Keith Woodford discusses the importance of agriculture to an export led economy and the need to keep an eye on the ball

By Keith Woodford*

These are increasingly troubled times for New Zealand agriculture. A significant proportion of the population has turned against farmers for environmental reasons relating to nutrient leaching and water quality. There is also a loud political narrative about methane from ruminant animals and the need to reduce livestock numbers.

There is also a group of agricultural doomsayers who state that new plant-based foods and even totally artificial foods can mimic meat and that they will do so at much cheaper cost than the real thing. And finally, there is an increasing group of consumers who are committed to vegan diets for perceived health reasons or relating to personal ethical perspectives.

These are the big external storm clouds. There are also some internal problems, particularly for dairy, relating to unsustainable debt levels and declining farm values. The challenges of market development are relevant across the board. 

It seems to be with glee that a proportion of the urban community is now saying to farmers that pastoral agriculture based on cattle and sheep is a story of the past and not the future. It is therefore not surprising that many farming families are dispirited. We are getting back to the 1990s where the children of farmers are looking to the cities for their future. Oh dear!

Given this situation, it would seem reasonable to ask whether Prime Minister David Lange was indeed correct when, back in 1988 or thereabouts, he described agriculture as a sunset industry. Did he just get the timing wrong?

Personally, I remain an optimist. I think agriculture is going to remain the backbone of our export-led economy. I believe we can find, and have to find, and will find, solutions to all of the problems. However, I also think there are some rough waters ahead.

We will need to find pathways to deal with the current challenges. Those pathways will be braided just like our braided South Island rivers.

The braids in our South Island rivers weave around, and as a novice kayaker I learned that not all lead back to smooth and open water. Sometimes the water slips away under the shingle, sometimes the braid becomes a rapid, and sometimes the braid leads in under the willow trees. But there are always ‘work arounds’ to be found, although dragging a kayak across dry ground is no fun.

In this article I want to build the argument as to why agriculture in general, and a flourishing pastoral agriculture in particular, is going to be important in the decades ahead. Details of the specific braids that we need to navigate must wait for later articles.

There is good reason why New Zealand, despite its isolation in the South Pacific, has been able to maintain first-world living standards. Sure, we have indeed been slipping down the league tables for wealth over many decades, but without agriculture and tourism providing the foundations it would have been much worse.

Given our isolation, we are never going to be a world-leading manufacturing centre. We are never going to be a world-leading financial centre. And we are never going to be a world-leading centre of education.

For those that think that education alone can provide us with the lifestyles we aspire to, there is a need to face hard facts. We have a good education system, but not a great system. By most measures, we don’t have a single university in the top 100 universities of the world. We do not, with very rare exception, produce Nobel-prize winning scientists. The three we have produced all worked overseas and all are long deceased.

Yes, we must continue to strive with our education system, but we have no inherent advantage over Europe, America, and increasingly much of Asia. No, we are simply an isolated little country in the South Pacific.

If New Zealand wants to compete with the rest of the world which has advantages of location and scale, then we have to make the best of our competitive advantage. Our competitive advantage lies in our agricultural resources, our bountiful water resources, and our wonderful scenery.

For those who agree with me, but think that our agricultural potential lies in horticulture and arable crops, I say think again. Biology, climate and soils come together to tell a different story.

Many people get fooled by the great successes we do have in relation to wine and kiwifruit, and to a lesser extent the success of apples, avocados, cherries and other crops. We can further increase our horticultural crops as long as we recognise that horticulture is highly dependent on irrigation water, but even then, most of our lands are not suitable for horticulture.

As for arable crops, there are good reasons why the wheat that is used to make bread comes from Australia. And to the extent that high-protein crops become the foods of the future, then they will largely be grown on fertile Northern Hemisphere soils rather than our phosphate deficient soils. Yes, we can grow these crops for our own use, but we may need tariffs to compete with many other countries. It is not where our competitive advantage lies.

Despite these cautionary notes, I do believe we can do a lot better than now with a range of crop-based beverages and also various nut crops. Other crops such as manuka honey can also be a valuable part of the export mix. However, that still leaves a great deal of land for which the most profitable land-use will be pastoral.

Current Government policy is to convert increasing amounts of pastoral land to forestry. I choose to not argue with that here. But I do note that carbon credits from forestry will not provide export income. Under current settings, we will need all of these and more from within the country just to balance the carbon dioxide from big-city living.

Currently, I wonder whether our Government is losing sight of the importance of exports. Should this be the case, then ironically, it will be the urban community that suffers even more than farmers.

If exports decline, then foreign exchange rates will drop to levels seen briefly during the 2008/9 financial crisis and which were systemic during the late 1980s and the 1990s. If that occurs, export-based agriculture will become profitable again for those who found a lifeboat and are survivors. But Kiwis wanting to do their OE will find they cannot afford it, Pharmac will have insufficient money for the purchase of medicines, and petrol will be a luxury that average people cannot afford.

So, in that environment the sun will not set for agriculture. Or if it does set, then it will eventually come up again after a long winter night. But for the rest of the community, that winter night might be a lot longer.

Consequently, as a society we need informed discussions as to the braids that need to be followed if agriculture is to remain vibrant. Agriculture needs transformation but it does not need destruction.

If agriculture goes into systemic decline then it will be too late for the broader community. There are big lags in the system between decisions and effects.


*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. His articles are archived at http://keithwoodford.wordpress.com. You can contact him directly here.

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28 Comments

Good, thoughtful article as always, Keith. The urbanites (I've lived half in small rural towns and half in moderately sized cities so have seen both sensibilities close-up over extended periods) are always susceptible to fads and fashions, and to sound bites carefully packaged for their consumption. And there is no lack of slogan manufacturers and rentable crowds from the cities: it's the best substitute for religion that many have. And in a democracy, where every person, no matter the state of their understanding let alone their brain-cell count, can Vote, numbers matter. I don't detect much of a Gubmint understanding of the importance of ag: they see it as an inglorious hybrid of a Cash Cow, and an Environmental Despoiler. You have rightly pointed out the importance of pastoral ag for the extensive areas fit for little else. As a caravanner, I can easily sloganise about Peak Tourist as well: it's the rare nook and cranny that does not have its share of roadside effluent and the burnt-oil smell of clapped-out cheap van exhaust. It is going to take a considerable awakening to appreciate the long-term worth of our exports, and I frankly don't see the precursors for this as yet. But keep pumping away because you are one of the few sensible voices on this topic.

I recently spent a bit of time in the US mid west. The impressively large cropping units on naturally fertile soil ,with no need for irrigation due to the reliable rainfall, are examples of Keiths valid observations about the more viable arable growing conditions in the northern hemisphere.

The urban latte set enjoying the financial benefits of NZ's dairy farming while loudly decrying the same industry and advocating for conversion of irrigated land to arable farming, demonstrate an uninformed, parochial world view.

"The urban latte set enjoying the financial benefits of NZ's dairy farming"...cough splutter..bugger spilled my plant based milk smoothie.
Can you expand on this comment please...are you referring to the hugh taxes farmers pay and our successful Fonterra? Or are you referring to A2 milk company.

If I were marking this as an essay, I'd give it an 'F'.

I'd send the writer away to read this:
https://www.resilience.org/stories/2003-10-02/eating-fossil-fuels/

and come back with something more grounded in fact..

mm - https://www.usgs.gov/news/usgs-high-plains-aquifer-groundwater-levels-co...

There is one question, and one only. Is what is proposed sustainable?

The answer is 'NO' in the case of agribusiness as currently practised. Regardless of who disparages whom.

Powerdown kiwi,
a) Given your grading guide, I am pleased you were never my examiner.
b) Perhaps you did not see my statement that agriculture will need to transform - examiners should always read carefully.
c) I am well aware of the Ogallala (the High Plains Aquifer) as I have studied that in some depth. It is indeed unsustainable.
d) Artificial foods still need an energy source.
e) NZ farming without nitrogen would indeed be interesting - we farmed that way until the 1980s ,and we could go back to that, albeit with lower productivity.
f) Absence of phosphorus would be a more intractable problem.
KeithW

a) chuckle.
b) If you're including reforming to a non-export feed-ourselves-format, I apologise.
c) The comment was aimed at mm's comment. Sometimes we forget what we can't see.
d) I'm not an advocate of artificial foods, not of non-meat or vegan (both of which I see as well-meaning but pointless reactions to overpopulation/over-use of land/overconsumption of resources.
e) Back to clover? We use mustard seed - agreed re calories-per-hectare.
f) no comment - outside my ken.

I see a global financial denouement somewhere between 2030 and now - see it as already overdue. I don't see global trade as happening beyond that point. Yes, there are many overseas mouths to feed, but drawing down your paddocks seems to be shooting oneself in the esophagus. I envisage many more hands/acre, a migration from the rentier city 'jobs' (which weren't really, in the energy scheme of things) to rural areas - probably re-filling the old hub-sites which made geographical/transport sense in the past. I suspect those who went the organics way will be better prepared than the 'business-thinking' types, but the land they take over (the corporate model won't survive a GFC event of the kind I envisage) won't be 'certifiable' and the society of the time will be perhaps too stressed to worry about such niceties.

So more like permaculture crossed with Farmer's Markets, and a huge scramble to reimburse the soil. If trading is coherent, food will be 'worth' a good deal more than at present. It requires cross-discipline reading to get there - Systems Analysis to you, Generalism to the non-academic - one of the best is Prof Mobus https://questioneverything.typepad.com/ About the smartest I know of, you might find that blog food for a lot of thought.
go well
PDK

Agree....but really most people cant see this coming, or are too frightened to contemplate it and when confronted strike out in a nasty manner.

Hands/acre; back at the turn of the century my Great Grandmother's farm employed 8 farm workers and that doubled if not trebled in harvesting. All in all 25% of the farm's output never left the gate it was used to produce the food that these days Diesel does. So by 2030 diesel or even bio-diesel is going to be expensive in terms of energy consumed. Then I wonder just where the capital will come from to keep replacing the tractors. EV tractors? currently an EV car is twice the price of a ICE car. Fast charging will probably make EV tractors possible but the capital cost of doing so will not be cheap. Which brings us back to farm labouring. .....hmmm.

Today NZ produces food for 20million, chop 25% off from above and that is 15million feedable. CC impacts also 10~25% (got to be carfule not to double count the %s being sliced off here. So that could be 10million we could feed. What does this do to the price of food? doubles if not quadruples?

What is going to happen to animal farming is that people, rightly or wrongly, are going to continue to become more sympathetic to the plight of animals involved. There will be nothing you or anyone else will be able to do about it, as the idea of animals having their natural lives completely dictated by human need and then herded to mass slaughter at the end of it becomes less and less palatable. The factory nature of farming is repulsive to a growing number, and even the most free-est if free range animals end up at the meat works.

PocketAces,
I agree that animal welfare is becoming a more important societal issue.
I am comfortable with that being the situation.
Many farmers would also agree on that.
KeithW

The concern and turn against animal products will nevertheless be relentless. I am not yet speaking entirely for myself, I am calling what I see in my grandchildren's generation, as kids we'd have never given it a second thought, but they do, and quite seriously. And there is no way to explain away how meat ends up on their plates.

PocketAces
Yes, those thoughts are reasonable and worth consideration.
Social change does occur stealthily.
But I think it will remain challenging to produce All Blacks on an all-plant diet.
Do you think insect foods will be acceptable?
I hope we never get to need soylent green
KeithW

Keith,
I accept that this is just a light hearted article but it seems to me that changing food preferences could reduce meat consumption by half in the next thirty years, for the european nations.
The boomers gone, or at least their teeth, and low meat menu choices, already on menus, are the preference.
What should NZ do now if my guess is correct?

positivelywall street,
Focus on Asia
The European nations do not need us, although there still are some opportunities there.
Asian food preferences may also change but those changes that do occur will in all likelihood be different than in Europe.
KeithW

Oh God,
The asians by and large consume half the meat of the european societies and please explain why they would wish to emulate the european experience.'
Particularly when the european sociieties are rejecting meat.
Its the Fed Farmers fantasy.

Drivel,
You should know the meat industry has achieved nothing with branding, only with partnerships , a variation of commodity trading.
The problem is lack of intellectual property, and horticulure demonstrates how ip works.
Vive la kiwifruit gold.

A big plus for kiwifruit is the almost exclusive exporting of kiwifruit by Zespri. Compare that to the meat industry and dairy industry etc where almost any man and his dog can export and compete with each other on the world export market.

oops

Your aspiration is to produce All blacks? I mean really? My aspiration is to produce more scientists and a better (in all its aspects) economy for all not run the soil to the point its ruined.

Who (but a tiny minority of kooks) says all plant? The point is here to produce a balanced diet and remove foods in the diet that are not good. Milk for instance is being pointed at not for "growing bones" but actually leaching from them. These long terms risks need to be worked with not fought as the key thing is the consumer isnt forced to buy milk and can walk away.

Hi Keith

You also have a particular pro industrial dairy narrative, so you see only what you want to see and tell it from your blinkered perspective. I have never heard you talk about organic dairy farming

You are obsessed with this pro intensive model and it limits your vision and perspective

Donker,
Always better to focus on the underlying sciences (biological, physical and social) and the sustainability thereof rather than throwing personal assertions around.
KeithW

Hi Keith

Once you accept the fact that farming dairy cows on the Canterbury Plains is a bad idea, due to the light and leaching soils, then you will be able to look for solutions aside from more cows in barns, which is a horrendously expensive system when you cut and carry all the feed, plus not the look NZ dairy wants in its natural pure image. Dairy farming on heavier soils with less leaching and less inputs such as nitrogen fertiliser, less cows and a higher value product such as organic, I believe is the answer. We need to move away from being fearful of 'organic' and associating it with hippie farmers. This de-growth model goes against the philosophy of modern agricultural teaching,

I also believe you won't help the vulnerable people in our society until you fix the neoliberalism that came in with Rogernomics. A successful economy does not always trickle down to the bottom as we have been led to believe. The rich get richer the poor get poorer

Agree, NZ is small is thought of as green and can be nimble and innovative yet some how we fail in exploiting areas where first mover carries significant advantage (and profits) instead try and produce more cheap commodities not enough ppl will want, yeah bound to end well.

No its justified by his words, clearly. I mean when we see words like " perceived health reasons" its pretty clear the narrative has bias. The science and economics are pretty clear, if you can look out past next week. a) We have what looks like a glut of cheap milk globally, however a shortage of organic products which is highly profitable and growing. b) We cant produce (significantly) more via yet more intensification and there isnt the demand to keep the over-production up either ergo we are in a losing game going down that path.

Keith,

I reckon you are pretty safe that the sun will never set on New Zealand's agriculture - well in the North Island anyway. It will probably get too cold in the South Island at some point.

The Northern Hemisphere has just had a climate oops, due to the unfolding Eddy Grand Solar Minimum. This will get worse before it gets better.

They will continue to have shortened growing seasons and with often droughts or hail events I think you may just find food for the masses becomes a bit more scarce. If you do a bit of research you will find that Egypt is now seizing warehouses containing potatoes while the Philippines are seizing rice from warehouses.

By late 2019 this global cooling may be cause for starvation.

It snowed in the Sahara and even Saudi Arabia this year. Qatar has just been flooded. Is that global warming?

We always hear about hot temperatures due to human activity, but during the past winter we were never told by our media that it got very cold in the major land masses of the South...Australia, South Africa and South America. It is winter already in the Northern Hemisphere with snow extra early, often in places it never snows until January/February. We are lucky that the ocean heat sink that surrounds us gives us the benefit of our maritime climate.

Sure the "green-washed gestapo" have a point about water pollution and some of your inefficient farmers will need to keep cleaning up their act.

But hitting you with guilt for carbon emissions is just rubbish.

It is borderline lunacy for government to worry about CH4 discharge from cows. Sure CO2 and CH4 are greenhouse gases but they are just tiny trace gases. The carbon emissions have absolutely no material impact on climate and with CO2 at 0.041 of one percent of the atmosphere, it is no wonder there is no way the IPCC folk can prove it has any material impact on climate change.

But consider this. In 1798 when Thomas Malthus wrote his essay on population growth, people (less than 1 billion) and their livestock comprised less than 10% of the earth's land mammals. Then 80% of the population worked on the land. Today (With 7.7 billion humans) we jointly comprise more than 98% of all land mammals and less than 4% of us work on the land.

Electricity and fossil fuels account entirely for this transition in wealth and the ease of our lives. We would not have the technology if we did not have the energy supply. Sure 1 calorie of food consumes 10 calories of energy now. But the critics of farming live in cloud cuckoo land if they think the transition to renewable energy will come without considerable pain.

As the Energy Return on Energy Input that is required to win and process fossil fuels becomes dramatically less, you farmers will be on the front line. The first 1.5 trillion barrels of oil we have already used was easiest and best quality, but now we are down to the dregs. Your challenge is to run your farms with other energy sources in a world where the availability of all finite resources will be more constrained and more expensive.

At this point, the increasing scarcity for oil will challenge you to find ways to produce and get your goods to market. The green-washed gestapo have no idea how long it will be before there is a fungible energy resource to replace fossil fuels and they are the ones who will eventually either starve or get their Socialist government to confiscate your production...if they don't raid your farms to steal what you have.

Let's face it. Today more than 50% of our population are unproductive in almost every sense of the word. They are the ones who bleat the loudest and they are the ones who want you to produce food that suits their minority tastes and who find the idea of restricting human births and of killing animals to feed ourselves repugnant.

But they arrogantly tell you how to run your businesses. Most have never run any sort of business enterprise.

The fossil fuel industry doesn't argue the toss with those folk, because sooner or later they will produce all the oil the earth can provide and they will sell all they produce at a profit. You should IMHO focus on doing what you do well and taking all sensible steps to reduce resource consumption and polluting - because it is a measure of your business efficiency and your true "green" footprint.

As for the Labour/Greens/NZ First government? These morons too shall pass.

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ei

Uh, as climate change and global warming spread its far more likely the South Island will get warmer.

"perceived health reasons" kind of says how biased you are....