Bruce Wills delivers an optimistic view of the future for the rural sector at the Federated Farmers conference. You agree?

Bruce Wills delivers an optimistic view of the future for the rural sector at the Federated Farmers conference. You agree?

By Bruce Wills*

Keynote speech by Bruce Wills, Federated Farmers President, to Federated Farmers 2013 National Conference, Hotel Ashburton, Ashburton.

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Good morning and welcome to Federated Farmers 2013 AGM here in Ashburton.

It is the first time we have returned to Canterbury since 2008.  It is great to be back in one of this country’s premier farming regions, we had intended to return earlier but for the Canterbury earthquakes.

2013 marks my penultimate term as your president.  I think we can collectively look back on substantial progress we have made over the past two years.

Our membership is up on the same point last year despite the worst drought to hit the North Island in seven decades.  It is up despite Canterbury’s farmers and our colleagues in Otago facing rain of biblical proportions, followed quickly by snow fitting the same description.

Financially, as you will hear later, this puts Federated Farmers on a solid financial footing to pursue our mission as a successful advocate for pastoral farming and the rural economy.

Policy wise we are fully engaged. 

Organisations from government to private businesses want us on board. They want to know our views and have our input. We are an advocacy body which is keen to engage positively and constructively. We want outcomes that are good for farming, good for the environment and good for our country.

This does not mean acquiescence.  The massive investment we are putting into regional and district planning is all about balancing the social, the cultural, the environmental and the economic.  This is vital not just for our industries but for all New Zealanders.

We can only do this with a strong team. My thanks to a very supportive Board, a diligent and hard working staff and to all of you, our National Council and other elected.  You have my sincere appreciation and thanks for your continuing efforts. 

We have had some headwinds in the last six months; a record breaking widespread drought, recent snows and all the while we continue to pay the price of serious weakness in many of the countries we trade with via an elevated New Zealand dollar.

The weather and the currency are things we have little control over, the same can be said for our commodity prices. What we can do is build resilient farming businesses to ensure we survive and prosper.

The New Zealand dollar has started to soften which is encouraging. My view is that this will continue with some bumps along the way.

With adverse events I am continually humbled by the way we Kiwis so willingly step up and help our fellow countrymen. We saw this with the Canterbury earthquakes, the drought and again in the recent snows.

Last night, at our awards dinner, I paid special tribute to all those people and organisations which helped out during this year’s drought. Due to my deep appreciation of what they did for farmers in need and I wish to mention them again.

Hamburg Sud and Pacifica Shipping for their shipping assistance, NZ Express Transport for packing the containers and the Ports of Lyttelton, Tauranga and Napier.  Also to the feed contractors, farmers and our Provincial Presidents in all those areas affected who worked so hard to shift some 280,000 small-bale equivalents of straw from South to North.

That is 365, 40 foot containers, stacked full of bales or the equivalent of 297 truck & trailer units. You guys saved the day.

A special thank you must go to the Rural Support Trust and three individuals I want to name;  David Clark for spearheading the effort, Nick Hanson for helping make it happen and Katie Milne, who, just 12 months ago, was given the ‘Adverse Events’ responsibility with no idea then what lay ahead of her!

My thanks to you all.

Last night we also enjoyed the gala Vodafone/Federated Farmers Cream of the Crop Awards, where we named Kingi Smiler, Chairman of the Wairarapa Moana Incorporation, as our 2013 Allflex Agri Business Person.  The 2013 Agri Personality going to former Fonterra Chairman, Sir Henry van der Heyden.  Congratulations to you both.

The Silicon Valley of Food

At this year’s Fieldays in Hamilton I heard the Hon Tim Groser deliver one of his insightful talks.  He quoted Sir Graeme Harrison’s description of Agriculture as being “New Zealand’s Silicon Valley”. 

The reference to Agriculture being New Zealand’s ‘Silicon Valley’ conjured up three things for the Minister:

-  “First, it conveys a real sense of optimism – and we have every reason in this country to be optimistic about our future in the first quarter of the 21st Century.

-  Second, it captures the reality that agriculture will be as important to New Zealand’s future as it has been to our past.

-  Third, it also captures a more subtle idea about our agriculture future. Yes - agriculture will continue to be the economic backbone of our country’s export future. But it will be a vastly more sophisticated agriculture with innovation at its centre”.

I agree.  There is good cause to be optimistic about our medium and long-term future.  We have growth of around three percent, which would have been more save for the drought.  We have, for the moment, the inflation genie locked in a one percent bottle. 

Our unemployment rate at six percent means many of our members are turning to employees from overseas.  While we have been concerned about government borrowing programmes, Government’s share of the economy is forecast to reduce to 30 percent in 2016/17.

Hitting 30 percent is vital in order to properly rebalance the New Zealand economy.

I am supportive of this government’s target of doubling primary sector outputs by 2025. This is an exciting prospect for us and is in line with the government’s business growth agenda, which is targeting to increase exports from 30 to 40 percent of GDP by 2025.

I do not have to tell you how important China is in all this.   China is not only our largest single dairy market, our largest timber market, it is also our largest sheep meat market by volume and in the first quarter of this year, knocked Britain off the No1 perch in terms of value as well.

If we look to India, where free trade negotiations are underway, it has a 300-million strong middle class rapidly developing a taste for red-meat.  If there is one thing that could rival a Trans-Pacific Partnership it would be an Indian FTA, followed closely by Russia, South Africa and Brazil. A BRICS strategy if you like.

Red meat does have an exciting future but at the moment is the problem child of New Zealand’s primary industries. The C student with masses of potential but could do better.  Here, Federated Farmers is working with MIE, the processors and Beef+Lamb.

We need bold thinking, we need change and we need it soon.

“Instead of think big it should be invest local”

Minister Groser, in Hamilton, outlined the Government’s business growth agenda covering Export Markets, Infrastructure, Natural Resources, Skilled and Safe workplaces, Innovation and Capital Markets.

Since then, the Government has announced a $10 billion transport package for Auckland.  I don’t think anyone will begrudge the $4.8 billion package for Christchurch.

But the $400 million pledged to accelerate irrigation does pale against the $15bn pledged for these two cities, given the economic payback of ‘just adding water’ will give our economy.  Something reinforced yesterday in the final plenary session. 

While Federated Farmers endorses the Primary Growth Partnership model, the taxpayer’s $300 million to date, matched by $350 million from industry does look small in comparison to these big city initiatives.

We are grateful for anything to speed up rural infrastructure but too much focus on cities and especially Auckland, risks gutting provincial New Zealand to fuel the growth of our largest city.

We saw this disparity with rural and urban broadband.  Urban got $1.5 billion while rural originally got $48 million.  Due to some strong advocacy from Federated Farmers, it was eventually raised to $300 million but you can see a pattern.

While the primary industries generate 72 percent of the exports some may say we are not feeling 72 percent of the love.

Agriculture is New Zealand’s star-turn in terms of labour force productivity because we embrace efficient tools and practices. Further innovation promises exciting changes to come.

We are also on the cusp of a new agricultural and industrial revolution that will remove humans from many roles. Not just on-farm but in our towns and cities too.

Given internet connectivity there is no reason why in the future we will need to have massive head-offices based in one key city.  That model calls for public transport to shift workers from their homes to a place of work when advances in technology will see many roles reduced, replaced or changed beyond recognition.  Take advances in 3D printing.  It will see niche manufacturing become local so the emphasis will shift to design more so than process itself. 

My call is for an infrastructural trinity of transport, internet and water storage. It is already in government’s thought process but it deserves more priority. Instead of think big it should be invest local. 

While fully autonomous vehicles are a matter of when not if, they still need efficient routes.

We are grateful the 132-year old Kurow Bridge replacements finally got underway in March but I am appalled at the way the Puhoi to Wellsford Motorway has been demonised.  That motorway is key to opening up the Northland economy to Auckland’s air and sea ports. 

In the same league is Wellington’s Transmission Gully.  The vast percentage of interisland freight goes through Wellington so that road is vital for route security and efficiency.  Efficiency may extend the discussion to the Picton v Clifford Bay discussion too.

Imagine what one-percent of Auckland’s $10 billion transport package would do for the East Coast’s roads; especially since rail has been mothballed. 

This is not an exhaustive list but better physical connectivity, in concert with technology, could alleviate the pressure Auckland is putting on rural land for housing.  Four percent of former farmland is now under tarmac there and as Mark Twain noted, we aren’t making land anymore.

The New Zealand Government needs to take a leaf out of Google and undertake a moon-shot of its own in terms of rural broadband. 

Physical and technological connectedness spreads economic development and helps to build world-class towns and cities; not just one city.

Federated Farmers is enthusiastically backing 4G wireless and long range pilots like Google’s Project Loon for those the RBI won’t reach.  We need the high frontier to start right here, in rural New Zealand, radiating out from us instead of crawling its way to us.  Better physical and technological connectivity puts Ashburton on the same level as Albany. 

For us it opens up every tool and application and allows the inventiveness of farmers to shine.  It is the pathway for precision farming and innovation we can’t possibly imagine today.

Providing equality of access also creates a viable future for people, businesses and services right here.  It means designers, developers and entrepreneurs can run global operations while gazing upon a rural vista.  Is not taking the pressure off Auckland a good thing?

Water is the strategic big idea 

As Minister Groser said in Hamilton, 70 percent of the entire world’s fresh water is used in the production of food.

We know we have water in abundance; we just need to store it in times of plenty to use it in times of shortage.

There is potential for another 420,000 hectares of land to be irrigated over time. Research from NZIER suggests exports could be boosted by $4 billion a year by 2026; this would support thousands of new jobs.

More consistent river flows in summer will also have real benefits for the environment, with improved habitats for fish and birdlife. Green grass holds soil where it needs to be; parched soil and dust more easily washes into waterways.

Being the world’s most carbon efficient farmers we perform a global good by taking pressure off less efficient producers.  We can do the same with water and take pressure off countries in both the near and far east, countries that are facing huge water resource constraints which thankfully we do not have.

Federated Farmers strongly supports water storage for farming.  Strategically, this is the economic big idea along with transport and technological connectedness.

I applaud the government’s Crown Irrigation Investment Limited, which was allocated an initial $80m in budget 2013 to help kick start worthwhile water infrastructure projects. This is a move in the right direction.

Agriculture has been New Zealand’s largest single export sector for the last 100 years and as such is critical to our country’s economic performance. This will remain so for the foreseeable future.

Any change in agriculture’s performance will materially and directly impact on the national economy. Successful agriculture matters to all of us here in Ashburton today, it also matters on Lambton Quay and in Queen Street.

We have a wonderful natural environment that we must take good care of, we have clever innovative farmers and we are the trusted suppliers of safe food to an ever hungrier world. With sensible government and supportive policies this country’s prospects are bright indeed.

Thank you.

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

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8 Comments

I do not have to tell you how important China is in all this.   China is not only our largest single dairy market, our largest timber market, it is also our largest sheep meat market by volume and in the first quarter of this year, knocked Britain off the No1 perch in terms of value as well.
 
If we look to India, where free trade negotiations are underway, it has a 300-million strong middle class rapidly developing a taste for red-meat.  If there is one thing that could rival a Trans-Pacific Partnership it would be an Indian FTA, followed closely by Russia, South Africa and Brazil. A BRICS strategy if you like.
 
Mr Wills don't you think Mr Grosser's zeal to settle NZ's future within a TPP framework works against China's interests and hence this type of explicit roadblock with well elucidated signals of the consequences keeps recurring?
 
Meat exports are again being delayed at Chinese ports, just a month after the last block there angered suppliers.
 
Meat industry sources said that since Thursday night customers had reported they were unable to gain access to product, including at Dalian, a major port in northern China.

China, a country that a few years ago imported 140 tonnes of NZ meat, Im talking two years ago, suddenly becomes a place where we have 30,000 tonnes heading too, on top of the 18,000 tonnes last quarter.
 Something has gone wrong, meat company freezers are full, works are looking at restricting kill as thay have no more storage.
 
 NZ inc, is in some kind of deep doo doo. Politicans are still 'managing perceptions' as the good  HMSNZ sails off the end of the world.
What has happened to our UK markets Mr Groser?  
http://www.stuff.co.nz/sunday-news/30288/MP-denies-shock-claims
 
 

Given the extent to which the rural sector is indebted to private bank companies, I think the banks will do very well out of NZ agriculture for many decades to come....not so sure about the indebted farmers however.

Bruce states:
I am appalled at the way the Puhoi to Wellsford Motorway has been demonised.  That motorway is key to opening up the Northland economy to Auckland’s air and sea ports. 
Much of the rest of Bruce's speech seems to be trying to demonise Auckland; albeit with the only real evidence being a sort of government commitment to start investing some money in 2020 towards the transport improvements Auckland actually wants. 
There isn't much point building a Puhoi Wellsford motorway, if everything is clogged up at the Auckland end. Build both by all means, but not just the motorway.
I understand bashing Auckland is an easy and probably popular platform to some of his constituents, but he's probably best to know that carry on with it, and he just may have Aucklanders resisting anything he says.
 

But isn't Auckland too geographically constrained to continue growing and make a gainful contribution to NZ that outweights cost?
I live south of Tokoroa, and think Exodus, movement of 'the' people, would be the way to go.
 

Omnologo,
It would be fine with me if that were to happen. Indeed with maybe a decent rail link, as well as improved road, Hamilton could easily take some of the pressure off, as it has enough critical mass to have the facilities and events that many people want in a modern city. Doing so makes more sense to me than building up in Pokeno or Karaka and beyond. Am sure the 30-40 billion going into Christchurch will end up making that a very nice City. Tauranga has good strengths; Wellington seems to be getting its mojo back- (to some extent as the Nats are clearly evolving into central control big government supporters, much like the neo cons in the States). Napier, P North and New Plymouth have good strengths, as no doubt Dunedin, Queenstown and Invercargill do in the South. (apologies if I've left a key town out)
But using and abusing, or strangling, Auckland doesn't seem helpful. 
Bruce has the following line:
 the Puhoi to Wellsford Motorway has been demonised.  That motorway is key to opening up the Northland economy to Auckland’s air and sea ports.
He apparently likes Auckland when it is helpful; and he's happy to send as many trucks here as it takes for his purposes. Using your reasonable logic, he should advocate building up what is already a pretty good port in Whangarei.
For the moment we have a very liveable City, but it's feeling the strains of transport; and related housing pressures in convenient locations, and it's not obvious that your exodus is in fact likely to happen naturally. So, have a good plan for this exodus, or even non growth, and we will relax. But it doesn't seem to be happening.
Separately you would infer from his article that Auckland receives more in tax funds spent than it pays in. I suspect the reverse is in fact true, by miles. But neither of us knows, as it doesn't seem easily discovered in Treasury figures. Even now, the $10 billion now sort of committed, with lots of caveats, to Auckland transport doesn't happen for 7 years, and 3 more elections.
 
 

No plan, apart that I thought it would be a better lifestyle for employees of whatever firms there are in Auckland, along with more efficient in terms of transport, commuting.... I'm one of those 'a to a' (aversion to auckland) country boys that has roots in Canterbury of all places, but appreciate your well presented comments, and feel a bit more enlightened as a result thanks.
 

Ag still pays for most of our imports, and even when that's all netted out (e.g. x % of fuel/oil, less exports, as input costs to ag), I would still expect to see a healthy surplus:  Sales less COGS.
 
Point of BW's speech is really that for years (just like cars) ag has been doing more with less, and is (like cars) actively managing down the residual impacts.  That sort of IP has much value in and of itself, and becomes another export revenue stream.
 
Ya cannae say that aboot e.g. Wellington.  If 1855 redux turns it into a mussell farm, the rest of the economy would scarely miss a beat once ya re-route a bit of shipping......and hand Auckland the title of 'capital'.
 
Again.