Is New Zealand sustainable in a global market place?

Speech – Federated Farmers

It is my pleasure to give you an overview of farming today and address the topic of whether New Zealand is sustainable in a global market place. Perhaps our arable sector provides a clue in answering that question. I would like to thank the FAR …16 February 2012

Is New Zealand sustainable in a global market place?

Speech by Bruce Wills, President of Federated Farmers, to the 2012 Foundation for Arable Research (FAR) annual conference, Hamilton

It is my pleasure to give you an overview of farming today and address the topic of whether New Zealand is sustainable in a global market place.

Perhaps our arable sector provides a clue in answering that question. I would like to thank the FAR Board and Nick Pyke, your Chief Executive, for the opportunity to be here today.

As you will know, much of Canterbury and the Hawke’s Bay have rejoiced in “Goldilocks” conditions with enough rain and sunshine to produce an excellent growing season.

What you may not know is just how exceptional this La Nina pattern has been to the Eastern North Island. For many growers, yields for Hawke’s Bay barley and oats look to be up an average of 2 tonnes on last year. Prices are holding steady.

Our Hawke’s Bay grain and seed chair, Rob Foley, has described the season as “one of the best in 10 years” for barley and oat crops.

It wasn’t long ago that consecutive droughts made things very tough in the Hawke’s Bay – my burnt fingers from that ordeal will take a while yet to heal!

It also highlights one word that ought not to be in our vocabulary; drought.

Right now, the Hawke’s Bay Regional Council, with the Irrigation Acceleration Fund, is looking at a major water storage project called the Ruataniwha Plains Water Storage Project.

If it comes off, it will not only be big for the Hawke’s Bay, but big for New Zealand.

The centrepiece is a $180 million project with a dam wall 77 metres high. The resulting reservoir will cover an area of some 400 hectares; only slightly smaller than Sydney’s central business district and double the size of Wellington’s

It will lift our irrigable area from 6,000 hectares to over 20,000 hectares, greatly aiding the development of not just our sector, pastoral agriculture, but horticulture too.

We are already seeing positive indicators for how farming and value adding industries mesh together.

At the beginning of this year, Heinz announced they were closing an Australian plant in favour of the Hawke’s Bay. It means Heinz will no longer make sauces or ketchup for Australia. I guess they’ll be eating our ketchup, there.

Realistically, there aren’t enough raw ingredients for Heinz to use only New Zealand grown product, but this water storage project creates the real potential for horticulture to grow.

It’s the same for our sector. Environmentally, the best way to prevent the loss of top soil and nutrients is by using water to keep our pasture and crops growing.

There are environmental constraints in agriculture, but our response shouldn’t be to demand that we just do less of what we are doing. Especially when we discuss water.

In addressing the issue of sustainability in our use of land and water, we must seek new ways of achieving our goals through innovation. Federated Farmers calls for innovation not deprivation.

Solutions will come through blending the biological and physical sciences; the Greenhouse Gas Research Consortium being one example of this. We also have lessons to learn from organics, but our adoption of any organic practices must be science-led as opposed to dogma or PR hype.

The organics industry is acutely vulnerable to changes in fashion and has taken a hit from the global recession.

Fonterra cutting its organic supply base is not the only manifestation of this. Speaking to John Hartnell, chair of Federated Farmers Bees, he has seen the same from Europe. On a more positive note, John is a local hero finalist in the New Zealander of the Year Awards taking place tonight in Auckland.

Sustainable products will be those which underpin our reputation for safe, reliable and high quality food. It must also be backed by science using methods, which in themselves, are environmentally responsible.

The simple fact is that we have the water, as evidenced by annual rainfall. We just lack the means to store this water in times aplenty. It falls, it goes into pasture, but much of it flows into creeks, streams and rivers then eventually, the sea.

This water is a wasted opportunity when it is the key to New Zealand’s sustainability in a global agricultural market.

Speaking to our various grain and seed chairs, it seems the La Nina summer means some parts of New Zealand may face winter feed shortages

Northern maize crops have been hit with too much rain as opposed to too little last year.

In the Waikato and the Bay of Plenty, maize crops on lighter soils are performing extremely well. On heavier soil and the hollows of rolling country there, are signs of water logging and are not expected to fare as well.

In the far south, demand for winter feed is also likely to be strong because most of the region’s swede and kale feed crops have been slow to germinate in very dry conditions.

For Canterbury growers, the season couldn’t be more different, though a dry spell is urgently needed for harvesting Autumn crops are doing well and barley, wheat and other dry land crop yields are expected to well exceed last season. Things were also looking good for seed producers with plenty of grass and small seeds and storage is the issue.

One common theme to come through, which I feel threatens the sustainability of farming and especially arable farming, is that while yields go up due to better farming methods, the overall land area dedicated to grains continues to shrink.

It’s very similar to the picture facing sheep and beef farming.

We know from the Canterbury straw crop already baled, there aren’t the numbers growing it as there were in the past.

Supply and demand means the number of our dairy farming colleagues continue to grow.

So Aucklanders may find it hard to believe 100 years ago, Mangere was dairy farming central

One of our greatest Prime Ministers, ‘farmer’ Bill Massey, farmed there and in 1890, the Mangere Farmers’ Club revived what we know today as the Royal Easter Show.

Recent work done by Landcare Research indicates urban sprawl may indeed be more of a risk to our farming system than more attention grabbing foreign ownership.

Look at it like this; 873,000 hectares of farmland is now largely under productive ‘lifestyle blocks’. That loss of our best farmland represents either half of all the land in dairy production, 873 James Camerons or just under two complete Aucklands.

While Federated Farmers wouldn’t be happy about limiting the rights of anyone to buy or sell the land they legally own, it raises important questions about how dense our cities and towns ought to be.

Auckland and its Mayor Len Brown, are trying to grapple with its outwards expansion. Depending on what source you use, the new Auckland’s 4,894 square kilometres puts it among the top 10 or 25 cities on earth by surface area.

Yet its 1.5 million residents, a milestone reached at the beginning of the month, only puts it towards the bottom end of the top 300 in respect of population.

With 175,000 lifestyle blocks now in existence nationwide, almost three-times the number of agricultural businesses and six times the number of pastoral farming businesses, I can’t help wondering if subdivision has played a role in driving up the cost of rural land.

Instead of politicians conjuring up images of rich foreigners squeezing out young farmers, it may be due to New Zealand building outwards rather than upwards. The loss of our best farmland arguably poses the single biggest threat to sustainability of New Zealand agriculture.

What also happens if change doesn’t come from ‘market forces’, but by legislation skewing the market instead? Read this as the ETS.

Farmers learned the hard way 30 years ago that subsidies are a poison chalice.

While there has been much discussion about the supermarket price of milk, meat and bread, the ETS has hard working mums, dads, businesses and farmers paying more.

The ETS financially rewards domestic and foreign carbon foresters in ‘cash for Kyoto compliant trees’. The risk is that we are losing productive farmland instead of marginal country to its financial incentives.

Converting to trees also adversely impacts communities. Each farm is a home. Farmers buying what they need locally and sending their children to local schools, is exchanged for occasional maintenance by a forestry gang.

As with lifestyle blocks, we don’t wish to criticise anyone’s right to sell their land legally and at the best possible price. It is their land and their absolute property right. But I also understand why foreign investors are all too happy to take our hard-earned dollars in exchange for planting Pinus radiata.

When you combine the two, sub-division of top quality farmland near population centres and the incentives to plant trees on hill country, the New Zealand pastoral farm system faces a squeeze.

All of this comes at a time when there are seven billion mouths to feed on our planet. This number is expected to grow to over nine billion by 2050. New Zealand’s population by then will be seven million with over 2.1 million expected to be living in Auckland.

Will that be at the expense of paving yet more farmland under concrete?

If you want to know what makes New Zealand sustainable, as long as we don’t trip ourselves up, it comes in a 2011 United Nations report.

To keep pace with global population growth by 2050, developed countries will need to produce 70 percent more food, but for the developing world, that figure is 100 percent.

This pressure to increase food production comes at a time when the land area available for food production declines due to desertification and urban sprawl. In 1960, the world had 0.44 hectares in food production for every single person. By 2050, this is forecast to have fallen to a mere 0.15 hectares.

That the human race grows by two people every second creates immense opportunity for all facets of agriculture. But only if we have the land, the people, the technology and the water.

As someone once said to me, a gold mine is just dirt unless you dig a hole and go after the gold.

New Zealand’s gold is our soil, water, land and people. Can we do things better? Yes of course we can.

Farming today is a quantum improvement over farming in the 1960’s, the 50’s and earlier.

If we are to go after the gold with a world beating sustainable system then we need to start at home. We need policies and research to unlock our full potential while giving us solutions to the downsides. From here we can take our skills and knowledge globally.

For arable farming, where we are a net importer of grains, there needs to be a qualitative step.

Like with wool, consumers must want New Zealand grown grains in their cereal when at the moment, it is more likely to be Australian.

It will mean fighting their corner and educating consumers that not all grains are created equal. Nor does ‘Buy New Zealand Made’ mean that your cereal is made of New Zealand sourced wheat. For some cereal manufacturers, “Assembled in NZ” would seem more apt.

Sustainability is a two-way street.

As we are expected to be a sustainable exporter, this means our many imported inputs need to meet the same sustainability test.

We may not like where those inputs come from or what they pose in terms of domestic competition, but if they are sustainable and meet our biosecurity requirements, then it is wrong to block them.

It doesn’t mean these biosecurity requirements should not have the most robust questions asked of it. Or for that matter, be independently verified either.

Nor should sustainability make us a nation of hypocrites.

New Zealand currently imports about 500,000 tonnes of urea each year, mostly from the Middle East, where it comes from natural gas or from China, where it comes from coal.

However, proposals to use our enormous stocks of lignite to produce urea locally bring screams of protest. It seems their slogan is more, “we don’t care where, as long as it’s not here!”

So while I’ve touched on sustainability in terms of inputs, perhaps the greatest issue we have with being sustainable in a global market place is attitudinal.

We recently floated the idea of shearing as a Commonwealth demonstration sport. Although this got very good media coverage, I was struck by the negative cynicism voiced by some.

We need to have the self-confidence to say why not? To dream of what may be. To push what we’re truly good at.

I am an optimist and for us to be sustainable optimism is a must. I believe there is an awakening to the potential we have within New Zealand and the potential New Zealand has to be a global leader in primary food production.

I also believe we do have a sustainable farm system. We just need our politicians, policy makers and the public to learn more about what we do, so that we can all pack down together.

That also defines one of the key roles Federated Farmers will play going forward.

Thank you.

ENDS

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