Opinion: Why NZ needs to focus on farming, not diversify away from it

By President of Federated Farmers Don Nicolson One tale from Greek mythology offers lessons today for New Zealand's economic development and for agriculture. Daedalus and Icarus is a father and son story of an old fashioned prison break. Daedalus, the father, was a pretty good handyman who built wings of wax and feathers so that they could fly to freedom. The shame is that the wings were a little too successful. While dad flew straight and level his son, Icarus, feeling a bit too cocky, flew higher and higher until he got so close to the sun, his wings melted sending him crashing back to earth. This is where we get the expression, "˜crashing back to earth.' While some commentators have wrongly compared dairy farmers to Icarus, farmers are more like Daedalus. Farmers are inventive, resourceful and industrious business people. They are part of New Zealand's biggest industry, a $25 billion industry at that. Icarus is the prototype Generation-Y. Thrill seeking and willing to try anything, as long as it's on their own terms and sometimes with mixed results. The fact farming is increasingly not the top occupational choice for New Zealand's most talented young people is of concern. After all, in how many occupations could a person control multi-million dollar assets by the age of 30? For those with a can-do attitude and a sparkling intellect, farming is one of the few industries where that outcome is a distinct possibility. If you are ambitious, self-motivated and bright, farming is where it is at in the 21st century. Yet we're not talking just farming here. Not just "˜hands in the soil.' It's a little known fact that GlaxoSmithKline, or GSK, the world's largest pharmaceutical group, had its origins in Bunnythorpe, near Palmerston North. To grow, Glaxo left these shores many years ago but oh, what a loss. Last year, GSK posted sales of some $68 billion. Put another way, GSK sales last year were equivalent to 40 percent of New Zealand's Gross Domestic Product. Fonterra is a farmer cooperative and New Zealand's largest company. It's also our only true indigenous multi-national with sales last year of $19.5 billion, admittedly over a 14 month financial year. While this current financial year won't be as rosy, its sales for 2007/08 represented most of the combined capitalisation of the top ten companies on the New Zealand sharemarket. Fonterra is that big and it is to the credit of New Zealand's farmers that they own it all. For those whose interests don't extend to hands-on farming, there are thousands of business opportunities to support New Zealand's distinctive and unique competitive advantage; agriculture. That means the industries that directly or indirectly support farming and farmers. Hamilton's Gallagher Group, for instance, is a home grown success story that has world-wide sales. Similarly, Ravensdown is now spreading its successful cooperative model into Australia. Not every country has a Gallagher Group or a Ravensdown, but they are the kind of companies that New Zealand needs to grow into multi-billion dollar behemoths. Diversification should not mean anything but agriculture. Harnessing those opportunities is key to developing our next Fonterra or for that matter, a GSK. While the anti-GE brigade might turn red, no one can deny that the American Company, Monsanto, is a major force in global agriculture. With sales similar to our Fonterra, its many operations can be summarised into two key areas, seeds and genomics as well as agricultural productivity. Doesn't that sound like something a New Zealand company ought to be doing? Monsanto is also research led. It spends around 10 percent of total sales on R&D amounting to some $1.6 billion annually. Scarily, that represents three quarters of New Zealand's total spend on R&D last year. Monsanto is a lesson in what New Zealand isn't doing locally in terms of both economic development and commitment to R&D. Companies like the animal remedy giant Novartis and that force in rural banking, Rabobank, provide additional examples of where New Zealand's economic development should be focused. Meeting the needs of farmers locally then growing those companies into global counterparts to our one true multi-national. That's the diversification New Zealand needs. Diversification built out of what we happen to know a lot about. For too long now, since the 1980s, New Zealanders have been told "˜we need to diversify away from agriculture.' Yet, just like Icarus, all attempts to move away from agriculture have crashed back to earth. Why? Because we have attempted to copy what other countries do rather than do what we actually do best. New Zealand ought to be running towards agriculture with arms outstretched. It's the world's biggest industry and the only one in which New Zealand is truly a global player.