On July 7 Prime Minister Jacinda Ardern released the Government’s document “Fit for a Better World - Accelerating our Economic Potential”. The associated press release from the Beehive says that it provides a 10-year roadmap for the food and fibre industries’.
At the same function where this report was released, Agriculture Minister Damien O’Connor released a companion document from his Primary Sector Council of chosen industry leaders. That document is also titled “Fit for a Better World” but lacks the title extension about ‘accelerating our economic potential’. This second document is indeed a different document, singing from the same song-sheet, but with considerably different material. Very confusing indeed!
My focus here is on the Government’s version of the report because this is the one that has been signed off by Cabinet. Minsters in attendance at the release also included Stuart Nash and Shane Jones.
I downloaded the document and worked my way through the first 24 pages, but my computer refused to proceed any further. My initial thought and frustration, now that I had worked my way through all the introductory fluff together with six historical case studies, was that I was ready to get into the core of the supposed roadmap. Then it dawned on me that I had indeed read the full document. This was it!
Before I take up some resultant criticisms, I first need to state that there is good news in the document for all of those who believe in the importance of the food and fibre industries. The Government is indeed acknowledging that the food and fibre sector is “vital to New Zealand’s economic recovery”. The Prime Minster also stated that the primary sector is “a huge part of our economy and our brand”.
Minister O’Connor stated that he would also soon be releasing another new report that “sets the path for future growth of our strong-wool sector and that “this will also be a key part of delivering our Roadmap”. Really? The wool report was indeed released three days later and it was the same aspirational high-level fluff.
If strong wool does have a future it will be as building insulation, but I saw no specific mention of that. Mainstream adoption requires technology yet to be developed.
Getting back to the ‘Fit for a Better World’ report, Minister Nash stated that “sustainable aquaculture presents massive growth potential”, and that the sector would grow five-fold to $3 billion by 2035. Minister Jones added that forestry had opportunities to develop domestic and export markets for more sustainable products.
In terms of the overall theme of the song-sheet, it was all good news. There were lots of words about sustainability but there was no mention of any specific new environmental regulations. The TV soundbites indicate that the assembled industry leaders were supportive even if not necessarily enthused.
The stated intent is that export earnings will increase by a cumulative $44 billion by 2030. What was less clear in media reports is that this is the aggregate additional income over the 10-year period, with the additional annual income having grown by $10 billion by 2030. That represents an annual growth rate of just over 2% per annum, although the communication spin doctors did not actually say that.
I reckon that growth of around 2% per annum may well prove to be realistic. But if we want to grow at that rate in real terms after allowing for inflation, then some hard work is going to be needed. On a per capita basis, that will still be close to a gain of zero if New Zealand goes back to pre-COVID population growth rates.
In another five years when we look back and can see the first two decades of this 21st Century in better perspective, we are likely to recognise the extent to which food and fibre industries have underpinned the New Zealand economy for the last 20 years. During this period there was a strong upward trend in global prices, measured in US$, for most of the products that New Zealand produces.
Much of the urban community does not understand the reasons that living standards increased, at least as experienced by middle and upper-income demographic groups. Rising export prices plus increasing volumes led to much stronger foreign exchange rates than in the prior two decades. All consumers benefitted from this one way or another.
Back in 2015 when I was writing for the Sunday Star Times, I wrote a series of articles exploring where New Zealand’s future food and fibre income might come from. My thinking was that some of the big gains we had made in dairy, wine, kiwifruit and seafood, with much of this stimulated by growing trade with China, would be challenging to replicate. These articles are archived at my own website.
I have been positive about kiwifruit for many years and I remain positive. Kiwifruit has to be one of the greatest New Zealand success stories, built on breeding and consequent ownership of new varieties. There may well be bumps along the way but the future continues to look bright.
I have also been intrigued for a long time by the prospects for mussels and other shellfish. It is clear that further development now depends on the success of offshore fisheries. The environmental limits have largely been reached in relation to enclosed waters.
I also remain positive about the future for dairy, but considerable transformation of that industry will be needed. I am sure the industry of the future is going to look very different to the current industry and I remain of the perspective that major parts of the industry are locked in the past. I will have more to say about that going forward.
I am cautious about forestry. The current Government policy allowing foreign investment for forestry is distortionary. It results in New Zealand earning up-front income from the sale of the land, but the subsequent income flows from sale of carbon credits will flow straight back to the foreign owners. It really is a case of selling out the future.
As for new uses of timber in building and consumer products, that could be exciting. However, New Zealand cost structures are such that the value-adding will be done overseas except for any products used in New Zealand. Also, once China’s big infrastructure projects eventually slow down, the need for New Zealand logs to be used in formwork over there will reduce. How will New Zealand’s timber then be used?
What I had hoped for in the documents proclaiming a roadmap towards industries ‘fit for a better world’ was genuine strategic leadership. Instead, the documents are full of aspirational fluff. It’s largely spin-doctor stuff. The hard work of finding the new technologies and associated pathways is all for the future.
However, it is always nice to leave with a positive message, and so I will do that. The good news is that with tourism in big trouble and the aluminium smelter apparently heading for closure, there does seem to be increasing recognition from Government as to the role that the food and fibre industries must continue to play as the backbone of the New Zealand economy. That seems to be a step forward.
*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. . He can be contacted at kbwoodford@gmail.com.
50 Comments
As always from Mr Woodford, a clear concise and well presented article. Keith Woodford would be one of the preeminent commentators on things agricultural, joined by Jacqueline Rowarth. Interesting to note, that with the imminent or impending demise of some of the last few Heavy Manufacturing industries, suddenly the Labour govt tells us that the "sunset industries" - their words not mine are now going to save NZ and they intend to support it.. hypocrisy at its best. Let's see what the Greens and EDS have to say
Rowarth? The one who said ther'd be x billion on the planet by 2050 so we've got to feed them? That straw-person? Spare me.
I have more respect for Mr Woodford, but still very qualified:
"I reckon that growth of around 2% per annum may well prove to be realistic. But if we want to grow at that rate in real terms after allowing for inflation, then some hard work is going to be needed."
Nothing - repeat nothing - grows at 2% per annum. I suspect he's of the commonly-wired cranial variety, who say exponential but mean linear.
Man PDK you really need to check recent economic history. Even OUR banana republic has achieved 2%+ growth for many successive yrs post the GFC. A CAGR of 2% is exactly exponential. Do the maths.. if it was linear 2% would take 50 yrs to double, 2% CAGR less, hence exponential
I'd also suggest that both Rowarth and Woodford have forgotten more than the average plebiscite has learnt especially in Ag matters, probably why they both have high level tertiary quals, one a Professor the other a Doctor
but not enough growth to save us from our debts. After WW2 the USA had huge debts, over %100 of gdp, but such high growth that by the end of the 50's early 60's, debt was only %30 of gdp.
That's the issue today, is growth related to inflation, is inflation a signal that we have the growth we need to reduce our debt to payable?
Next question, is deflation a sign that we don't have the growth capacity, that unavoidable deflation will wreak havoc on economies, that have borrowed and not invested in production but asset speculation?
No % rate of growth is sustainable. All else is short-term thinking.
Most folk argue for what they need to, to maintain their position in society and within their peer-group. It becomes self-reinforcing, as per the Emperors' Clothes. That was Rowarth's downfall, ultimately. Ag as practiced, is draw-down based, a linear conveyor-belt. It is therefore unmaintainable. Some of us are asking where to from here? Those on the current gravy-train seem unwilling/unable to.
watch the last ten minutes of this if you haven't already
https://www.youtube.com/watch?v=XbKXeVOUQYY
I enjoy Keith's missives. I did in the SST many years ago too, until Fonterra had him shut down. These days we buy Anchor a2 milk. Who would have thought??? As per the article, it has taken the Coalition of Labour government 3 years to recognise our primary industries for what they are, & have always been. Essential to our lifestyles. Yes, even the green ones.
LJM,
The reason I stopped writing for the SST was that I was not happy with the headlines they were using which had too much clickbait for my liking, and I was also unhappy with some of the editing which reflected the biases and ignorance of sub-editors, but for which I was then having to take public blame. So I quit. Similarly with Stuff a little later - I found it too constraining. Yes, I have tangled with Fonterra at times, and I believe they did in 2007 and thereabouts suggest to my University (from which I am now retired but still hold an honorary position) that it would be better if I was shut down, but nothing came of that. I have at various times been told that some of the things I write are not good career moves, and professional doors do get slammed, but other opportunities seem to arise. A younger academic would be very unwise to take on some of the issues that I take on and I think that is sad. I try and go where the evidence takes me.
KeithW
Keith- how about some simple facts?
What we do is extract, consume and excrete parts of a finite planet, and we did that an an exponentially-increasing rate. Doesn't matter whether it was only 1% pa, it was unsustainable. Agriculture - as practiced - is the art of reducing soil (both quality and quality), a trend to monocultures and reliance on artificial inputs. But most of all, it involves a total reliance on fossil energy - several calories of oil to one of produced food (we can argue the ratio; I've seen every number from 3 to 70, but let's say 10:1). That will cease.
There were people - some academic and who should have been dispassionate, objective and wider-read - raising the straw-man argument of having to feex x more billions (who haven't been born yet). Not only is that not physically possible, but we're drawing-down the planetary paddock even as we speak. To advocate more, is to be disingenuous.
My question to you is not even how do we feed the world, but how do we feed New Zealand, beyond fossil energy? People conflate two things; exporting food for many more than 5 million using fossil energy/feedstock, versus what a sustainable output might be, over more than a generation's tenure. In my circles, 2 million is reckoned a fair local target, a fair stocking of the NZ paddock. Is anybody addressing this? Herbert Girardet is a good read, if you haven't already.
https://www.amazon.com/Creating-Regenerative-Cities-Herbert-Girardet/dp…
Keith - try this link
https://surplusenergyeconomics.wordpress.com/2020/07/06/177-poorer-angr…
Prosperity is definitely on the decline
ham n eggs
I agree that economic growth rates have been in decline for quite some years in the so-called developed world and the factors driving that and the implications thereof are worthy of careful thought and reflection. China, most ASEAN countries, and India were still growing fast until COVID came along. It looks as if China could still show some weak growth this year but some may wish to debate that. Almost everywhere else will go backwards. It is indeed a new world.
KeithW
Well said Keith. It beggars belief that the same government that promotes a policy (ETS offsetting) that will eventually require 70% of our productive sheep and beef land to be converted to non-productive pine trees for carbon speculators, can at the same time trumpet such vacuous piffle that we are somehow going to increase sector productivity by $44B. Must be a hell of a lot of mussel farms planned? As someone has already noted - this is a 'roadmap without any roads'.
You should work for the NY Times Mr Woodford. Opportunities there for the not Right people, if you see what I mean.
Couple of things. In the past a lot of governments have belittled and minimized the importance of agricultural production and exports to our economy, and have wasted fortunes on promoting other stuff, always with disastrous results. They then always swing back to the old standby. Remember Roger Douglas and Colin Moyle battling away to pay back Rob Muldoon's debts in the early '80s? No, probably not. Roger deliberately increased interest rates, our dollar rose, and our foreign debt was paid back easier. Also our domestic borrowing dropped, and inflation went down. Not rocket science.
Also, is the rumour that the Green Party want the Manapouri power scheme shut down true?
sit23,
Yes, I do remember Colin Moyle. At the time he first became Minster of Agriculture I was working for the Ministry of Agriculture. Despite farmers in general not being well disposed to the Labour Government, he was well regarded. He brought fresh thinking to the position.
KeithW
Sorry but the NYT.......??!!
"But the truth is that intellectual curiosity—let alone risk-taking—is now a liability at The Times."
Given the Green Party have been completely missing in action re the Waiau River Care Group's attempt to get another 3% flow sent back to the river from Manapouri, and the groups call not to allow Manapouri be exempt from the Freshwater regulations, AND it is a NZ First MP taking their petition to parliament, it has shown no interest in Manapouri/Waiau River to date in recent times. Whether it would be because they would be seen to be supporting, gawd forbid, a rural community in regard to an ecological issue, or not, only they know.
What about the sheep and beef Keith? Where is the meat?
And I know that this governments environmental legislation will reduce on farm productivity, farmers have to produce less for the sake of the environment and future generations - on farm production growth at 2% is only possible with additional nutrients, intensification, environmental degradation.
Its inevitable that farms will have to reduce stocking rates to meet environmental requirements. Less animals = lower production and in turn will see land values fall as per hectare production will be radically reduced. I would hate to be a dairy farmer in Canterbury
The key new dairy technology will be composting barns. The technology already exists and it is compatible with pasture-based farming. But the industry has yet to get its mind around this. For more info do an online search using my name and the term "composting barns"
Keith Woodford
Keith - the dairy industry needs to be incentivised to take on new technology such as "composting barns". Currently the industry cant fund the huge Capital Cost this type of system and until we get the banks and government back on board we will tread water with our existing production systems.
Stevell,
The key technological advance for meat production will be when semen sex selection techniques get to the point where the best 30% of dairy cows are mated with female sex selected semen and the rest are mated to male sex selected semen from beef breeds. But we are not there yet. Very hard to make substantial further productivity advances with sheep, but some further advances are possible through breeding for disease resilience.
KeithW
Yes I agree somewhat, but you will still need to grow more grass to realize the potential of the "...male sex selected semen from beef breeds", and that is only possible with additional nutrients, intensification, environmental degradation. While you say “we are not there yet.” The reality is that we are there “… in the early 1990s researchers in the United Kingdom began experimenting with producing male calves through in-vitro fertilization. In the late 1990s, Seidel and his team at CSU developed a process for creating sex-sorted cattle semen for freezing and use in artificial insemination (AI).” https://www.dairyherd.com/article/sexed-semen-history-and-potential
So why aren’t we doing it? (I’m guessing here, please enlighten me)
1. Its not economic
2. Its not natural
Most countries work on calving throughout the year to align with consumer needs and maximise processing plant utilisation. In NZ we go the other way which is to optimise the balance of feed demand and feed supply within a predominantly pastoral system. That works OK for us as long as we focus on commodities - milk powders, butter and hard cheeses. But does not really work for most other products. In contrast, sexed semen works well in the US with their farming systems and is widely used - or at least much more widely used than in NZ.
KeithW
Agree, its difficult to see NZ dairy systems changing their production curves unless we are forced (highly likely) too house cows for 6 months of the year to keep our "licence to farm" and the economics/markets force our dairy factories to become more efficient from a factory point of view e.g. cant afford to have all of that stainless steel sitting idle for 9 months of the year so we want consistent year round production.
Such a change would mean a doubling in milk production as farms (that can) would move from all pasture (13-15 tonDM/ha) to maize/annuals (30 tonDM/ha) and double drymatter production as a result. Possibly this is the way forward for NZ dairy (which is only what the rest of the world is doing already) if we are going to be forced to house our cows for 6-7 months a year, in turn this is great for NZ's export income and will help feed the growing world population.
On the back of this methane bio-digestor generators would be a must to control methane as well as produce power to run the machinery etc, so farm scale will be the key.
This type of production system is standard in a lot of the world already and from what Ive seen, governments have incentivised these systems with tax breaks, subsidies, price controls as they see milk/food security as a key to their peoples survival.
Given what weve seen with Covid I believe NZ is now totally reliant to the Rural Sector but our government needs to wake up to this and start to support the big picture for Rural NZ.
You must be a North Island farmer Grumpy to talk of using maize. ;-) My guess is that given the prohibitive cost to send Canterbury wheat to Nth Is for food production, the cost of sending maize to Southland would also be prohibitive. Before we get too carried away with forcing all farmers to build barns, it is wise to talk to vets about the animal health issues they see happening in barns....there are a few with barns who have serious issues in that regards, but its out of sight to Joe consumer. Also to do nutrient budgets, soil types/physiographics mean in some areas barns are only an option if they can export all their effluent off farm. I know in our environmentally sensitive catchment we will be worse off environmentally with barns than with using runoffs/grazing away. Barns usually = intensification to pay for them. There's no one size fits all.
Yes governments offshore incentivise a lot of ag systems, but do we really want to be like the EU where on average over 54% of farm income is via subsidies? That to me says the don't have a viable system.
Farmers I speak to don't want to go back to relying on subsidies. Once we become the same as everyone else we also lose our pasture based marketing advantage vis a vis with the rest of the world. Can our markets take the additional product without causing a price collapse from what we get now - the Oceania premium. Producing more is all well and good, but will our markets want a product, that in its provenance will be no different from any other product on the market, and be willing to pay current premium for it simply because it is from NZ? Given Fonterra is looking to pay an incentive which includes grass based farming and Ireland is looking to go more pasture based, going to barns seems to be going against the market wants?
I spoke to a large farmer who put in a methane digester - it didn't pay and they weren't going to do it on their other farms. Also they had difficulty in getting rid of the surplus power - no one wanted it.
Yet I also know of a young techie farmer, not livestock - setting up a substantial solar power system who is in discussion with the lines company to store surplus power, in a type of JV, that can be sent to the grid when needed. But then we have power issues here, so the lines company here has a different attitude to that of down South.
I agree with you that farm scale would be the key to what you are advocating - but IMO that means large industrialised farms, eventuating in farming wealth in the hands of a few, and the end of family farms and the dreams of many of our young farmers.
I'll go with methane reductions being handled by breeding from low emitting cows/change in feed stocks/vaccine etc - any or all of them if they prove to be proven useful instead of industrialisation and subsidy reliance. But your prediction may well be proven true.
Composting mootels are the technology that can solve all of the animal comfort, animal health and nutrient leaching problems, and in the process reduce somewhat the need for fertiliser coming in from outside because there is better nutrient cycling - using the nutrients that would have leached. And doing all of this within a pasture-based grazing system. But the infrastructure has to be built correctly and in too many cases this is not being done. Some people are promoting the concept and selling infrastructure that is not appropriate. Economics is good but finance can be a big issue with many farmers already maxed out.
KeithW
Agreed that composting is a definite option up to a certain herd size. Robots are now a huge part of our competitors systems, expensive as they are its difficult to see NZ Dairy continuing down the path of long hours in a cowshed, plus cows want to be milked 3 times a day (so who knows best). My gut feel is that farmers are over the continual labour issues and would change their existing systems but the margins (& equity/bankers) arent there to justify it.
The world govt's basically sees their farmers as essential to their peoples lively-hoods and they in return tend to incentivise their farmers to change so that they are there in the future to feed their people.
In NZ those outside of farming have little respect for what the farmers do and are certainly blaming us for the current environmental issues. The days of small farms in NZ are unfortunately numbered and have been for a while. NZ needs a pull through and to do that we need to be incentivising change as the govt. have done over the last 100 years when they incentivised farmers to clear the bush, spread fertiliser, plant grass seed and farm animals for wool/meat/milk. The required change will not happen on its own as the farming community is now too old and weve lost the young to more attractive lifestyles.
Our present govt. has no idea.
And by incentives I dont mean subsidies but more "tax breaks" to help us justify the huge cost of infrastructure most of us need to combat the environmental rules, without having to drop our stocking rates which is a poor choice given our current economic's. Other new ways of controlling the green house gas issues such as Bio-digester generators all need Govt. "help" to get them going and if we are only going to rely on Breeding and Feed changes to be compliant in the future then I suggest we are taking a huge risk and would rather hedge my bets and work with what we already know will work e.g. Cow Barns/TMR/Robots.
The modern cow barns (composting or concrete & robotic) that Ive seen around the world have far better animal health/breeding than what i see here in NZ's systems plus the environment issues are far more controllable. As Keith has said we need to upskill our farmers to run these systems properly and get the confidence of the bankers and investors.
Excellent article as usual. The only thing I would add is the banks now require principle to be repaid . Hardly ground breaking stuff but they sort of didnt worry about it for about 10 -15 years , a generation of young farmers are hamstrung by not benefitting from rampant capital gain , high entry cost and now having to repay the debt. There is very little potential to increase output if your paying principle out of OD .
Excellent article Keith. I started reading the report but gave up after a few pages when it was obvious it was a talking head bunch of waffle! Nothing more than an election year PR exercise and will be consigned to the same place as Kiwibuild - the bin! Mind you you couldn't expect anything more from this group of "industry experts".
As discussed elsewhere, China has become a default market for much of what we produce. China's political adventurism is now drawing unfavourable comment from many of our traditional allies. The US has a naval task force in the Indo China region, Britain has sent an air craft carrier, HMS Queen Elizabeth to the same region, Australia is in an ongoing war of words with China and Hong Kong is the potential flashpoint that no one needs. If the situation blows up and we have to take sides where will that leave us?
That interchange isn't scoped wide enough. Much like the article.
Stand back and tick them off; One, there's not enough planet left to even continue the present rate of consumption. So China cannot get to the USA's level, India has Buckley's, and even the US cannot maintain (as we are watching - the virus was just a trigger and only gained traction becayuse of system-vulnerability. Two, there's more debt extant, than can be repaid by processing said planetary remainder (particularly the fossil energy/feedstock)). So both China and the US have a debt problem. Three - we will fight over 'what's left', winner absolves debt, loser is gone anyway.
You want to guarantee anyone 'buying' anything during and post-scrap? Sit on the sidelines and pretend the IOU's are redeemable, if you must. Reminds me of Mack and the Boys paying for the coal range..... Apparently those involved in agri 'business' do not wish to discuss such options. Or the simple problems of Limits to Growth and depletion, irrespective of overpopulation.
What if in 15 years
1. All milk is produced in a lab process?
2. All burgers in the USA are from Lab produced meat - no killing of animals ?
Sounds crazy but who would have said coarse wool would be virtually worthless 20 or 30 years ago?
We need to really challenge ourselves sometimes and not be defensive as this is happening in other industries at an ever increasing rate.
what does the consumer of tomorrow really want?
There is likely to be a place for all - natural, highly processed and everything in between. I dont believe there will be just 'the' consumer. But many consumer types. The 'elite' who can afford to pay for whatever high priced food they want/ whatever the fad of the day is; the 'ethical/environmentally conscious' consumer; those who buy nutritional food based on price, those who have limited options because of financial constraints. Every food producer is exhorted to supply the first. There is talk from marketers that a big change in food purchasing since COVID19 is people deciding to continue to cook more homemade meals using foods that are seen as 'healthy, natural food'. If that trend continues or not, remains to be seen.
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