Gareth Morgan calls on farmers to accept the Horizons win in the Environment Court and dump Federated Farmers. Your view?

Gareth Morgan calls on farmers to accept the Horizons win in the Environment Court and dump Federated Farmers. Your view?
"Progressive farmers should form their own lobby group, leave Fed Farmers and their ignorant rump" - Gareth Morgan

By Gareth Morgan*

The Horizons Regional Council’s victory at the Environment Court which found that farmers deserve no special treatment and should follow the rules like anyone else when it comes to curbing their pollution, is of major importance. It’s late but better than never.

The vast majority of farmers are environmentally responsible and many are passionate about not despoiling waterways in any way.

This is a victory for them and round condemnation of the ignorant rump in that fraternity who arrogantly think they have some sort of birthright to generate wealth for themselves off the back of environmental destruction.

The requirement to restrict excessive runoff of nutrients like nitrogen and phosphorous is no different to requiring a manufacturer to limit the polluting consequences of any process. Nature has an amazing ability to absorb what we throw at her but it certainly isn’t infinite.

Further, the natural injustice that arises when one person’s economic advantage is secured at the expense of damaging the property of others, is one too often government’s turn a blind eye to.

All of which makes the indignant reaction of Federated Farmers to the Environment Court decision disappointing, reminiscent of the dark days when the outfit was led by ACT myopic, Don Nicholson. I thought this lobby group had grown up a bit under Bruce Wills. It needs to.

The dairy industry in New Zealand long ago eschewed vertical integration into marketing and consumer products. It has left that, the most profitable end of the value chain, to the Nestle’s and Krafts of this world and kept to a strategy of raising raw milk production decade after decade and converting that to a transportable form of powdered manufactured ingredients. An interesting business strategy for sure, that’s entrenched primarily because of the legacy of regulatory protection of farmer cooperatives.

That introverted view saw all industry profits flowing back behind the farm gate, irrespective of where in the supply chain they were made.

Under this regime it’s logical for the industry owners to simply boost the volume of raw milk on-farm. It’s the only path they’ve had to greater profits.

Unsurprisingly the consequence of that lethargic business model is that the population of dairy cows has exploded from 2 million to 4.5 million over 30 years.

Progressive farmers should form their own lobby group, there’s few benefits being tarred with the brush of environmental retards. Leave that to Federated Farmers and their ignorant rump.

But as we know cows are major pollutants so the clash between their numbers and the environment, particularly waterways, was bound to happen.

It’s surprising that the environmental authorities have been so slow to define the ecological boundaries. Thankfully we have a huge number of farmers who are conscious of the damage their industry causes anyway and have designed their farm practices accordingly. The efforts of that majority needs to be recognised more widely.

But there are always the laggards, those who simply don’t care about the consequences of their actions and clearly the forthcoming tightening of limits on their activities will generate indignant squeals from them.

What isn’t acceptable however is that a national farming lobby group becomes chief apologist for such a retarded attitude. It undermines the good work and good name of so many farmers who are doing great environmental mitigation work.

Progressive farmers should form their own lobby group, there’s few benefits being tarred with the brush of environmental retards. Leave that to Federated Farmers and their ignorant rump.

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Gareth Morgan is a businessman, economist, investment manager, motor cycle adventurer, public commentator and philanthropist. This opinion piece was first published on his new blog garethsworld.com and is reprinted here with permission.

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Gareth -- you say at the end of a preamble on Dairy Products
"Unsurprisingly the consequence of that lethargic business model is that the population of dairy cows has exploded from 2 million to 4.5 million over 30 years. "
The prime reason that this has happened is that Farmers --with Dry Stock --- Sheep and Cattle --- have had at least 20 years of making low or no Profits what so ever--- there is a limit to how long you can live on fresh air ---- and the only gain was when at the end of their working lives, they sell the farm and get a Capital Gain, to enable them to buy a new home and have a bit of extra to supplement their retirement.
The Dairy Industry produces regular Monthly Pay cheques to the farmer ---Lambs, Sheep, Wool and Beef do not.
When you have run a farm we might listen !!!!
ps Have you ever thought about the logistics of sending fresh Milk to China/Asia. Have you ever thought about the Logistics of sending UHT Packs of Milk to China. There is a new UHT Plant built/funded by an Asian woman, in Tauranga.  Its capable of using/Processing/packing maybe 30,000 litres/day or 90,000 x  330ml UHT packs.  How much milk does Tatua Dairy take in daily  ( among the smallest Export Plants in NZ)  2 million litres a Day.  Fonterra Edendale Intake  14 millionlitres per day.
 

Gareth, I accept your arguement that farmers must do what is neccessary to mitigate negative impact on the environment, and I think our right wing orientated industry leadership is misguided. But I strongly disagree with your assertion that the cooperative model is too blame for the ills created by farmers (specifically dairy farmers in your case). You come across quite righteous in your high profile stance on matters of importance, but  then you show your true colours, in this case a call to undermine any self determination created by far sighted agricultural forebearers in creating cooperatives so farmers could capture some value from their product, and let the financial industry (that's you Gareth and people like you that have covered themselves in glory in recent years) increase value and solve problems. Maybe you could point to some examples around the world.
 
What is stopping the cooperative model from adding value. And by the way the day Fonterra was formed was the day it was mandated to demutualise, and it's been downhill since. Do you think once it's fully demutualised, investor governance replaces cooperative (already happened), that all that you bemoan will come right?

mist - why would anyone take your advice and "take a 120% loan, go buy a herd" - stupid in the extreme and selfish as well because now you have to "exploit" someone or something to manage to pay back the loan.  It sounds like you want to exploit the environment because you are already up to your ears in debt.  You (and the environment) would have been better off had you invested in growing vegetables if what motivates you to farm is the work in the outdoors. 

mist, that tirade only goes to prove my point - there is no profit in animal protein.  If a person with your experience can't make ends meet - why would I (or anyone for that matter) make the same mistake as someone like yourself with experience!  Why do you seem to think working outside, driving tractors and raising animal protein is somehow so noble that everyone ought to try and do it?  I'll stick to growing my own vegetables, thanks.  And I might consider nuts as a replacement tree crop when we harvest our radiata.  A much better legacy for a future generation - a great source of healthy protein and carbon sequesterers in the meantime.
 
The only reason these industry "experts" are trying to tell you this aim is possible:
"(b) setting up sustainable, intensified systems,"
 
Is to keep the present ponzi scheme going - it needs someone like you 'believing' that someday you can get there with your "intensified" animal stocking plan.  The ponzi needs people like you to keep borrowing more and getting yourself into a greater debt pickle to do it.
 
Stop feeding them your future.
 

We put cows inside Mist, and we cut and carry or buy and carry. Are we really going to be paid enough to do that when the oil gets even more expensive to pull out of the ground.
In the meantime we could be reorganising our respective  industries to cope with a change in our how we power our world.
Dairy is so totally reliant on fossil fuels. Daily pick up... fertiliser...motorbikes and tractors and cropping. Very fuel intensive.
How are your fuel bills now? Mine are manageable. I guess product prices will rise, as fuel rises. But will NZ get its share of oil, or will the big boys snatch it all? Its not far away. In the meantime we become intent on becoming more fuel intensive.... craziness.

I don't think you should do it.  But then - are you on the council or environmental court, or one of those people telling farmers that they must pay to clean things up (without passing on the cost <- important bit!!)
 
The point is we can farm our land sustainably - meaning we can feed our own population with all it needs from our land whilst maintaining a high level of biodiversity and not spending all the natural capital to the detriment of future generations.  Where farming gets uneconomic is when we look on on agriculture as a key export earner.  And if because we do place such a ridiculous enphasis on ag as an export earner - we have inflated land prices beyond what is reasonable, so we have had to look to expand our herds at the expense of what is environmentally sustainable - so we expend further borrowed capital to clean up the cost of too many animals, and so the price of land goes higher ... and so on and so forth.
 
Folks talk about our current account deficit as if we overspent on imported goods (a lifestyle better than what we 'earned') - but that isn't the case at all.  Largely we overspent it on land - not imported goods.  Stupid, eh?
 
  
 

Kate what happens when 300 million Chinese who's earnings on average are greater than ours in NZ  are prepared to pay more for food than us ?
 critics with no tolerance of the environment foot print of food production should wake up and open your eyes to what is happening globally

It's not a matter of whether they are prepared to pay more for food than us - but rather they are ABLE to pay more for food than us.  Same goes for land - and we know what the answer is to that.
 
But why are they more able to pay?
 
Because they've been making lotsa their money on copyright knock offs, explotation of their labour force and trashing of their environment.
 
And Helen signed a free trade agreement with these folks and we're happy to allow them to buy their way into NZ residency - no questions asked about the means by which the money was obtained.  The 'way' of globalisation - it's unconscionable to my mind.
 
 
 
 
 
 

They are very able to out bid us for food and they will because they work hard and save/invest aggressively. Their average GDP per capita has doubled in three years in china, ours has been flat or declined for several years in real terms - its just this country has borrowed excessively and as a country, we now have to live within our means. This is becoming very painful for a lot of sectors, yet as a country we don't work hard, save and invest effectively. 

I agree.  GDP per capita in China is around USD$5,000 - on a PPP basis USD$8,000. 
 
It certainly isn't their middle class buying offshore assets.
 
 

Largely we overspent it on land  Kate what do you mean by land.  Rural, urban or both?

Both - only a guess but I imagine a very large chunk of our current account deficit relates to us paying one another too much for land.  I don't think buildings have inflated to the same degree.

we have inflated land prices beyond what is reasonable, so we have had to look to expand our herds at the expense of what is environmentally sustainable   Advancements in grass/crop species, technology (cowshed as well as machinery/cultivation),genetics, knowledge/changes of management systems etc have contributed more to increasing herd sizes than debt.  In 12 years we have increased on our farm stocking rate has increased from 2.67 cows/ha to 2.95 cows/ha without any increase in debt at all. 12 years ago we paid less than $10kg/ms for our land - hardly high land prices.   It's not debt that's the problem for the majority Kate, it's rising costs, coupled with reducing payout.

Come on Cas Ob 12 years ago the payout hung around the $4.00. For the last few years it must have averaged well above $6. We all get ups and downs, so this year its down. Big deal. You have to plan for those ups and downs. And if it wasnt land farmers were buying it was machinery or a rental. The banks were very good at sewing up most farmers, encouraging them to leverage one way or another. To say debt is not a problem is bull. Absolute tripe. My bank lady loves to tell me how much I dont owe compared to everybody else. Maybe you are in my camp, but there are few sitting in our tent with us.

I standby my comment debt is not a problem for the majority of dairy farmers, Belle. The average dairy company payout was $5.01 for 2000/01 season. :-) 01/02 $5.35; 02/03 $3.66; 03/04 $4.25; 04/05 $4.58. 
 
The big deal Belle is that because of the higher payouts, suppliers to the dairy industry have ratcheted up their prices to take advantage of the extra cash dairy farmers may have had over the last few years.  Now the payout has come down from the heady heights of a few years ago, prices haven't dropped - at all.  I have been farming long enough to have seen all the ups and downs of farming - including the 1980's.  However we never saw the volitility that we have now. That is what is different now.
Check out the difference between actual payout and inflation adjusted payout in the graph 5.1 on this site, page 42
http://www.lic.co.nz/pdf/DAIRY%20STATISTICS%2010-11-WEB.pdf
 
What has caught some farmers out (and I would suggest it is bigger than admitted by the powers that be) is the costs of  meeting Regional councils ever changing environmental rules. This is especially true for dairy farmers.  If you know the changes are coming you can plan/budget for them.  It is when rule changes are made 'overnight' and you are expected to find in excess of $100k to make 'immediate' changes that the problems arise. Like wise the introduction of dairy differential rates which are in addition to the farms general rates.  In 2000/01 our total RC rates was around $300 (payout was $5.01) This year those same rates will be $3800 (payout expected to be around $5.50). Rates have increased by over 12x, payout hasn't. Compare that to our District Council rates - 2000/01 $5k; 2012/13 $10k - the rate of increase isn't as high as RC rates but they have still doubled but payout hasn't.
I can't speak for your farming industry Belle - your costs may not have seen those sorts of rises, but I do get a little grumpy when people outside the industry say that debt is the problem - for the majority of dairy farmers it isn't. I do accept it is a problem for a minority - and perhaps a significant minority at that, but that debt is being exacerbated by rising costs.
 

CO - the only reason it could have 'caught you out', was if you were assuming (in arrogance?) that it wouldn't happen.
 
Clearly the problem was in existence, clearly (despite some folk spinning spin, eh CO? :) it was escalating, clearly it was only a matter of time.
 
The only difference between debt and costs, is surely the column you enter them in. McCawber was on the money....
 
 

Ah, you are now making assumptions pdk - in ignorance of the facts of the situation to which I was referring. Ignorant (arrogant?) assumptions?
 
As fairly environmentally friendly thinking folk we had already made allowances/changes so personally it didn't affect us. :-) 
 
When a farmer has a consent and is legally operating within their consent it is only usually as the consent period is coming to a close (maybe 3years prior) that they will consider adding changes in to their budgets. That is because the science in regards to dairy effluent is constantly changing. e.g. in the relatively short time we have owned our current farm the rules around effluent have changed multiple times.  In the past the RC would be quite prescriptive in what options you had (this was actually quite good as you knew what exactly they wanted).  Now however, they are less prescriptive and say things like 'effluent storage according to best practice' instead of '90 days storage required'.
A friend had put in an effluent system which was encouraged and signed off, as 'best practice' four years ago, only to have some arrogant little man come out last year and say, ' that's not acceptable now, you have to change your system'. 'That will cost me in excess of $200k' said the farmer.  'Well, you should have budgeted for it' said the little man. 'I have, in 2017' said the farmer. The farmer is still in full compliance of his effluent consent with his current system, but was being bullied to change his system immediately, because of a kneejerk reaction by the RC, probably due to talk that the govt was going to 'do an ECan on them'. Thankfully in the fullness of time, those stupid and relationship damaging sorts of behaviour have been modified.
Farmers are making changes pdk, but there is no 'one size fits all' solution to dairy impacts.  It has to be done on a catchment, by catchment basis. There are lag times in cause and effect. In our catchment there are three distinct soil types which RC has now stated vary in leaching properties from just weeks to years. They are now doing the science  and investigating other possible causes, not just dairy.  For waterways in our area RC are now saying sediment is the No1 problem.  A bouquet to our RC as I believe they are way ahead of the pack as far as regional councils go.  :-)
 
As to an escalating problem - that was a matter of opinion. :-)  Never met your friend McCawber so guess it's one of those theory v practice things.

It's the cleaning of drains that is contributing to the sediment mist in our area. - After the RC goes through and cleans them (on a 2/3yr rotation) there is is slumping of drain banks. Hence them looking at battering the drain banks - but who pays? 
Soil type doesn't help in some instances. There are situations of farmers on certain soil types planting up riparian strips only to have all the plants ripped out during floods.  They are finding in some cases it is better to leave the strips as grass only as less sediment is entering the waterways. Hill country erosion and forestry are also being fingered by the RC. Was talking to a RC scientist recently and through monitoring they have found gravel roads to be a cause, which hadn't been considered earlier.  As Southland has the largest area of gravel roads in NZ the cumulative effect of this type of sediment source is now gaining some attention. What, if anything, can be done about it remains to be seen. And of course sediment contributes to nutrients loading.

Mist - ah, well, I account things a little differently from you-all.
 
We sink enough carbon to more than cover our (less than average admittedly) carbon pollution. We also count the use of fossil-fuels/fertiliser, as a negative, while attempting to maintain/improve our soil.
 
The sobering answer is "not much"; and that's where we're globally bound. I'm told Lester Brown's new book is worth the read:
 
http://www.amazon.com/Outgrowing-Earth-Lester-R-Brown/dp/0393327256
 
 

Then you ask the wrong question, Mist. Not alone, you aren't, but wrong you are.
 
The aim of food from the land, is food from the land. Physical/biological/chemical balance in inputs/outputs are the only yardstick.
 
There is where you always miss the point. Money is a man-made, entirely artificial, not guaranteed to monitor, system.

You are cherry picking  Cas ob, 00 /01 was a very high payout year in context, this year at mebe 5.50 is a low. Now to say that, that means there has been some serious movement upward in prices. 
I agree rates are shocking, and as you add value to your land as a dairy farm, you up my rates if you are next door to me.
If you talk environment rules, I have no sympathy whatsoever. Dairying has gone industrial. We dont let factories (well mostly) dump their shit all around the countryside. What makes you think it should be different for farming.
 I believe I have said this before here, when I am out and about and asked what I do, and I say farmer I am now greeted with grim silence. I remember the days when I was given a cheery acknowledgement. 
I dont use nitrogen anymore, I use rpr and  do very little break feeding and no cropping. Compare this with how most dairy farmers treat their land, we have little in common. If it wasnt for the regional councils imagine how bad it would be. Costs are going up for everyone, that doesnt mean we should wreck the rivers to pay our bills. If you consider the billions we owe to overseas banks, I seriously doubt the value of all the infrastructure that has gone into building this big dairy farm that is Enzed.
Rising costs are not a new concept Cas Ob, the new concept is that land prices have stopped rising, and didnt they go down around 30%. Hmmm yes thats what no one figured. The ponzi might stop. If I consider the smaller family farmers I know, everyone is maxed out. EVERY1. I dont know the state of the corporates, but at a guess, they probably out do the family farmers. If one considers the serious cost cutting going on everywhere. You are in dreamland Cas Ob if you think the average farmer has no debt problem.  

Belle, go spend some time researching the discharge consents for industry - you may be surprised at what toxins/contaminents are legally discharged in to the waterways.  Likewise sewage consents. There should be no legal discharges of sewage in to waterways, high rainfall or not. Southland has a 28% compliance rate of sewage consents - it's all in their report on line.  This figure doesn't seem to improve a lot in any given year.  When a local community was surveyed about their 'significantly non-compliant'  sewage system upgrade, the overwhelming majority said they didn't want the upgrade, as they didn't want to pay for it.  Consequently the non compliance continues unabated without any form of infringement notice/prosecution from RC. I'm not saying dairy should be exempt - only that there should be a level playing field.  Farmers cannot use cost as an excuse not to comply with consents, neither should urban consent holders be able to.  Afterall, urban NZ is pretty quick to vilify a farmer who has a mechanical breakdown that causes a consent breach (note that is not the same as effluent actually entering a waterway), but seems to think they should remain above the law when their urban schemes literally pour shit in to the waterways.
 
Did you look at the inflation adjusted payout graph Belle  that I linked to? Did you not notice that though payout may have been lower in $ terms years ago, in inflation adjusted terms they were quite high, whereas now the two lines almost converge? 
 
It is telling that Horticulture NZ is also appealing Horizon's One Plan Environment Court decision.  The penny is starting to drop that ALL land users have a part to play in water quality.
 
Suggest you do some research in to the environmental damage dams on rivers cause. Large dams and river diversions have proven to be primary destroyers of aquatic habitat, contributing substantially to the destruction of fisheries, the extinction of species, and the overall loss of the ecosystem services on which the human economy depends. Their social and economic costs have also risen markedly over the past two decades" (Postel 1998, p. 636).
 
We farm very different land/soil types Belle.  Backfencing crops is considered 'good practice' and recommended by ES!  Good on you for not using nitrogen, we use very little on our farm and then it is usually liquid urea which has 40% less leaching than solid urea. In fact most of the dairy farmers in our area now use this and similar type products. 
It is interesting that you say 'most dairy farmers' when referring to bad environmental practices, yet Gareth Morgan says 'It’s surprising that the environmental authorities have been so slow to define the ecological boundaries. Thankfully we have a huge number of farmers who are conscious of the damage their industry causes anyway and have designed their farm practices accordingly. The efforts of that majority needs to be recognised more widely.'  About the only thing he says that I agree with ;-)
 
Janette Walker wrote on another thread that around 22% of farmers have debt issues. That figure is very similar to what I hear from my contacts in the banks.  That would mean around 2400 dairy farmers, which numerically is a lot and maybe a headache for banks, but that still means that the vast majority of dairy farmers are ok at present. So I guess we  have to agree to disagree based on the circles in which we move. :-)

Isn't debt responsible for the GFC and ongoing reprecussions. Aren't NZ dairy farmers also guilty of contributing behavior? From memory debt has increased from $8MS in early 2000s to over $20MS. That's a phenomenal increase in average debt. Whose carrying the burden? Has efficient (and sustainable) productivity  kept pace? Speculative spawned debt assisted by tax structure is an issue alright. Cost inflation is affecting many, just ask consumers buying dairy products, and rates are a burden, but land values don't help that.
 
Despite Mists and Gareths assertions that the cooperative model is part of the problem afflicting our industry and society in general, I find it unpalatable and without foundation. Ha Joon Chang a professor of economics at Cambridge Uni credits cooperatives with the success of the Dutch, German and Danish dairy industries. Now I wonder if they add more value than NZ dairy cooperatives (eg Tatua)? Being in the middle of the south pacific may be a factor, hence turning milk into milk powder as value add.
 
It's more than a bit rich and blantantly ridiculous of Gareth to lay the blame for agricultures failures at the feet of th cooperative model. Cooperatives are more likely to have principle based values more consistent with those of the surrounding community than any investor owned industry that will apparently add value and care for the environment as suggested by Gareth. I realise Fonterra may not be a good example, but it ceased adhearing to cooperative principles and values upon releasing 100 years of cooperative development capital at time of its formation, in part due to encouragement from the government and financial investment industry bless their wee socks.
 

Mist -  we sold a farm in Central Plateau and bought in Southland, strictly a business, not emotional, decision.  Southland prices were less and you got more land for your $.  It was just before prices down south rose.  A lot of Nth Island friends thought we were crazy - but we have never lived down on the farm and have always employed 50/50 sharemilkers. By buying in Southland where land was cheaper and more productive, and following a low cost farming system, we have had huge flexibility in lifestyle ever since. The MOTH maintained at the time (and still does) the North Island is over-rated and mostly over priced for dairy. ;-)

We had set ourselves up so we didn't need to take drawings from the farm. That makes a big diff. By employing 50/50s we didn't have the capital cost of cows and machinery. Also meant farm staffing wasn't our problem. As absentee owners we gave our sharemilkers a lot of autonomy as far as decision making was concerned. Both our previous sharemilkers went on to their own farms when they finished with us, even though we milk <450 cows. Sure we may have been able to make more $ with contract/lower order, but it isn't just about $. The sharemilking system is something we are passionate about supporting. It has also given us a stable base of a farm workforce. We deliberately sought a farm close enough to town for partners of staff to work off farm, and also <550 cows.

Enjoyed your post, mist. Back in 1999/2000 when we bought our current farm and runoff we could have bought 2 farms and a runoff, for around the price of $3mil. Ah, those were the days! ;-)  The MOTH always has had goals and a plan to acheive them as well as an ability to 'think outside the square'.  We don't believe in the 'child has to inherit the family farm' mantra. That sort of thinking often only retards progressive thinking as folks get emotionally attached to a specific piece of land, and become blinkered in seeing opportunities elsewhere.  If it works for some that's fine, but sometimes that can be the wrong way to approach things.
We created our off farm income by each becoming involved in our own businesses - run from home - think consultancy type work. It comes down to self belief, I guess. Some farmers have huge difficulty in letting go, so a 50/50 arrangement would only end in disaster for them, but for others it gives a flexibility of lifestyle others only dream about.
 
Our farm is a business for us - it has to be in the sense that it has to be profitable as it is intended to provide us with a retirement income i.e. we will take drawings from it, as we have no expectation of receiving National Super. If NS is still around then that will be a bonus. :-) Surpluses have been used to diversify our investments - we have never wanted a 2nd farm. You are spot on about time-leakage.  :-)

It wasn't an easy ride mist.  ;-) We had been farming for around 20years by the time we bought down south. 
 
Selling land that was high $ value, to buy considerably more land that had a much lower $ value, but with greater productivity potential was a no brainer really.  The potential to increase production on the farm we bought was significant - even on the low input system we operate.  That has been key to the farm being a first class investment. The first thing we did was engage in conservation measures - riparian strips, fencing off wetlands, native bush-long before it bcame 'fashionable' to do so.  While we did that, the sharemilkers did their bit by bringing on to the farm quality stock and first class management skills on converting grass to milk, using a low cost system.
 
Some people are good at recognising good staff and some people aren't.   There are some shockers out there as 50/50 employers too, mist. 

The Pot calling the kettle black.
Garth you should be checking what is happening on your own farm in Brazil that you have invested in 
1000 kilograms of artifical nitrogen applied to every hectare on your farm that supports a very high stocking rates ( 8 cows / hectare ) growing 45 tons of grass / hectare 
compare NZ average 150 kilograms and 3 cows / hectare
where is all the excess nitrogen going after it has passed though the cows via urine ???
Garth just to help you out here the  Answer  = Into the aquifer
if you want slam food producers in N Z   please avoid the double standards
 
 

Wow.... Gareth?

Mmm pot and kettle, I hope its not the case, I enjoy Gareths take on stuff. But hypocrits, not so much.

It is the case

Cry me a river Mist. There are two easy ways for dairy to get its costs down so they can afford to stop the pollution.
No 1 Pay less for your cows
No 2 Pay less for your land
Farmers own worst enemy...another farmer. We compete fiercely in the market place for land and stock and dont leave money for the other important stuff.

Sadly we may be joining the group that remain unwilling to buy into the pay n be damned brigade. Of course it means the end of the dream but  we are at the moment able live in a beautiful place and enjoy the farming.

Keep looking for the deals that work redcows. Dont lose the faith. When looking for the farm we bought, we couldnt believe what people were expecting to get paid for some of their rubbish land. Eventually we got a really good block, it was a bit further out than I expected, but it sure grows grass. Half the price of the crap closer to town.

This is hilarious.  You've spent the best part of an afternoon explaining how farming meat protein isn't profitable if there are rules and requirements put around intensification and land use.
 
So you intend to sell your land holding at an inflated price (as compared to its sustainable productive capacity) to some foreigner. 
 
And then you will "get back in" to farming in NZ when NZ consumers are prepared to pay the price for the pollution/environmental degradation caused by your requirement to run too many and/or the wrong type of animals on the land.
 
Have I got that right? 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

I understand what your frustrations are Mist, and get that you think you would like to get back into land and farming if things pan out. Personally after watching the realestate papers a lot for years I think now is a good time to get in, if you have some dosh, not out. There is so much pain out there, I think many are willing to talk turkey. But I dont base that on much fact, just hearing tit bits from hear and there.
I am similar to you, low inputs, take it easy, yet still have it sorted that I maximise my assets here. Look to the future and hope to demolish the debt  before the shit really hits the fan.
More than a little bit concerned that Gareth is like Prince Charles, do as I say but not as I do. I am green, but only if it doesnt stop me from using that private jet. I appreciate the intelligent thought that is spouted, but back it up with something. He has the where with all.  

If farmers are really making sod all money, then the environmental damage caused is even more unacceptable. The only possible argument for is that farming creates significant economic benefit to the country and the individual farmers.
The idea that farming is really about low or no profits followed by capital gain when you sell the farm makes no sense either. Why is there capital gain if it is not possible to make a sensible return off the land? Unless land prices are an irrational bubble which will pop at some time in the future.....

Suggesting that user pays should apply when a public good such as water quality is diminished is hardly 'socialist'. Quite the opposite in fact. A free market with economically rational actors allied with consistent and coherent environmental legislation would do a world of good.

I think you've hit one of the key issues there, farmers could implement all the latest environmental spending etc, then try to pass along costs, and the consumer would then opt to import the meat/vegetables etc because it is cheaper (from somewhere w/o environmental constraints).
What can an individual farmer do in these circumstances, you would need to have the govt look at enironmental tariffs on importers, which would be a tough sell.

We've got about 20 acres of grazing land and a number of good outbuildings/infrastructure.  I looked at what to do with that land.  Costed out growing all the different types of protein we eat and not one animal (not even chickens) make economic sense - the grocery store is my best bet for meat, milk and eggs - and subsequently I've leased the land to neighbours who 'grow their own' largely for the novelty/image.
 
 

Pigs would make sense but.......l
competing with feed subsidised forgein imports of pork? Dont think so.
Niegbours happy with a pig farm close and even free range the stocking rate is still going to give the same pollution problems mythologicaly  associated with dairying.
As to Morgans denigration of cooperatives, pfft. They are the only reason agriculture serves in NZ as a viable industry. Outside "investors" have a shocking track record in Ag.
Recently Fonterra has ceased to be/act as a co-op and with its launch with the NZX  it will definatley look to put shareholders first and Farmer owners elsewhere.
Oh and good rant there mist. Number 63 kick you recently?

Kate if you cant make economic sense out of growing your own you just dont know what you are doing..... growing your own veg, or some fruit, milking a cow or goat, fattening a couple of lambs or pigs, having some chooks for eggs. Are you crazy? Or addicted to your trips away. The thing with lifestyle blocks, they take work, 7 days a week.
Dont mistake cost for laziness.
Edit, that sounds awful, and I dont mean to be rude. But come on Kate.....

I may have mistaken what Kate meant, but I didnt think she meant for it to make a living. However to supplement your wage with a 20 acre block, great... you can register and claim a good bit of your gst. Small business tax claims can save a lot of dosh.

We've got just under 100 acres but about 60 are planted in pine.  20 acres in existing paddocks. It was purchased just as a lifestyle block - but I was determined not to let it become a "life sentence" - in other words, costing us more than what it earned as a land holding.  One could perhaps earn a living off it if one wanted to do firewood but very hard work - two man operation - not worth it if you have to employ the second man.
 
A family of 5-6 might find it worthwhile to own/graze their own animals - but not a family of two, in my opinion. 
 
Agree on the GST thing - and indeed given we have both the forest and the grazing leases - we are registered.
 

yet you say you're wanting to turn a profit
 
No, I just didn't want to lose money on the land holding.  That was the point - we bought it as a home to live in - the location/view and house just happened to be on 90+ acres and I didn't want 'the property' to eat into either our savings or our off-farm income.
 
We didn't plant the pines - nor had they been valued and added in to the sale price.  So basically we got 60 acres of pine for free.
 
 

This place is just our home - we swapped one in town for one in the country - and the country one came with this amount of land.  Needing to keep the paddock grass down (largely to keep the place looking tidy, as its too steep to mow) - I checked out grazing of our own animals - and found purchasing and raising those (either beefies, sheep or goats) was not worthwhile - in other words I'd likely lose money - maybe not every year but the risk of losses was always there; or put another way, the guarantee of no losses was only there in owning no animals.
 
Yeah, we got a forestry consultant in recently to do the valuation.  Our block is one of a number boardering one another - all planted at the same time and subsequently subdivided and sold.  Access roads in are good - our tracks are excellent and processing is very close as well (at present).  So it's not like the crew will be brought in just for one 60 acre block.   They are 4-5 years off profitable harvest (given today's log prices) and if we let them grow on for 5-10 more years the profitability goes up.  Meantime, we've registered them under the ETS scheme, and we'll just hold onto 75% of the credits in a wait and see.
 
 
 
 

Lol, ah yes I believe there are significant changes. However if you create a genuine business, there are some definite benefits.  And I would never be afraid of claiming what is rightfully a business expense. The idea is not to get greedy and push the envelope. Of course there are downsides, such as ACC as a backup. Its not. And once you do some self employment work, ACC dont want to know you unless you pick and pay for their cover plus thing. 

Mist I think you must be sick of the rain like me.  

Growing our own fruit and veg - yep - it makes economic sense.  But not animal protein - not at the prices we can get it store/butcher bought, particularly when shopping the specials and keeping a large freezer (we are only two people - so a house cow for example would over produce - so we'd need perhaps a pig or two to use up the excess - and then they'd need supplementary feed, like scraps - and so we'd have to go collect those on a regular basis from some business - incurring petrol costs. And then there are vet bills and all the extra bits and pieces of equipment you need for animal husbandry etc etc). 
 
The best return on our land has most certainly been grazing leases.  Regular income by direct credit, no unexpected costs, no risk, no losses.  I do have three goats who free range the property and do a stunning job of keeping the weeds down.  They've been good value.
 

The grazing leases pay the rates.  Rates went down substantialy when we moved from an 800m2 section in the city to the 90+ acres out here.  And I am the same 12kms from my work.  As the place is just our home, I reckon it was a good deal.  Had I been raising my own beefies on the land - I doubt I'd have got the same return - indeed could well have lost money.

Agreed, Belle.
 
Between us, we average one person full-time working something on the land. It can be weed/blackberry clearing, planting, weeding, watering, doing the chooks and the goats (they're weed-eaters only) and maintaining things.
 
Free-range-and-supplement chooks are on the plus side of the ledger, for sure.
 
That results in almost no grocery bill. no power bill at all, and not a lot of overhead. I do wonder about the calories we burn doing it all, vs the calories we make, though.   :)
 
Sad about Gareths Brazil operation, I'd suspected it for a while though; you don't go there for no reason. Doesn't make his article wrong, though. Just reduces his cred.

Gareth, there are too many leeches hanging on by their gums and sucking the poor old biddies dry. By the time these leeches get their cut, there is nothing left for serious environmental protection. The banks the advisors the equity partners....not enough doing the actual tit pulling, yet still taking a cut. Something has to change.