Rob Reynish says a transition to horticultural land-use away from livestock or forestry will be no easy and quick thing, but there are major commercial and export-boosting incentives to do it

By Rob Reynish*

If we need less pastoral livestock farming to meet our climate commitments, how will that work for our economy?

As the Climate Change Commission has suggested, one land use change could be into horticulture.

But the actual transitions will probably need more than landowners shifting on a sense of "doing the right thing". Governments tackle this by changing the incentives, imposing costs for activities they don't want to encourage.

But this is almost always a process that is unlikely to generate much more than a backlash. Unenthusiastic landowners subject to forced cost impositions are hardly likely to drive any innovations.

Livestock farming is a business, part of a large sector involved in generating significant income from exports that will be very hard to replace. Incentivised forestry that produces nothing but tax credits will always seem like a dead end to the sector.

Livestock farming makes use of land in a way that can generate more income than costs. The country benefits. But deciding what is the best, most profitable use of land will always grab the commercial attention of landowners.

And it isn't just because sheep farming is in a rut at present. Beef and intensive dairy farming are high-cost operations. And while they may be profitable at present, there will always be tension when other land uses can generate better returns.

An important transition is already underway in Canterbury, naturally, because it generates better commercial returns. It is out of sheep, beef and dairy, and not into pine forest. Horticulture is even replacing dairy as the numbers stack up for those enhanced commercial returns. But for the trend to extend to become significant, substantial investment will be required for local processing.

The transition required is large. Livestock farming produces the products that make up 50% of our merchandise trade exports. Horticulture makes up just 10%, forestry 7%.

Not all land is suitable for horticulture. But much of the Canterbury Plains are. As are other sizeable pockets of land previously used for livestock grazing.

When horticulture options are more profitable than livestock options, the transition can happen with private equity and funding, not needing taxpayer subsidies. And it could be relatively fast. The downstream processing will attract major international investors with expertise and the funding. New local alternatives will generate wealth for those taking the risks. There will be failures too, but they will be tolerated if the profit promise from horticulture is proven.

And it is not as though there aren't vast international markets. It is only that we haven't got our share yet.

Our sustainable advantage is the combination of climate, soils, and a reliable water supply. There are many other places in the world that have similar advantages, but face more immediate threats from climate and water access. New Zealand must use this to achieve more recognition on the global stage. The key is to choose horticultural options that maximise those advantages for us.

In a climate-challenged world, safe and reliable food production will always be a premium economic position. Horticulture can assist in the way we transition from the much maligned emissions-affecting livestock model.

*Rob Reynish is an agribusiness consultant specialising in land use issues, a business development manager at Lincoln University, and maintains the livestock data at interest.co.nz.