BakerAg open letter on water policy

September 13, 2019

Chris Garland, a director of BakerAG has penned an open letter to government:

The Prime Minister:   Jacinda Ardern

Minister for the Environment:   David Parker

Minister of Primary Industries:   Damien O’Connor

Minister of Health:   David Clark

Dear Ministers

BakerAg NZ Ltd has been providing business consultancy to the rural sector for over 35 years. Morale among our farming clients is now as low now as it was in the Rogernomics years of the late 80s and during the GFC. The difference in those earlier years, is that farmers still felt valued by the NZ public.

This government’s approach to environmental policy is undermining the mental health and well-being of the pastoral sector. Government has contributed strongly toward turning the NZ public against farming, which has had a severe impact on farmers’ self-esteem and on their ability to cope with a rapidly changing policy environment.

As examples, the Zero Carbon Bill and the National Freshwater Policy Statement are having a profound impact on the pastoral industry, which has compounded over a short period of time.

The terms of trade in the sheep and beef sector are some of the most buoyant seen for the last 20 years, yet there is a malaise among these farmers that emanates from a sense of worthlessness. The dairy industry is struggling to recover from a three-year downturn, it’s had the M. Bovis outbreak to deal with and is now seeing a withdrawal of support from the finance sector.

How does the government expect to achieve behaviour change from constituents who are dejected and feel alienated from society? Ministry of Health statistics confirm that mental health in the rural sector has deteriorated significantly over the last five years. The government must understand that its own actions are exacerbating this decline.

It’s a sad situation that some of the governments $1.9 B investment into NZ’s mental health will be needed to counter the impact that this government has had on farmers’ mental state. One of the leading initiatives of the Wellbeing Budget is to “Take Mental Health Seriously.” This Government’s actions are having a negative effect on the mental health of a large section of the community.

Farmers are not environmental vandals. They are a business sector that has found itself at the centre of a maelstrom of environmental concern. Most of these concerns around water quality and greenhouse gas emissions are legitimate. But farmers didn’t set out to deliberately degrade water quality or to produce GHGs. These are unintended consequences of their business activity, which until recent years, had been wholly endorsed by the nation. It took 150 years to get to this position. It will take more than five years to achieve environmental sustainability.

One of farmers’ greatest attributes is that they are problem solvers. Give them a problem and some tools, and they will find a way to fix that problem. It’s this ingenuity that has made NZ farming some of the most efficient in the world. The food they produce is regarded as being of the highest quality throughout the world.

Farmers now recognise that there is a problem with the environmental impact of their activities. They want to fix this. But they are not being given an opportunity to find their own solutions. Instead they have been subject to a relentless dialogue of rhetoric, regulation and rejection.

The farming community has not been recognised for the positive efforts that a great many land owners have gone to mitigate their environmental impact. The negative public view of the sector has been influenced by government dialogue. This is not the way to change behaviour or effect policy.

If this government is genuine about improving mental health and genuine about motivating farmers to address environmental issues in their industry, it should:

  • Give landowners credit for the progress that has already been achieved in environmental management (exemplified by Ballance Environmental Awards competition, the Ahuwhenua Trophy, QE II and Nga Whenua Rahui covenants, and Country Calendar subjects).
  • Acknowledge that there is an environmental conscience in the farming sector.
  • Provide balance in the accountability message: urban, industrial, domestic, pastoral.
  • Acknowledge that the pastoral sector makes a valuable contribution to the NZ economy.
  • Ask the sector how it believes environmental expectations should be met?
  • Give the sector an opportunity to develop and implement its own solutions.
  • Assist in developing tools and methodology.
  • Work with them.

CHRIS GARLAND

Director

On behalf of BakerAg NZ Ltd

www.bakerag.co.nz      

References to the ag-sag of the 80s is not hyperbole.

Our local, The Fort at Enfield, hosted a lunch to raise funds for prostate cancer on Wednesday

. Around 100 people were gathered and conversation kept coming back to how hard it was in the 80s and how much worse what’s being imposed on farming is now.

The changes of the 80s were tough, but necessary and based on economics.

The changes the government is threatening to impose on farming now are tougher and based on emotion not science.

Reports from consultation meetings are making matters worse. MfE has underestimated turnouts so venues are too small and those fronting them aren’t able to answer technical questions.

Comments like this from the Minister for Agriculture don’t help either.

Rather than blaming the messenger he should be listening to the message and trying to understand the very real concerns that farmers and those who service and supply them have.

P.S.

BakerAg produce the weekly AgLetter. You can subscribe to it here.

Jamie Mackay interviewed Chris Garland on The Country yesterday.


Saturday’s smiles

June 16, 2018

Before the Battle of Agincourt in 1415, the French, anticipating victory over the English, proposed to cut off the middle finger of all captured English soldiers.

Without the middle finger it would be impossible to draw the renowned English longbow and therefore they would be incapable of fighting in the future.

This famous English longbow was made of the native English Yew tree, and the act of drawing the longbow was known as ‘plucking the yew’ (or ‘pluck yew’).

Much to the bewilderment of the French, the English won a major upset and they began mocking the French by waving their middle fingers at the defeated French, saying, See, we can still pluck yew!

Since ‘pluck yew’ is rather difficult to say, the difficult consonant cluster at the beginning has gradually changed to a labiodental fricative ‘F’, and thus the words are often used in conjunction with the one‐finger‐salute.

It is also because of the pheasant feathers on the arrows used with the longbow that the symbolic gesture is known as ‘giving the bird.’   And yew thought yew knew every plucking thing

Hat tip: BakerAg’s weekly AgLetter.


Commodity prices then & now

January 23, 2016

Baker & Associates’ excellent weekly AgLetter compares commodity prices 18 months ago with current ones:

Oil price down 70%:     June 2014 ‐ US$103/barrel January 2016 ‐ $US30/barrel

Wheat price down 57%     June 2014 – US$287/tonne   January 2016 ‐ $US164/tonne  

US Beef down 16%       June 2014 – US$2.00/lb   January 2016 ‐ $US1.67/lb

US Lamb down 30%     June 2014 – US$1.37/lb   January 2016 ‐ $US0.95/lb

Whole Milk Powder     June 2014 ‐ $US3459/tonne January 2016 $‐ US2188/tonne

DAP Price down 20%     June 2014 ‐ $US499/tonne January 2016 ‐ $US399/tonne

NZ/US Exchange Rate down 25%    June 2014 – $0.8670    January 2016 ‐ $0.6540

NZ Floating Interest Rate down 1%    June 2014 – 6.07%    January 2016 ‐ 5.1%

NZ Inflation Rate down    June 2014 – 1.6%    January 2016 – 0.1%

It appears that the global economy is facing challenges on a similar scale to those of the GFC five years ago.

In 2008, the problems arose from over‐priced assets in the US and EU markets, and with incompetent finance sectors in those markets.

The current problems appear to arise from a slowdown in the economies of emerging markets (China and India), upon which western markets have become increasingly dependent over the last 10 years.

The implication for NZ agriculture will depend on how the combination of “plusses” and “minuses” balances out . . .

NZ Agriculture Hangs in the Balance

On one hand we have depressed in‐market prices for red meat, grain and dairy produce.

On the other hand we have record‐low interest rates, record‐low inflation, a weaker exchange rate, low fuel prices, low freight prices, low electricity prices and lower fertiliser prices.

We have the TPP about to be signed. We have a low‐cost grass‐fed production base.

There’s got to be something to work with here.

Possibly the biggest challenge is to accept the reality that commodity prices are going to remain highly variable, and that driving Efficiency of Production is the main tool that farmers have to secure profitability in the coming years.

During the ag-sag of the 80s we faced plummeting prices for what we were selling and high prices for a lot of what we had to buy, wide spread trade restrictions and tariffs, inflation nearing 20% and interest rates even higher.

Produce prices are low and not likely to go very high very fast.

But on the plus side we’ve also got lower costs of fuel and other inputs, better trade access, and low inflation and interest rates.

Those of us who survived the ag-sag also know that there’s no point wasting energy worrying about what we can’t control and opportunities from concentrating on what we can control.

P.S. The AgLetter is a weekly publication from Baker & Associates. You can find how to subscribe and back copies here.

It’s always a good read.


Saturday’s smiles

December 13, 2014

Einstein died and went to heaven only to be informed that his room wasn’t ready.

“I hope you won’t mind waiting in a dormitory. We are very sorry, but it’s the best we can do and you will have to share the room with others,” he was told by the doorman.

Einstein said that that wasn’t a problem at all and that there was no need to make such a great fuss.

The doorman led him to the dorm and Albert was introduced to the other inhabitants.

“See, here is your first roommate. He has an IQ of 180!”

“That’s wonderful,” said Albert. “We can discuss mathematics!”

“And here is your second roommate. His IQ is 150.”

“That’s wonderful,” said Albert. “We can discuss physics!”

“And here is your third roommate. His IQ is 100.”

“That’s wonderful. We can discuss the latest plays at the theatre!”

Just then another man moved out to capture Albert’s hand and shook it.

“I’m your last roommate and I’m sorry, but my IQ is only 80.”

Albert smiled back at him and said, “So, where do you think interest rates are headed?”

Borrowed from this week’s AgLetter, a weekly email publication from Baker & Associates which anyone involved or interested in farming would find an invaluable resource.


Gift tax by stealth

September 15, 2014

Labour yeah-nahed over whether or not capital gains tax would be due on the family home if it was sold by the beneficiaries of a will,  but would which make CGT a death tax by stealth.

It will also be a gift tax by stealth.

Baker & Associates latest AgLetter examines the tax and finds:

Gifting an asset will be considered a CGT event, except in the case of inheritance upon death. The person gifting will be liable for CGT based on the market value of the asset, and this will include farm property.
National removed gift duty because the amount raised didn’t justify the costs.
The major beneficiaries were accountants and lawyers and that would be the case should labour CGT be inflicted on us too.

Successful succession

April 15, 2014

A recent Baker and Associates’ weekly AgLetter* included Rob McCreary’s thoughts on succession planning, given at the Wairarapa Farm Business of the Year Field Day.

1. Rob’s farther was an academic. The greatest thing his father passed on to Rob was no expectation of succession!

2. You have to define what you mean by succession vs inheritance. In Rob’s view, succession is about investing in the energy, youth and enthusiasm of the next generation. It’s also about handing on your experience and being a mentor to the next generation. Inheritance is simply getting what’s left at the end.

3. It’s important to pass on some debt, as well as assets.

4. Make sure the kids have a business or a part of a business that they can stamp their mark on.

5. Because children work in their family businesses, there is an automatic expectation of succession. In older businesses, this expectation is probably a lot stronger, and therefore needs a lot more management.

6. If it’s important to treat all children equally, their net equity will only be equal for one day. After that day, their own business skills and external forces will change what that equity becomes. This is a fact of life. There should be no come‐back.

7. For a successful succession plan, your business needs to grow. Concentrate on improving the things that increase income. Don’t over‐capitalise. Buy more land. Spread your business.

8. Carry out your succession plan as early as you can. This gives your kids more opportunity to do something with their own equity.

9. All the young people I’ve come to know who have been given this type of help have driven their business further and better than the last generation.

 Succession is a generally complex which will be different for every business.

One measure of successful succession is that all parties are still talking to each other when it’s done.

If one or more offspring wish to farm and others don’t, it’s easier if there’s some off-farm investments for the latter. Not all farms generate enough income to enable this and many prefer to put any profit back into the farm.

Some people think it has to be equal to be fair, others are sure that fair isn’t always equal and equal isn’t always fair.

Regardless of which side you take on this, point 6 is right. Even if all are treated equally their net equity will only be equal ont he day they get it. After that it’s up to them.

* You can see more about the AgLetter and how to subscribe here.

The AgLetter is a weekly publication, which provides timely management and marketing information to sheep, beef and deer farmers throughout the country. Established in 1986, the AgLetter has become a valuable source of information and humour for a large number of subscribers stretching from south Auckland to Southland.

Each week, the AgLetter provides an overview of:

  • Topical management advice
  • Industry Issues
  • Store market prices
  • Export schedule price
  • Market analysis

Detailed prices on export schedules and store sales are provided.

In addition, special topics are covered each week that may range from stock trading profitability analysis, fertiliser price and product reviews, industry developments such as carbon trading, new financial instruments or drench resistance. . .

It’s well written, easy to read and informative.


Castlepoint Stn Wairarapa Farm of Year

March 10, 2012

Castlepoint Station has Keinzley AgVet Wairarapa Farm Business of the Year.

This is a deserved tribute to Anders and Emily Crofoot who bought the station 14 years ago after immigrating from New York State.

Castelpoint is on the Wairarapa coast, east of Masterton.

Baker and Associates’ weekly AgLetter reports:

The station comprises 2790 ha effective and carries approximately 21,500 su made up of 14,000 ewes and replacements and 330 calving cattle and replacements. . .

The farm manager is Stu Neal, who heads up a team comprising three shepherds and a general hand.

The judges have listed some key features of this business: –

1. A shining example of industry best practice around farm management, governance, HR and health & safety, animal health

protocols and implementation.

2. Strong community and industry contribution.

3. Implementation of R&D on-farm, well aligned to current science.

4. Reaping the rewards of “front-end” development work carried out in early tenure.

5. A challenging coastal environment with high wind run and frequent drought.

6. Strong history of feed budgeting and monitoring.

7. Environmentally conscious and responsible.

8. Strong contribution made to the property by the manager.

A field day will be held on the property on Tuesday 3rd of April.

Emily and Anders are not only top farmers, they are very active in their community and agri-politics.

Is it too much to hope those advocating a blanket-ban on foreign ownerhsip of farmland could learn from this?

The Crofoots provide a wonderful example of the benefits immigrants can bring to New Zealand and provide very strong evidence for the case in support of some foreign ownership of farmland.


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