Bruce Wills says he has had better weeks because of two disappointing rural issues. Your view?

Bruce Wills says he has had better weeks because of two disappointing rural issues. Your view?
Horizons Regional Council jurisdiction

By Bruce Wills

You can say some weeks are better than others and this week has been far from vintage.

First was news of a major animal welfare incident on the West Coast, but as this is a live investigation by the Ministry for Primary Industries; I’ll have to choose my words carefully.

Then came that unexpected bolt of lightening out of the Environment Court called Horizons One Plan.

I will start with Horizons because an easy way for newspapers to frame this, is 'rivers before farmers'.

The reality is that no one wins under the One Plan decision.

To be green you need to be in the black may be a well-worn cliché, but BERL figures gives the argument substance. BERL ranks Horizons as having the lowest economic performance indicators in New Zealand. Out of 14 regions, Horizons was ranked 10th in 2010 but has now holds the wooden spoon.

Almost over the entire life of the One Plan debate, between 2006 and 2011, the region’s economy has been the worst performing in New Zealand.

This is in stark contrast with the top three performing regions; the West Coast, Bay of Plenty and Taranaki.

Framing this as being about water or farming, implies farmers don’t care about pollution and that we are the only polluters.

Farmers and our stock need access to clean water so we have a vested interest in getting things right.

Yet you cannot help suspect that the focus on farmers as a curative, may mask some major problems elsewhere.

Perhaps the biggest reason why farmers were shocked by the Environment Court, is that it reversed the decision of independent hearing’s commissioners.

These commissioners sat through months of detailed evidence. They saw assumptions crumble and found evidence severely wanting. They also tended towards the arguments of Federated Farmers and those in the primary industries, over that of the council.

This week, these years of evidence, millions of dollars of expenditure and months of mediation were cast aside.

The Environment Court effectively turned the clock back to May 2007.

It is disappointing because farming today is streets ahead of where we were, in 2007.

What this means for farmers in Horizons, is that if you use water in an intensive land use, you look set to be regulated for nitrogen loss limits determined by a Land Use Capability. This rates land in order of increasing degrees of limitation or hazard. This is not just a dairy issue; any intensive land use or any existing intensive land use in some places, will require a regional council consent to farm.

No doubt some will cheer that farming is being brought to heel. Already, I have seen a degree of crowing by some groups.

Aside from the cost of these consents, what happens if consent is set in a way that limits an existing farm’s ability to farm?

As a former banker, suddenly the risk profile escalates and radiates out to the towns and businesses within the region.

Bearing in mind the weak economic performance of Horizons over recent years, this could all have the unintended effect of striking the residential sector downstream.

Potentially reducing farm productivity means less economic activity in New Zealand’s weakest performing region.

As a counterpoint to Horizons is the welcome time extension for Commissioners in Canterbury.

This will give added time to deal with its equally massive Land and Water Regional Plan.

A key result from extra time, aside from tidying up some holes in the science, is to allow the NZIER to catch-up on modelling the Plan’s economic impacts. I say this as the Ecan plan was notified well before this vital economic modelling was due to finish. As any plan will mean sacrifice by farmers in some places, we want to ensure it delivers exactly what it ought to deliver.

Importantly, it also allows the wider community to consider and digest what impacts it will have upon them. The primary industries are a big part of the Canterbury economy, so this will affect everyone directly or indirectly.

The point we need to stress again about Horizons; economics matter because it goes to the commercial success or failure of any farm - something our West Coast province has been dealing with under our animal welfare Memorandum of Understanding with the Ministry for Primary Industries (MPI).

As Katie Milne said earlier in the week, “there is no way anyone can condone the maltreatment of livestock. Aside from an obvious and significant destruction of commercial value, it is ethically unacceptable.”

In large animal welfare cases, Federated Farmers provides expert farmers and resources to complement the Ministry’s professional team. Our sole combined aim is always the welfare of affected stock.

The one critical message we need to get out is whatever happens financially, you are a farmer first.

Failing at a business does not mean you have failed as a farmer but failing your stock does. The thing about our involvement in large animal welfare cases is that we don’t get a single dollar for doing it. We do it because this goes to the heart of why we farm and that is to work with animals. Irrespective of how long an animal may live for does not reduce or remove the ethical obligation we owe them.

I must make it clear there is no logic or reason to maltreat stock.

The only result will be loss; maltreated stock do not perform meaning good animal welfare is good for business.

And being in business and ensuring we all have a good standard of living, is why we must equally balance the environment with economic.control.

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Bruce Wills is the President of Federated Farmers. You can contact him here »

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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As a former banker, suddenly the risk profile escalates and radiates out to the towns and businesses within the region.
 
Bruce do you care to explain and expand upon this bald but rather meaningless statement? - emphasis on your understanding of risk in relationship to banking in the context of the Horizon One Plan would be appreciated, by me at least.

The increased risk for bankers will come via the devaluation of farms with adverse land classifications, when you have to drop from 2.7 cows / ha to 1 cow / ha your ability to make a profit falls in comparison to other areas, as such your land value will fall.
The result of decreased land value is that security values for the bank are decreased, this alongside the impacted cash flow will see the risk for the bank increase and decrease borrowing power. Therefore less investment on farm and off, impacting the wider communities around the Horizons region. 
The BERL report which is correctly linked below already indicates that the region is already performing poorly. I have no doubt that this performance will only get worse in the coming years.

I didn't realise Chuck was the diminutive for Bruce.

Well its about time rubbish valuation were driven out.
Banks as the lender have the wip hand in what goes in, how a valuation is prepared. (e.g. valuation for mort purposes).
We think as valuations have in the past been so bullish/bullother things that otherwise need have been mapped out in such documents are now being pressed down by councils..
For instance re valuation the bit we have always had probllem with is
1. Valuers happy to just aply an asset spc view of compariative sales - the greater fool theory. Falls over when the properties go over to $25m plus.
2. When productive valuations had been used, that productive value is based on top 25% can do in the district (i.e. no one you can actually walk up to and talk with).
With the big units, it takes a couple of seasons to turn under performance around, hence we just drive back to actual production over last 3 seasons - why should we pay for potential, that we have to find.... and reward folk with poor systems, and low profit...
 
Chuckie is under estimating the banks ability to avoid a loss / find a greater fool....
Would Chuckie have the  RBNZ make banks mark to market their ag loan books...
if not why not.
 

Bearing in mind the weak economic performance of Horizons over recent years, this could all have the unintended effect of striking the residential sector downstream.
 
How does a council have a weak economic performance?  And striking the residential sector - downstream of what .. the ag run off?
 
Did you mean to say, that given Horizons Regional Council has failed to turn a compliance blind eye to poor ag practices for some time now - the city dwellers as well should plan to kiss any prospect of tax free capital gains goodbye too?
 
Or to put it simply - hey townies, more shit matters ("economics" ala BERL tells us so).
 
BTW, I looked for that BERL report - and this is one I found - but the rankings as stated above by you didn't correlate;
http://business.naturecoast.co.nz/tl_files/ENTERPRISE/Publications/BERL%20Reports/BERL%20Regional_Performance_Indicators_2008.pdf
 
Can you provide a link to the report referred to above?
 
 
 

The only blind eye that has been turned to pollution is by the councils themselves, why don't you research how good they have been at complying with their own consents.....

Environment Courts are also biased against dairy - consider the two cases reported in the Southland Times in the last week.
A farmer who has had no previous compliance issues charged with one offence fined $48,000 and  South Pacific Meats with four separate breaches which the Judge said was negligence fined a total of $31500.
http://www.stuff.co.nz/southland-times/news/court/7623341/Fine-for-disch...
http://www.stuff.co.nz/southland-times/farming/7606738/Farmer-may-appeal...

Ahh. Love it when people like Kate and Stephen Hulme call bull dust...

I heard the farm manager himself called the authorities in.  It's supposed to be one of those 'wonderful' equity jobs.
Classic example of when 'corporate' farming goes bad.

Good post mist.
Agree with the Coast example its the wrong guy getting hammered.
We are seeing examples where equity in a deal turns out to have really be borrowed from somewhere else, so the one time when its needed (and "knowing it being available" was what got people along in the first place) its not there...
 

Mist42nz - some very good points made and that last sentence on industry best practice is spot on. 
 
Maybe the corporate super-farm structures will fall over from natural causes.

Spot on Henry and Mist.

Good points maybe, but wishful thinking that there will be any change of attitude. Latest figures from Pillipa Hedley at dairynz point to actual cost of supplement being in the region of $6.30/kgms, but is anyone listening or are they all tied in to thier system 3&4 feeding? Low payout would point to de-stocking as the answer but not veer likely is it.