Allan Barber surveys the implications of the election result on the rural sector and finds most leaders see present policies delivering "the desired outcomes"

Allan Barber surveys the implications of the election result on the rural sector and finds most leaders see present policies delivering "the desired outcomes"

By Allan Barber

Beef+Lamb NZ’s Manifesto which was issued before the Election contains a very concise summary of the red meat sector’s wish list for the next three years, although it doesn’t necessarily include the big elephant in the room of meat industry restructure.

But the National government’s attitude on that one is well known and unlikely to change until the industry can present an agreed solution favoured by a majority of industry participants.

I contacted Nathan Guy, at present acting Minister of Agriculture, to find out the government’s priorities for the next term and how they dovetailed with the B+LNZ and Federated Farmers manifestos.

He responded in some detail, stating satisfaction with the strong support received from rural New Zealand which gave confidence the last government was very much on the right track.

Major initiatives would be RMA reform, a strong policy requirement of the Prime Minister, continuing focus on strengthening biosecurity protection, investment in science and innovation which has increased 70% since 2007/8, attracting more young people into careers in agriculture, more free trade deals, an increase in water storage and developing the potential of Maori agriculture.

This all seems pretty consistent with the two manifestos, although there will never be enough money to go round all the priorities listed.

Feds’ push for $600 million additional investment in science over the next three years with specific reference to the three Centres of Research Excellence which missed out on the last funding round may be a leap too far.

$1.5 billion is already committed for next year with a large proportion going towards the primary industries through universities, the Callaghan Institute, the Sustainable Farming Fund, AgResearch and Scion.

PGP funding of $708 million has been allocated across 18 different projects with matching industry investment with an assessed potential to generate returns of up to $11 billion by 2025.

My impression from Guy was very much the intention to proceed with present policies which all appear to be on track to deliver the desired outcomes.

My first question to B+LNZ’s chairman James Parsons was whether he saw any change to current policy settings following National’s re-election as well as whether there were any specific areas where more action and investment were needed.

He is very committed to the success of the PGP programme, citing the Red Meat Profit Partnership as a prime example of the benefits from providing a platform from which nine partners – six processors, two banks and B+LNZ – could combine forces; there was no way this would have happened without government funding.

One of Parsons’ main concerns is to achieve the goal of the People Powered report produced in July to attract an average of 5,000 people a year into the industry.

However as the report shows over the next 10 years, the most important factor will not be the absolute number of entrants, but the change in the make up of the workforce.

In 2012 44% of the workforce had a tertiary qualification, but this will rise to 62% by 2025.

Government response has been to raise subsidies for agricultural degrees at tertiary level or higher, as well as looking to improve information and material available to careers advisers. I suspect this will not be nearly enough on its own to achieve the required rate of increase. It remains a mystery why a career in agriculture, New Zealand’s largest export sector by a country mile, continues to be less attractive than a whole range of other less exciting and productive choices.

Other priorities for B+LNZ include environmental policy with a sensible discussion about nutrient allocation, reduced regulation where appropriate, and negotiation of improved trade access agreements with important trading partners where New Zealand is at a disadvantage. Specific examples of priority agreements on tariffs which must be pursued vigorously are Korea and Japan, particularly on beef access, where progress has been slow.

Japan’s commitment to the TPP has stalled over dairy access, while Australia has a sub optimal FTA which provides for reducing beef tariffs, while New Zealand beef tariffs into Korea will be higher than those enjoyed by Canada and Australia from 2015. Non tariff barriers on Chinese imports of beef and green runners and beef to Indonesia are also an issue in need of urgent resolution.

Parsons corrected me when I raised the necessity of introducing NAIT for sheep if we are serious about controlling disease outbreaks such as Foot and Mouth. This would impose a conservatively estimated cost of $80 million on sheep farmers to track stock in the event of an incursion of what is a wind borne disease.

NAIT is more relevant to food safety than biosecurity problems.

An infinitely preferable mechanism for tracking livestock would be the mandated introduction of electronic Animal Status Declarations to avoid the use of paper records, impossible to trace quickly and comprehensively.

One topic notable by its absence from the manifesto is a Government Industry Agreement with the meat industry, already signed with the kiwifruit and bee industries. B+LNZ suggests road testing a GIA document for an outbreak of FMD before the industry would be willing to make a commitment.

On balance the new government’s agricultural policies appear to correspond to the wishes of the red meat sector which is a good start, built on the solid foundation of the last three years’.

At a time when global demand for beef and sheepmeat is robust, this is a good time to emphasise the sector’s importance to our economy.

-------------------------------------------------------------------------------------------------------------------------------------------

Farms For Sale: the most up-to-date and comprehensive listing of working farms in New Zealand, here »
-------------------------------------------------------------------------------------------------------------------------------------------

Here are some links for updated prices for
lamb
beef
deer
wool

---------------------------------------------------------------------------------------

Allan Barber is a commentator on agribusiness, especially the meat industry, and lives in the Matakana Wine Country where he runs a boutique B&B with his wife. You can contact him by email at allan@barberstrategic.co.nz or read his blog here ». This article first appeared in Farmers Weekly and is here with permission.

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?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

18 Comments

Comment Filter

Highlight new comments in the last hr(s).

If I were a farmer I would be very happy at the re-election of the National Government.  They can pollute the environment as much as they want and not have to pay for the clean up,  Also if they get into financial trouble the Nats will allow them to sell their farms at inflated prices to foreign buyers.  BTW I have just got back from a holiday in the UK and milk was £1 (NZ$2) for 4 pints (2.3 litres).  Supermarkets should start selling imported milk and give the Fonterra monopoly a bit of competition.  But of course the Nats won't allow this as they are the farmers friend!

Its not about the farmers, its about the financialisation of the industry.

Not really comparable, UK milk is subsidised by the taxpayer and NZ milk has G.S.T added.

AR   They can pollute the environment as much as they want  proof/urls? Given the  worst water quality is near urban centres (even the Greens/Labour acknowledge this though aren't interested in doing anything about it) your message is like a stuck record. Stuck in groove that it can't get out of - that's ok Andy you aren't the only one with your head stuck in sand. ;-)
 
I have just got back from Switzerland fresh milk there was 1.65Euro for one litre.  This is comparable to being able to buy 4 litres for $6.50 at my local BP shop. :-)  

You are in-correct.
Examples,
"WAIKATO RIVER: North of Huntly the river has high levels of E. coli and nitrogen caused by agricultural runoff."
"Pulp and paper mills have reduced wastewater discharges into the river and oxygen levels are now high enough to support fish life."
"WAIWHETU STREAM, WELLINGTON: Past discharge of toxic waste (including heavy metals) from industry has left a thick sludge of contaminants, with "mineable" quantities of lead, zinc and copper. In the Environment Minister Trevor Mallard's own electorate, the stream is considered to be New Zealand's most polluted urban waterway. A $6 million cleanup began this year."
Oh are un-interested?
"NGAKAWAU RIVER, WEST COAST: Above the Stockton Plateau it is pristine, below the Stockton Opencast Mine it is contaminated by sediment and toxic chemicals — although a recent cleanup has reduced levels of metals. People fish and catch whitebait in the river's lower reaches."
Doesnt sound that the Greens are un-interested in non-farmers to me.
So the urban areas and industrial pollution is actually being cleaned up, taken from,
https://home.greens.org.nz/features/its-not-too-late-clean-our-polluted-...
Oh and what pollutes the urban areas? probably mostly businesses or historic businesses (ie those that may no longer exist).   So generally not urban in terms of residential, but industrial and clean up efforts are underway.

Interesting you say Waikato was polluted and had low oxygen levels?  When the Manawatu River got publicised as terrible pollution it was the _high_ oxygen level that they based the claim on (high oxygen being from too much weed and other growth from nutrients)

Depends on which paper you want to read steven. Rivers and streams in (or downstream of) urban areas tend to have the highest concentrations of nutrients and bacteria, and lowest macroinvertebrate health. However, water quality at the relatively small number of monitored sites in urban areas is generally improving. Urban streams make up less than one per cent of the total length of New Zealand’s rivers.
http://www.mfe.govt.nz/environmental-reporting/fresh-water/river-conditi...
 
Just because the greens put some success stories on their website, doesn't mean that they are particularly interested in forcing the issue to clean up urban waterways.  
 
Historic causes are also valid for the rural waterways.  Some groundwater in Rotorua takes 80years to reach the lake.  Some in the Waikato province 100+years.  So urban river catchments don't have that on their own, but for Joe Bloggs it appears to be acceptable to have 'historic causes' in urban waterways, but the same attitude isn't taken to rural waterways. No surprises there though.

Depends on which paper you want to read steven. Rivers and streams in (or downstream of) urban areas tend to have the highest concentrations of nutrients and bacteria, and lowest macroinvertebrate health. However, water quality at the relatively small number of monitored sites in urban areas is generally improving. Urban streams make up less than one per cent of the total length of New Zealand’s rivers.
http://www.mfe.govt.nz/environmental-reporting/fresh-water/river-conditi...
 
Just because the greens put some success stories on their website, doesn't mean that they are particularly interested in forcing the issue to clean up urban waterways.  
 
Historic causes are also valid for the rural waterways.  Some groundwater in Rotorua takes 80years to reach the lake.  Some in the Waikato province 100+years.  So urban river catchments don't have that on their own, but for Joe Bloggs it appears to be acceptable to have 'historic causes' in urban waterways, but the same attitude isn't taken to rural waterways. No surprises there though.

CO, how does that compare with average incomes?

Is that relevant Aj?  After all,-the cry of many on this site is that the polluter pays.  Some here also write about the 'taxpayer' paying for farmers clean up - well farmers are taxpayers and taxpayers also do/have contributed in various forms to some of the sewage upgrades.  So farmers also contribute via the taxpayer contributions to urban cleanups.  Personally I don't have an issue with that.  But its got to be a level playing field.

I was interested as I have a friend who milks 20 cows in the country. I haven't seen him in a long time,his life is great. He Skis a lot.
 He tells me that Swiss wages are quite low and costs are high, but the upper echelon do very well.
  I don't know what to think of the pollution problems, I pay through my rates for town schemes and in turn run very low stocking rates on rolling hill country, I'm still going to be affected by the new zone changes. I find the whole thing rather exhausting and makes want to move to a beach with no phone, a small boat,  surf board,  wet suit and snorkel, I could live pretty cheap and well without a care. Or I could move to the islands and disappear.
 Then someone else could worry about my old problems all day. I wouldn't even know what day it was. I might live forever just got to convince the wifey thingey.
 
 I suspect we could get back to basics and solve alot of the problems, that would require a change in thinking away from production and towards systems that are more resiliant. Thats hard if you have a lot of debt which as a country we do. Im interested that you have moved back to a grass fed closed system, good on ya mate.

Aj.  Switzerland is an interesting place. Depends on which Canton you live in. This explains it somewhat.
https://publications.credit-suisse.com/tasks/render/file/index.cfm?filei...  edit - refer to page 18
 
 There is no 'standard' tax rate and cost of living varies, but where we were we thought it was  expensive. Though we did see NZ lamb for sale in the local Coop supermarket, on special for 39.50fr a kg.  
 
There does seem to be some very serious wealth and rather than see themselves on 'struggle street' because they can't buy a house young folk are quite happy to rent.  You can't build single storey homes.  Must be 2/3 levels and the ground floor apartment is usually rented out.  This is the same for new builds on farms - but farm homes are usually multigenerational, with each generation having their own storey.  One friend did buy an apartment - after they received an inheritance from their fathers estate.    Son says they make more money there than they would here (he would be a shepherd back here), while living the dream lifestyle - but all up he only pays 12% tax including health insurance etc and his partner 7%.  They don't have a car, as their one died and they said registration for their last one, which includes third party insurance, was 1600francs a year and they get by using the trains.  Public transport is exceptional.  They live in a 'city' of around 11000 people.  When told the definition of a city in NZ is 50,000 the Swiss we met were very surprised!
 
Swiss farmers receive on average 57% of their farming income from subsidies.  Some are as high as 70%.  A significant number of farmers in the area where we were, farm in summer and work elsewhere in winter - skifields etc.  We did a hike and at around 2000m there was a family farm that made and sold their own cheese and yoghurts that you could buy.  A lot of the farmers in that area did the same.  Only ever saw one milk tanker, near Zurich, on the whole trip.  We did see two cars and a van with the Fonterra logo, in Livigno, Italy.  The vehicles also had A-Ware logos, Fonterra's JV partner in The Netherlands.
 
 
 
 
 
 
 
 

Hi CO, long time reader, first time commenter on Interest. You can perhaps guess whereabouts I currently hang my hat.
Curious to know whereabouts you were based when you were in Switzerland?
I can vouch that Switzerland is most certainly not a low wage, high cost of living country. It tends to be towards the high(er) wage, high cost of living, and buying property is a very expensive exercise, even an apartment in one of the major centres would go for more than 500,000 CHF, which is a very pretty penny indeed.
Warm regards,
NK
P.S. The water quality throughout Switzerland is exceptional - the lakes are crystal clear, and they put a lot of effort into keeping it that way. That said, from what I have seen while hiking, their 'farming' practices probably contribute directly to that. Their approach to farming is a little different than NZ's, indeed subsidy heavy. Not hard to see why when you have circa 1 cow per hectare.

Neutralkiwi.  Welcome aboard, look forward to your comments.
I went online and average household income looked pretty good.  this is disposable income, whats NZ average disposable income? Just found it , $21,773.
 
Money, while it cannot buy happiness, is an important means to achieving higher living standards. In Switzerland,the average household net-adjusted disposable income per capita is 30 745 USD a year, more than the OECD average of 23 938 USD a year. But there is a considerable gap between the richest and poorest – the top 20% of the population earn close to five times as much as the bottom 20%.
 
But then averages can be deceiving.
http://www.englishforum.ch/employment/107287-faq-chf100-000-good-salary....
Anyway as my cost structure is killing me in NZ, I'm starting to look around for a longer term solution. Running a business in NZ is stifling me with red tape and costs. Employing people can be a minefield and I really don't want the hasles anymore.  My wife has an EU passport as do my children, which opens alot of doors for us. I was thinking of looking around Spain ( daughter lives there part time) but then Europe can be a savage place. I want to expand my business in NZ but whats the point when local government puts hurdles in my way and then the government follows up by letting on farm inflation run away.
 I see NZ as having alot of problems that no one wants to face, they just get pushed to the back of the pile. Locals are now earning what I consider very low wages,  many lack the skills to do basic work because they are not reliable or lack discipline. 
 In California at least its cheap living and more business orientated. They complain but I think they are way better off than us. 
 I've had to accept the fact that most people just don't care enough to do anything about it or are too busy trying to make a living.
 I'm down sizing and simplifying, Im over hasles.
 

Hi AJ, thanks for the warm welcome.
Indeed, there is a reasonably big gap between the bottom 20%, and the top 20%. There is a lot of old money, probably from remaining 'neutral' during world wars, one could suppose. 
At a national level, they are running at circa 2 to 3% unemployment, and their school system is markedly different to ours (NZs). Students are split into trades / business apprenticeships / univeristy circa 14/15, perhaps earlier, where only the top end go on to complete university study. I imagine this contributes to the stability of employment & strong wages, and allows university degrees to retain their prestige.
One of the hot issues in Switzerland is housing, and the availability, or lack thereof.
Given the attractive tax benefits of operating a multinational here, many EU nationals have relocated for the subsequent jobs, which puts pressure on the existing housing stock, which pushes up rent costs, which makes the locals understandably unhappy.
Actually, one of the most popular political parties - UDC - has risen to prominence because of this groundswell of public opinion, and the  'it's someone else's fault' party line. Last election, circa 2010/11 (I can't remember exactly because I'm not eligible to vote), they had posters saying "Protect Switzerland from the European Virus", including a graphic of a condom, with the European Union stars inside, among others which would reasonably offend a lot of people.
One could draw parallels between a popular Austrian in Germany, circa the early to mid 1900s, but one would be a bit naughty for doing so.
Voter turnout here is quite impressive - the public vote regularly on proposals by politicians, and recently (in the past couple of years) voted to reject an extra week's annual leave per year, which I found a reasonably mature decision.
There are a lot of interesting differences between Switzerland, and the wee country in the middle of the Pacific, and probably some lessons to take away. Tomato fondue being one of them.
I suspect I have gone wildly off-topic here, so deep apologies to the moderator in advance - I am new to the game. Please be gentle.
Warm regards,
NK
P.S. Doing business in Europe is probably worth exploring, but you need to have a good grasp of the language & culture. Despite being fluent in French, this place remains a mystery to me in terms of what you can/can't do business-wise, though I imagine the punishment for straying into the naughty zone would put you at risk of some sumptuous fines.

Education has always been a bit of a minefield, we have eduacted our children mostly outside the system. We have two at school in the States, its starting to bug us,  with the selfconsciousness of  the students and the way the teaching is so USA centric.
  Its hard to find the perfect country.  I do love NZ, but the hasles of doing business at the farm level is forcing me to cut and cut production. I cannot compete with the in debted, the corporates and the foreigners.  Pehaps thats going to change quite quickly now  debt is seen as such a problem.  The unproductive are paid far too well, the productive languish at the bottom and the top take all the money offshore.
 I'm with you in being worried about Nationalism returning to Europe. I don't see much chance of turning the ship around. Europeans can fight nasty wars with each other and history has a habit of rhyming. My daughter finds Spain cheap, while she earns the majority of her income in the UK. Looking at unemployment figures it looks like a lost generation working through the system, with no chance of homeownership or decent career choices, while loaded with unpayable student debts. That can lead to some unstable outcomes.
 Mean while back on the farm we deal with unstable volitile markets, that want to correct but keep getting proped up by various governments supporting those witrh the most to lose.

money might not be able to buy happiness - but I guarantee you, lack of it buys you misery

Welcome NeutralKiwi!  I was hoping someone with more than a 'visiting' and 'OE' experience of Switzerland would add comment to my post. :-)
 
We were based in Davos.  Son has been working past few years mainly on skifields in Graubunden. He has a rather serious love affair with mountains. ;-)   One of the common denominators in all the skifields is alot of his co-workers in winter are farmers who work there each winter. Each time he has moved to a new skifield he starts on their basic pay rate despite previous experience.  In the second year he gets experience recognition in his pay rate.
 
Farming there is somewhat like what some commentators here would like to see in NZ.  No artificial fertilisers and very low stocking rates.  One of the biggest differences is that here kiwis don't want to pay for it, but in Switzerland they see it in part as preserving their culture and attracting tourism and are happy to pay for it.  :-)