Andrew Hoggard assesses 'asymmetrical threats' to the NZ dairy industry - including by some in the media who just don't understand the basics

Andrew Hoggard assesses 'asymmetrical threats' to the NZ dairy industry - including by some in the media who just don't understand the basics
Karori Stream at Makara Peak Mountain Bike Park in Wellington.

By Andrew Hoggard*

On TV3’s The Nation recently, Fonterra Co-operative Group Chief Executive, Theo Spierings, underwent a rare hard-nosed interview.  The sort of grilling usually reserved for the Prime Minister.

What caught host Lisa Owens by surprise was the risk posed to Fonterra by Ebola. That’s right, Ebola.

Theo puts the impact of this disease at up to six percent of Fonterra’s exports; $150 million.

The reason being people in affected countries are unable to get to markets and so economies start to unwind.

Only the journalist Bernard Hickey ‘got it,’ by pointing out that Fonterra had the means to switch production from powder into other products.

This not only shows it is a different beast than many give it credit for, but highlights that Fonterra is our only real “global company.” 

The impact of Ebola makes me think that we need to borrow a term usually associated with the military. 

You see Ebola ranks right up there with the Eastern Ukraine as examples of “asymmetrical trade threats.”  These are things straight out of left field impacting us nonetheless.

What Russian separatists do have already cost our dairy industry and economy hundreds of millions by dislocating European milk.

Ebola’s cost to us is already $150 million and counting. 

None of these two things have anything to do with a cow munching grass on a Kiwi farm or the dairy industry of the Ukraine or Liberia.

There is no direct connection but we’re still affected by its ripples. 

I think most people reading this will understand the “symmetrical trade threats” we face, things like quotas, subsidies and tariffs. Things possibly benefiting the American farms that Eric Watson, the former Hanover co-owner, has interests in.

As The Economist noted earlier this year, “the Senate passed the farm bill, a strange piece of legislation which costs nearly a trillion dollars. It mixes benefits that mostly go to the poor (food stamps) with agricultural subsidies that mostly go to the rich (crop subsidies for large farms)….”

Ebola and Eastern Ukraine show us that we should fear “asymmetrical trade threats.”  It’s the same threat if our biggest export happened to be iPhones, software or tourism instead of dairy.

Explaining this to the public is hard when a senior journalist goes onto Twitter and seriously asks if Beetroot makes milk pink. Other reporters I’ve spoken to over the years have firmly believed fresh milk is just reconstituted powder. You have to wonder if there’s something amiss with our education system.

Just like eating scallops won’t turn your blood white, non-farmers need to know that a cow has four stomachs, which break down and extract nutrients from grass, feed and water.  The mammary glands take these nutrients from the bloodstream turning that into the white stuff we call milk.  As for the powder claim what can you say?  Do some people seriously think we milk cows then remove all the water at great expense just to add it back in later? 

Of course it’s not television news without the doom and gloom. The Nation seemed captivated by reports saying China could soon become self-sufficient in milk. The assumption by journalists, again, is that all countries are the same and all farming is done the same way.

The United States is about the same size as China and while some 40 percent of the United States is farmable, only about 11 percent of China is.

While you can run a barn system in China, those cow stomachs need to be fed and if you can’t grow grass like we do, it means fodder crops on land you don’t really have or importing feed.

The good news for ‘NZ Inc’ is that Fonterra is growing in China, which helps to explain why New Zealand exported $17 billion worth of dairy products in the year to date, but Fonterra generated $22.3 billion in revenue - the first time $20 billion in revenue, corporate New Zealand’s ‘four minute barrier,’ was broken

What’s that about value-add?

TV3’s The Nation also raised “Peak Cow,” something we’ll apparently hit in the next ten years to the delight of some but there’s no mention that water quality has been largely stable for the past decade.

Sadly, what we don’t see much on programmes like The Nation are the NZ Dairy Industry Awards or the Ballance Farm Environment Awards.  Awards and farmers showcasing what we’re doing to farm better. 

Meanwhile, one of the worst waterways for nitrate toxicity and E.coli in the Wellington region happens to be the Karori Stream at Makara Peak Mountain Bike Park!  Makes you wonder, doesn’t it.


Andrew Hoggard is Federated Farmers dairy chairperson.

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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or a better term, a "black swan"  aka "These are things straight out of left field impacting us nonetheless."

"China could soon become self-sufficient in milk."
with its water issues? yeah right.

Don't underestimate them, they intend to add over 4,000,000 more arces of irrigation
Scientists at the China Agricultural University in Beijing believe that smart-farming techniques are the key to China’s food problems in a study released in early September.  The acquisition of the Israeli smart irrigation tech company is significant in China’s struggles with food security.
Founded in 1988, AutoAgronom is the only full automatic system in the world which applies water and fertilizers without human intervention according to the company’s website. The system is based on more than 20 years of research and can reduce water consumption per acre from 500 tons to 150 tons, making it an affordable alternative for farmers.


If you look at some of the issues they have, a) their pumping costs have got so high to get the water out of the collapsing aquifies that farmers are going back to traditional dry farming techniques.  b) Their rivers are quite highly polluted, so great lets dump poisioned water on the crops as well as crappy fertilizer which is also doing huge damage. c) "smart" techniques seem to use yet more power to achieve....see a)
Lets see how "affordable" pans out, and especially looks for externalisation of costs in those sums.
So actually I think many ppl over-estimate them, we'll see.

And people overlook the power of a brand.  First and biggest in market is hard to ever beat. 
Coke has never been threatened by mass produced cheaper cola's.  There is only one coke.

"What Russian separatists do have already cost our dairy industry and economy hundreds of millions by dislocating European milk.".... The crisis in Ukraine was fomented by the USA and the EU not the mainly ethnically Russian Ukrainian separatists so I think the asymetrical risk is from the USA and the EU. They started the sanctions war that has disrupted normal trading patterns in Europe and Russia. Not so long ago in 2008 the Western banks caused a disruption in trading patterns by their mis-management of the financial system. Please ascribe the asymetrical risk to the real culprits.
The media is full of Russo-phobia as the US and Nato tries to engineer another cold war if not a shooting war.. Putin has come out asking for dialog and diplomacy but has also demonstrated he will not be a doormat to Nato. No doubt if this escalates further  he will be blamed for more dislocations in the market. What about the TPP. How is it fair that NZ will be competing with countries that print money and provide it to their corporates at negligible interest? Sounds pretty asymetrical to me.

Others are on record reinforcing some of the issues you raise.
"It's official: The U.S. is the world's leading terrorist state, and proud of it."
That should have been the headline for the lead story in The New York Times on Oct. 15, which was more politely titled "CIA Study of Covert Aid Fueled Skepticism About Helping Syrian Rebels."
The article reports on a CIA review of recent U.S. covert operations to determine their effectiveness. The White House concluded that unfortunately successes were so rare that some rethinking of the policy was in order. Read more

Very good SH, And read 'The Bitter Sea' Simon Ball, for  America's perfidious history in the Med/Levant/Arabia.
And here's another good reason why we should stay away:

Absolutely agree Apple Tree.

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