Andrew Hoggard assesses 'asymmetrical threats' to the NZ dairy industry - including by some in the media who just don't understand the basics

By Andrew Hoggard*

On TV3’s The Nation recently, Fonterra Co-operative Group Chief Executive, Theo Spierings, underwent a rare hard-nosed interview.  The sort of grilling usually reserved for the Prime Minister.

What caught host Lisa Owens by surprise was the risk posed to Fonterra by Ebola. That’s right, Ebola.

Theo puts the impact of this disease at up to six percent of Fonterra’s exports; $150 million.

The reason being people in affected countries are unable to get to markets and so economies start to unwind.

Only the journalist Bernard Hickey ‘got it,’ by pointing out that Fonterra had the means to switch production from powder into other products.

This not only shows it is a different beast than many give it credit for, but highlights that Fonterra is our only real “global company.” 

The impact of Ebola makes me think that we need to borrow a term usually associated with the military. 

You see Ebola ranks right up there with the Eastern Ukraine as examples of “asymmetrical trade threats.”  These are things straight out of left field impacting us nonetheless.

What Russian separatists do have already cost our dairy industry and economy hundreds of millions by dislocating European milk.

Ebola’s cost to us is already $150 million and counting. 

None of these two things have anything to do with a cow munching grass on a Kiwi farm or the dairy industry of the Ukraine or Liberia.

There is no direct connection but we’re still affected by its ripples. 

I think most people reading this will understand the “symmetrical trade threats” we face, things like quotas, subsidies and tariffs. Things possibly benefiting the American farms that Eric Watson, the former Hanover co-owner, has interests in.

As The Economist noted earlier this year, “the Senate passed the farm bill, a strange piece of legislation which costs nearly a trillion dollars. It mixes benefits that mostly go to the poor (food stamps) with agricultural subsidies that mostly go to the rich (crop subsidies for large farms)….”

Ebola and Eastern Ukraine show us that we should fear “asymmetrical trade threats.”  It’s the same threat if our biggest export happened to be iPhones, software or tourism instead of dairy.

Explaining this to the public is hard when a senior journalist goes onto Twitter and seriously asks if Beetroot makes milk pink. Other reporters I’ve spoken to over the years have firmly believed fresh milk is just reconstituted powder. You have to wonder if there’s something amiss with our education system.

Just like eating scallops won’t turn your blood white, non-farmers need to know that a cow has four stomachs, which break down and extract nutrients from grass, feed and water.  The mammary glands take these nutrients from the bloodstream turning that into the white stuff we call milk.  As for the powder claim what can you say?  Do some people seriously think we milk cows then remove all the water at great expense just to add it back in later? 

Of course it’s not television news without the doom and gloom. The Nation seemed captivated by reports saying China could soon become self-sufficient in milk. The assumption by journalists, again, is that all countries are the same and all farming is done the same way.

The United States is about the same size as China and while some 40 percent of the United States is farmable, only about 11 percent of China is.

While you can run a barn system in China, those cow stomachs need to be fed and if you can’t grow grass like we do, it means fodder crops on land you don’t really have or importing feed.

The good news for ‘NZ Inc’ is that Fonterra is growing in China, which helps to explain why New Zealand exported $17 billion worth of dairy products in the year to date, but Fonterra generated $22.3 billion in revenue - the first time $20 billion in revenue, corporate New Zealand’s ‘four minute barrier,’ was broken

What’s that about value-add?

TV3’s The Nation also raised “Peak Cow,” something we’ll apparently hit in the next ten years to the delight of some but there’s no mention that water quality has been largely stable for the past decade.

Sadly, what we don’t see much on programmes like The Nation are the NZ Dairy Industry Awards or the Ballance Farm Environment Awards.  Awards and farmers showcasing what we’re doing to farm better. 

Meanwhile, one of the worst waterways for nitrate toxicity and E.coli in the Wellington region happens to be the Karori Stream at Makara Peak Mountain Bike Park!  Makes you wonder, doesn’t it.

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Andrew Hoggard is Federated Farmers dairy chairperson.