'remedy' of import substitution reminds me of a much younger Waymad, spouting on heedlessly to a lecturer who later became a university VC. He listened quietly and then quipped 'how quaint - a Siege Economy', turned and walked away....

by b21 | 21st Jan 20, 11:49pm 1579603750

You have just described countries such as France or Italy, while they do produce food to export, their economies are not just that and specially in the French case there's a strong engineering and technology sector, this is what we should be investing on.

by Boatman | 21st Jan 20, 11:39am 1579559994

Farmers and small businesses are the backbone of the NZ economy .............and this Government has routinely treated them as punchbags .

More taxes
Fuel levies
Administered wage increases
Carbon taxes
Accusations of causing climate change

by youngdumbandbroke | 21st Jan 20, 12:00pm 1579561254

Like the crackdown on tradies for cash jobs while they turn a blind eye to the MNCs pillaging millions in profits tax free