Feds Chief Not Out To Win Friends

June 26, 2008

When I was a child, every meal began with grace. I suspect relatively few families do that now and even if they did I don’t think they’d be taking any notice of Federated Farmers out-going President  Charlie Pederson:

“Folks in the city need us more than they know,” he told the federation’s annual conference in Christchurch today.

“Three times a day as they sit down for a meal every New Zealander should say “thank God for the producers”.

And he suggested than when people sat down after a meal, in front of their large flat screen TV, they should also thank God for exporters “because without them this proud little nation would be the largest third world country in the South Pacific”.

He’s right about the importance of producers and exporters but this isn’t the way to get support from those who fail to appreciate that.

Mr Pedersen, a dairy farmer, railed against the “cruelty” of Resource Management Act, which regulates environmental standards for use of land, air and water.

The RMA needs some attention – but it’s not because it regulates air, soil and water, it’s the way it does it which is the problem.

“Food producers are on the brink of feeling unloved and unwanted in this country,” he said, speaking in the wake of complaints that the nation’s 10,000 dairy farmers are being attacked for their intensive style of agriculture.

And public comments like his introductory ones are part of the reason for this.

Mr Pedersen said today there were untruthful people who would brand farmers as “profit-driven people, unconcerned about our environmental footprint”.

“Much of the contempt we face as food producers is falsely based,” he said. He particularly criticised the “hypocrisy” of consumers living in unsustainable cities who demanded farmers accept responsibility for the environmental effects of production.

He’s right that much of the criticism is not based on fact and there is an element of both ignorance and hypocricy from critics. We have only one world, we all need to look after it and it’s best to address the logs in our own eyes before worrying about the specks in other people’s.

Another approach would be for consumers to share the cost of Kyoto and a better environment by paying an extra tax on all food.

“The proceeds of this tax could be used to help New Zealand food producers to buy carbon credits and compensate for property loss under the RMA,” suggested Mr Pedersen.

“Such a tax would have the double benefit of keeping New Zealand food producers viable and still producing in New Zealand, and allowing all New Zealanders to share the responsibility”.

No thanks – we’ve already got too many taxes and compliance costs and a subsidy by any other name is still a really bad idea.


You think yours is harder?

May 29, 2008

Under the heading Bleating Farmers Cactus Kate challenges any farmer to prove they actually work harder than any city worker or small business owner.

 

I could quote Vincent McNabb who said: “There are those who wrest a living from the land and that’s work; there are those who wrest a living from those who wrest a living from the land and that’s trade; and there are those who wrest a living from those who wrest a living from those who wrest a living from the land and that’s finance”.

 

I might also quote Invercargill MP Eric Roy, who when asked about his early impressions of parliament said, “There are too many people here who’ve never had a bad lambing.”

 

I could then talk about those weeks in late winter and early spring when you work from before dawn until after dark in the cold and wet, battling the weather, keeping your patience with recalcitrant ewes, persevering gently with lambs when experience and instinct tell you they’re almost certainly beyond help and not giving into despair when the piles of slinks mount in spite of all your efforts. I could talk about the stress of living on credit for months because your bank balance just creeps into the black once or twice a year if any combination of the market and weather and dollar and interest rates and other variables over which you have little or no control are in your favour.

 

I could mention the long hours, the hard physical work and mental demands of calving, and calf rearing; and how no sooner that’s over than you’re in to mating and irrigating, making silage and hay, while feed budgeting and dealing with staff some of whom don’t care about what they’re doing and how they’re doing it; don’t know how to keep themselves or their houses (which you own and they live in as part of their employment package) clean; and have no respect for their own or other people’s property.

 

Then there’s paying wages which isn’t just working out what the staff and the IRD are owed, but also what goes in child support, to the Ministry of Justice for overdue fines and the finance company for overdue interest and debts – in spite of them starting with a package including accommodation and wages well north of $30,000.

 

I could mention droughts, floods, snow and wind, pests and diseases.

I could also argue about the intellectual snobbery in Kate’s comment that farming isn’t rocket science. It’s not but that doesn’t mean a job which requires brawn doesn’t also require brains and that people who get their hands dirty don’t need to think. Farming requries a variety of physical, personal and intellectual skills including but not limited to engineering, mechanics, fencing, animal husbandry, soil, plant and vet science, accounting, budgeting, HR, determination, intuition, patience, charm and a sense of humour.

 

But there’s no point in the mine’s bigger/harder than yours argument about farming and other work. There is no easy way to earn a good living, wherever you’re trying to do it. Every job has its difficulties and its rewards, and the comment which occasioned Kate’s rant was an observation rather than a complaint.

 

It came from Charlie Pederson who said:  “When I started farming 31 years ago the average dairy herd size was 125 cows. Today it’s 347 and even at that size you are really just scratching along.”  

That could easily apply to any other small business – urban or rural  – because compliance costs and economies of scale have changed so that what would have been an economic operation, in the city or the country,  three decades ago would not be today.

 

 

 


Quote of the Week

May 16, 2008

“This report clearly shows that food producers are not ‘creaming it’.” Charlie Pederson


Farmers get tiny slice of food price

May 15, 2008

An NZIER report commissioned by Federated Farmers shows producers are not the main beneficiaries of food price rises.

The farmer’s share of the retail price was 40.12 % for honey, 35.46% for milk, 30.97% for lamb chops, 18.86% for blade steak, 16.37 for bread and just 5.3% for cheese.

Feds President Charlie Pedersen  says that means the farmer’s share is just three slices or bread in a 20 slice loaf, one of four pieces of steak, three glasses from a two litre bottle of milk and a tiny slice of kilo block of cheese.

The cause of high food prices is complex and outside the control of the food producer. Transport, processing, energy and marketing, plus normal margins are some of the factors which have pushed prices up. There is a link to export prices, but this has never changed since New Zealand began exporting meat back in 1882. There is a misconception that because dairy farmers are receiving good payouts from Fonterra, this is driving up prices.

In fact, fertiliser and the cost of compliance have risen. Food producers have had to cope with a severe drought and pay high prices for supplementary feed for their stock. Many sheep and beef farmers will suffer losses this year adding to the losses of previous years.

This report clearly shows that food producers are certainly not ‘creaming it’. Let’s not forget that food producers also have to buy food for their families.

Let’s also not forget that the farmers’ share is a gross return.

The full report concludes:

One influence on the gap between retail food prices and farmers’ returns is changes in general prices in the economy (inflation), particularly from goods such as petrol. Inflation also puts downward pressure on farmers’ profits, as the returns farmers receive need to cover increasing costs of production.

A feature of New Zealand agriculture is that the majority of our agricultural production is sold in markets overseas. New Zealand also imports a significant proportion of food by value. Given the significance of these international factors, addressing increasing domestic food prices requires a response broader than simply targeting the returns to New Zealand farmers. Lowering domestic farmers’ returns

may depress the domestic supply of food, and in turn increase dependence on  imported foods and the growth of food prices further.

 

We saw this happening when we were in Argentina last April. The Government had increased taxes on exports of beef and dairy products in an attempt to keep domestic prices low. But as our host, an economist, pointed out the market always wins because farmers were getting rid of cattle and growing soya instead which was giving a much better return. As a result of this meat and dairy supplies were decreasing and there were fears Argentina would have to resort to imports at world prices.

 

An increase in the export tax on soya earlier this year led to farmer protests and in spite of resulting shortages of food, an Argentinean friend said most people support the farmers rather than the Government.

Rising prices of basic foods here has led to calls for subsidies. Those of us who went through the ag-sag of the 80s know the trouble that would cause.There are no easy answers to the question of making food affordable but attempts to tax exports or subsidise producers will only make the problem worse.


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