Rivals put the heat on NZ farmers
19th Apr 10, 11:22am
NZ agriculture has as little as five years before large-scale intensive farming in South America, western China and central Asia erodes its cost advantage in producing bulk commodities, according to accountant KPMG. Their Agribusiness Agenda report observes that these regions have the benefit of lower-cost land and labour and less complex regulatory regimes. "In addition, they are traditionally closer to key markets, enabling them to deliver food to the customer at a significantly lower cost than a competing new farmer or grower in NZ could achieve," KPMG agribusiness chairman Ross Buckley said in Stuff. "This gives NZ companies a short buffer, maybe as little as five years, before low-cost regions are producing bulk commodity products in significant volumes and undercutting NZ's pricing in our traditional commodity markets." Because of this, it was now time to start revising industry structures, practices and products to give NZ produce better value well in advance of large-volume commodities from these new suppliers. To be more efficient, we need to invest heavily in science, technology and infrastructure, KPMG lead agribusiness partner Ian Proudfoot said. The farming sector of the future should have the ability to deliver food solutions all year around through adoption of advanced global sourcing and logistics. "Companies need to be constantly talking with customers to understand their future needs and requirements around product presentation, sustainability and traceability to deliver these in advance of competitors and lock in price premiums," Mr Proudfoot said. Sustainability was a priority. "Failure to adapt to sustainable practices will in our view leave the industry facing a future competing in low price, commodity markets with producers from countries that have increasingly got a significant low cost advantage over our producers."Government policy should also be focused on better investment, management and use of water resources, Mr Proudfoot said. "Water is NZ's liquid gold. Development of a policy framework that provides certainty over the access, quality and cost of water to agribusiness is important if the industry is to have the confidence to make long-term investments in improving productivity and increasing its contribution to the NZ economy." National co-ordination of a water management strategy was needed.