March 27, 2015

Ahuwhenua Trophy finalists announced:

Primary Industries Minister Nathan Guy has congratulated the three finalists in this year’s Ahuwhenua Trophy competition, celebrating excellence in Māori farming.  

Mangaroa Station in Hawke’s Bay and Gisborne, Paua Station north of Kaitaia, and Maranga Station near Gisborne were announced as the finalists for the 2015 Ahuwhenua Trophy BNZ Māori Excellence in Farming award at an event tonight in Parliament. . .

 Can green-lipped mussels be the next heavy lifter? – Keith Woodford:

If New Zealand is to double agri-food exports by 2025 in line with Government targets, then we are going to need some lateral thinking. We won’t get there just by doing more of what we have been doing.

Related to this, in recent weeks I have been giving thought as to whether the green-lipped mussel can be one of the heavy lifters that can get the job done for New Zealand.
The green-lipped mussel is indigenous to New Zealand. The species is found nowhere outside our coastal waters. It is easily identified in the shell by its distinctive emerald green colour. The flesh is also distinctive from other mussels.

Maori would no doubt have harvested green-lipped mussels for many hundreds of years, but most of nature’s mussels are well hidden. In most years there are huge amounts of microscopic mussel spat washed up attached to seaweed on the Northland Coast, particularly on the so-called Ninety Mile Beach. Exactly where it comes from no-one knows. . .

 – Keith Woodford:

A Chinese language report on WeChat –China’s popular social media platform – indicates that the Chinese infant formula market is about to become a lot more price competitive. According to a usually reliable Chinese industry website, the New Hope Nutritional Foods Company is about to introduce a new line of products called ‘Akarola’ which will come from New Zealand and sell for less than one third the price of similar products.

New Hope already has a New Zealand sourced brand called ‘Akara’ which is manufactured and canned by Canterbury-based Synlait. Linked to this, Synlait announced in late 2014 that it was taking a 25 percent share in New Hope Nutritional Foods and that this would create an integrated supply chain from farm to consumers, in line with Chinese Government regulations. . .

Canterbury/North Otago Dairy Awards Winners Determined to Advance in Industry:

The 2015 Canterbury/North Otago Sharemilker/Equity Farmers of the Year, Justin and Melissa Slattery are passionate and determined to advance in the dairy industry – in fact they want to be farm owners before they are 35 years old.

The Slatterys took out the major title and claimed $18,800 in prizes at last night’s 2015 Canterbury/North Otago Dairy Industry Awards annual dinner held at the Airforce Museum of New Zealand at Wigram. The other big winners were Mark Cudmore, the 2015 Canterbury/North Otago Farm Manager of the Year, and James Davidson, the 2015 Canterbury/North Otago Dairy Trainee of the Year. . .

Food Safety Law Reform Bill consultation begins:

Food Safety Minister Jo Goodhew has welcomed the consultation process for the Food Safety Law Reform Bill, which will address the recommendations from the Whey Protein Concentrate (WPC) Contamination Inquiry.

“We have made substantial progress implementing the WPC Inquiry recommendations; however, some recommendations require legislative change,” Mrs Goodhew says.

“The Food Safety Law Reform Bill will address these recommendations and reinforce New Zealand’s reputation as a reliable supplier of safe and suitable food.

“We are seeking feedback from the public and those in the food industry to ensure the proposed changes are usable and practical for all involved.” . .

Red Meat Sector welcomes signing of Korea FTA:

The recently signed Free Trade Agreement (FTA) with Korea will be a significant step towards reducing the overall amount of tariffs paid on New Zealand red meat exports, according to the Chairmen of Beef + Lamb New Zealand (B+LNZ) and the Meat Industry Association (MIA).

Trade Minister Tim Groser signed this week the New Zealand Korea FTA with his Korean counterpart.

“This deal is critical for New Zealand sheep and beef farmers and meat exporters, keeping us competitive in this key market,” said Beef + Lamb New Zealand Chairman James Parsons. . .

 Commerce Commission issues draft determination on wool scouring assets application:

The Commerce Commission has reached a preliminary view that it should allow Cavalier Wool Holdings to acquire 100 per cent of New Zealand Wool Services International’s wool scouring business and assets.

The Commission has today published its draft determination on Cavalier Wool Holding’s application under the Commerce Act for authorisation of the proposed acquisition.

“Our preliminary view is that the proposed acquisition would substantially lessen competition in the North and South Island wool scouring markets, and in the small domestic customer wool grease market. Cavalier Wool Holdings would essentially have a monopoly on the supply of wool scouring services and the supply of wool grease post-acquisition. However, at this preliminary stage, the Commission is currently satisfied that the public benefits of the acquisition would outweigh the loss of competition,” said Commerce Commission Chairman Dr Mark Berry. . .


Korea FTA worth million$

March 24, 2015

The signing of the Free Trade deal with Korea, singed by Trade Minister Tim Groser yesterday  has the potential to add millions of dollars in extra export earnings.

“Improving access to international markets through free trade agreements is a key component of the Government’s Business Growth Agenda. Supporting our exporters is crucial to creating new jobs and boosting incomes for New Zealanders,” says Mr Groser.

“This Agreement secures the long-term future of New Zealand exporters to Korea whose international competitors were benefiting from Korea’s other FTAs.

“It reduces barriers to trade and investment, provides greater certainty about the business environment and ensures our exporters remain competitive in each other’s market.”

On entry-into-force, tariffs on 48.3 percent or NZ$793.7 million of New Zealand’s current exports to Korea will be eliminated. The Agreement will progressively remove tariffs on 98 per cent of New Zealand’s exports to Korea.

“Particular success stories include the removal of wine tariffs of 15 percent on entry into force, and the removal of 45 percent tariffs on kiwifruit effectively five years after entry into force,” says Mr Groser.

“It will also make possible a new level of cooperation in areas like agriculture, the creative economy, the environment and education, and spur greater investment.”

The FTA will offer improved protections for New Zealand investors in the Korean market, and reinforce the attractiveness of New Zealand as a stable investment destination.

Prime Minister John Key and President Park Geun-hye of Korea witnessed the signing of the Agreement by Trade Ministers Tim Groser and Yoon Sang-jick in Seoul.

“The Agreement shows the strength of the relationship between New Zealand and Korea. It symbolises our countries’ commitment to economic openness and market integration in the Asia-Pacific region,” says Mr Key.

“Korea is one of New Zealand’s biggest and most important trading partners. This Agreement makes it easier for Koreans and Kiwis to do business with each other, and the removal of tariffs will benefit consumers in both countries.

“At the moment, New Zealand exports into Korea attract NZ$229 million a year in duties.  Tariff reductions in the first year of the FTA alone will save an estimated NZ$65 million.”

The Agreement now needs to be ratified by the New Zealand Parliament.

“We are keen for the Agreement to come into force this year,” says Mr Key.

“With a population of over 50 million and as the 13th largest economy in the world, Korea is an attractive market for New Zealand exporters.” . . .

Korea is New Zealand’s sixth largest export destination for goods and services and our eighth largest import source, with total two-way goods trade of NZ$4 billion.

Once ratified by parliament, the FTA will open the door to better business for Koreans and New Zealanders.

It makes the eggs in other trading baskets than China more valuable, will give better returns for our exporters and more choice and lower prices for consumers in both countries.

1080 protesters threaten infant formula

March 10, 2015

An email to suppliers from Fonterra chair John Wilson tells us that police  are investigating a criminal threat to contaminate infant and other formula in an apparent protest over the use of 1080 poison in pest control.

  • The Police say that even though there is a possibility that the threat is not genuine, they are treating it seriously and have a full investigation underway.
  • The threat is not specific to Fonterra or our brands.
  • It is a criminal threat designed to cause fear to generate a political outcome.
  • We can assure customers and consumers that our own testing programmes confirm our products are secure and free of 1080.
  • We are confident the right testing and security measures are in place to protect the quality and safety of our products.

We fully support the action being taken by the NZ Police and Government.

The Ministry for Primary Industry gives the background:

Fonterra and Federated Farmers received anonymous letters in late 2014. These letters were accompanied by packages of powder, which tested positive for 1080. Police were alerted immediately.

The letters contained a threat to release infant and other formula contaminated with 1080 to consumers. This contamination was to occur unless New Zealand stopped using 1080 for pest control by late March. The person or people making this threat say they intend to run an international media campaign to publicise their threat and pressure the government to stop using 1080. . .

The  media release says:

The Ministry for Primary Industries (MPI) is working closely with Police to respond to a criminal threat to contaminate infant and other formula in an apparent protest over the use of 1080 in pest control.

MPI Deputy Director-General Scott Gallacher says the Government’s first priority is protecting the health and wellbeing of consumers.

“We are confident that New Zealand infant and other formula is just as safe today as it was before this threat was made. People should keep using it as they always have,” Mr Gallacher said.

“People should feel equally confident about using imported infant formula which has to meet New Zealand’s strict food safety requirements and is equally secure in the retail chain.

“The ability for anybody to deliberately contaminate infant and other formula during manufacturing is extremely low. Regardless, we encourage people to be vigilant when buying infant and other formula. Our advice is always to check packaging for signs of tampering. We are reinforcing that advice as a result of this blackmail threat.

“New Zealand’s food safety model is among the best in the world. New Zealand manufacturers maintain high levels of security as a normal routine. Security and vigilance has been significantly increased since this threat was received.”

Since the threat was made, the Ministry for Primary Industries – with the support of multiple government agencies, manufacturers and retailers – has put additional measures in place to further protect infant formula products, including:

  • strengthened security measures in retail stores
  • enhanced milk and milk product testing, including a new 1080 testing programme
  • increased vigilance by all relevant players in the supply chain
  • extra physical security at manufacturing premises
  • an audit programme to confirm dairy processing facilities continue to maintain the highest level of security and vigilance.

“The combined MPI and industry testing programmes confirm there is no 1080 in infant and other formula. We have tested just over 40,000 raw milk and product samples and we have had no 1080 detections,” he says.

“This criminal threat is designed to cause fear in order to generate a political outcome. It is using food as a vehicle but should not undermine confidence in our world-class food safety system or in any manufacturer.

“This type of threat does occur from time to time internationally.  We are fortunate that this is the first such threat in New Zealand, and that New Zealand has one of the world’s strongest and most secure food safety systems,” he says.

People with any relevant information should contact Police immediately on 0800 723 665 or Information can also be provided anonymously to Crimestoppers on 0800 555 11.

Visit for more advice on how to check packaging for signs of tampering, and for information about government’s response to the threat.

This could be a hoax but Fonterra, MPI and the police are taking it very seriously as they should.

However, some markets whose politicians and media aren’t as open as ours might not understand that it is a potential threat.

Ministers for Primary Industries Nathan Guy, Food Safety Jo Goodhew and Trade Tim Groser recognise this and are doing their best to allay concerns trading partners might have:

The Government is taking a criminal threat to contaminate food products very seriously, and is reassuring parents that our infant and other formulas are safe and that extra testing and security measures have been implemented as a further safeguard.

The New Zealand Police and the Ministry of Primary Industries announced today they have been working with a range of agencies to assess and respond to a threat to contaminate infant and other milk formula products in an apparent protest over the use of 1080 pest control.

“We would like to reassure New Zealanders that every step possible has and is being taken to respond to this threat and ensure the ongoing safety of our food products,” says Primary Industries Minister Nathan Guy, Trade Minister Tim Groser, and Food Safety Minister Jo Goodhew.

“While the police have advised the risk is low, we are taking this very seriously. Since the threat was received last November, the Police have been actively investigating, while the Ministry of Primary Industries and other government agencies have been working closely with industry players across the supply chain to insure that all New Zealanders can have the upmost confidence in these products,” says Mr Guy.

“Every resource has been made available and we have treated this as a top priority. Ministers have taken expert advice on how to respond to a threat of this type and made considered decisions.

“The Government’s first priority is the safety of our food for consumers, both here and overseas. We are highly confident our products are safe and new increased dairy product testing gives even greater assurance.

“It’s hugely disappointing that someone would try to damage New Zealand’s strong reputation for top quality products and processes.”

Mr Groser says New Zealand officials have informed authorities in our major markets about this criminal threat and our measures in response.

Mrs Goodhew says New Zealand has a world class food safety system which has been further reinforced by recent improvements.

“We now have a comprehensive new 1080 testing regime for dairy products that gives us a high degree of confidence. MPI has also analysed the supply chain in detail and worked with manufacturers to put in place additional security measures,” she says.

“This new testing is on top of our normal thorough testing, auditing and verification system. It is extremely unlikely that anybody could deliberately contaminate formula during manufacturing, and there is no evidence of this ever having occurred.

“In addition, we have worked with retailers to address any risk to food products at the retail end of the chain.

“The advice to consumers is not to consume any food product that appears to be have been tampered with, and report it to the Ministry for Primary Industries immediately.

“Any signs of tampering are easy to spot. Detailed information on how to check products and further information is available at”

If parents or caregivers have any concerns they can contact Plunketline 0800 933 922 or Healthline 0800 611 116.  

Lone voice not answer

January 13, 2015

The ODT editorialises on climate change and concludes:

. . . No sudden shift in policy by the Government will stop the forces of nature. Mr Groser says New Zealand is taking a balanced approach to climate change and New Zealand is playing its part in avoiding imposing excessive costs on households and businesses.

In that sentence is the nub of the problem. The New Zealand economy is going against the trend seen in Australia, Japan and the euro zone with economic growth set to rise in the coming year. Imposing energy charges on households and businesses will slow growth and put jobs at risk.

Climate change is an important issue for communities facing previously unheard weather conditions but New Zealand being a lone voice on change is not the answer. A balanced approach is the best solution.


Sustainability is the balance of economic, environmental and social considerations.

Handicapping the economy and hurting the poor by imposing excessive costs which would have little if any impact on the climate would be the triumph of politics over science and common sense.


Rural round-up

December 23, 2014

New Zealand-Korea FTA initialled:

Trade Minister Tim Groser welcomed today’s initialling by Chief Negotiators of the Free Trade Agreement (FTA) between New Zealand and the Republic of Korea.

“Initialling marks the end of the text’s legal verification process. It’s another milestone as we progress towards bringing the FTA into force,” says Mr Groser.

“The next step is translation of the text into Korean, which will be completed early next year. Following translation, the FTA will be signed.

“This FTA will deliver real economic benefits to both our countries. It will secure our position in the Korean market and will create more opportunities for traders as tariffs are gradually removed.” . . .


Stay safe on the farm this summer:

On average, 850 people each year are injured riding quad bikes on farms. Five die.

It is because of these unacceptable statistics that Ministry of Business, Innovation and Employment inspectors will visit farms this summer to ensure key quad bike safety steps are recognised and understood.

Rural Women New Zealand joins the Ministry in urging farmers and their families to take extra care on the farm over summer, particularly when it comes to quad bike safety.

As it gets closer to the holiday season the pace of work picks up and more tasks are fitted into the longer days.

“Long hours can lead to fatigue and an increase in accidents,” says the Ministry of Business, Innovation and Employment’s General Manager – Central, Ona de Rooy.

There is also a real need for vigilance once the school holidays begin and children are spending more time around the farm. . .

Signs of new interest in soil science:

Soil scientists worried about a decline in the numbers working in that field have taken heart at signs that interest may be growing among a new generation of scientists.

Science Strategy Manager at Ballance Agri-Nutrients, Warwick Catto said a national soil science conference in Hamilton earlier this month was notable for the number of younger scientists attending.

And he was hoping that showed interest was on the rise, because as he pointed out, the soil and what it produces was the basis for much of the country’s economy .

“There were a lot of young people in the audience, which is either a reflection that I’m getting older, or that there are lot of people looking at careers in soil science and I think the latter is that there are issues going on with soil, be it nitrogen leaching, soil erosion into water water ways. . .

Scientists breed cattle to thrive in tropics:

Livestock improvement co-operative LIC sees South America, Asia and possibly Africa as potential markets for a new breed of heat tolerant dairy cattle it is developing.

LIC has started a breeding programme crossing the Senepol breed from the Caribbean with New Zealand Holstein-Friesian dairy cattle.

The programme came about, ironically, from scientists’ investigations into a genetic mutation in one of its breeding bulls that produced very hairy off-spring, prone to over-heating. . .

New Zealand’s Food Safety Regulations Are Not About Food Safety, But Rather International Trade & Politics – Milking on the Moove:

New Zealand’s food safety regulations are not simply about food safety. It’s also about international trade & politics.

Once I understood that, the regulations & procedures around dairy products begins to make sense to me.

I’m going to be quite charitable to the regulators in this post.

Biddys Story

Last night Seven Sharp did a follow up story on Biddy and her micro cheese making business. You can view the 7 minute video here.

Biddys story is, she milks 3 cows and makes the milk into cheese. She has won international awards etc etc. 5 years ago she was featured on Country Calendar. This alerted the authorities to her small operation and she was required to meet the dairy regulations.    . .

Beef + Lamb New Zealand Director Elections:

Nominations have now closed for two farmer-elected positions on the Beef + Lamb New Zealand board.

A director election in the Northern North Island electorate will not be required. James Parsons (incumbent) is elected unopposed.

Two nominations have been received for the Northern South Island electorate. The candidates are Nigel Harwood of Takaka and Phil Smith of Culverden. . . .

Rural round-up

December 1, 2014

Mining can help revive struggling rural economies:

• Rural regions and their manufacturing-based economies are shrinking
• Decline at odds with high mineral endowment in rural areas
• RMA and lack of incentives are major hurdles to resource development

The minerals sector can help revive New Zealand’s struggling rural economies, but only if the government reduces the complexity of the Resource Management Act and creates financial incentives for local government.

This is a key finding of Poverty of Wealth: Why Minerals Need to be Part of the Rural Economy, the latest report produced by public policy think tank, The New Zealand Initiative. . .

Fonterra farm fund seen as stepping stone – Andrea Fox:

Dairy farmers interested in buying land through an equity partnership trust being proposed by Fonterra would need to show they would be profitable enough to one day buy back the farm, says the co-operative’s shareholder council.

Fonterra is planning a new fund to invest in farms and has begun talks with potential investors.

The trust would be a partner that would invest in farming operations through a minority stake.

Council chairman Ian Brown said the trust could be particularly helpful to young farmers wanting to buy their first farm. Established farmers wanting to buy the next-door property and those involved in equity farming partnerships could also find it useful, he said.

Whatever the type of farming operation, it would have to be profitable, and profitable enough, to have the ability to buy the trust out at some point, Brown said. . .

Maniototo farm impresses Peren Cup judges -Sally Rae:

When the judges of the Sir Geoffrey Peren Cup competition visited the Lindsay family’s farm in the Maniototo, they were impressed with what they saw.

Creekside Farms Ltd is farmed by Adam Lindsay, his partner Jules Blanchard, and his mother Karen Lindsay.

The family was one of four entrants in this year’s competition, which is held annually in the region that is hosting Perendale New Zealand’s national conference.

A field day was held last week at Creekside Farms, between Kyeburn and Ranfurly, where an impressive farming operation, including extensive development, was outlined. . .

Hailstorm misses strawberries – Sally Brooker:

Waimate’s main strawberry fields escaped last week’s hailstorm and are looking good for the season.

Donald Butler, who, with wife Jackie, owns Butler’s Berry Farm and Cafe, said they were lucky the hail that bombarded the east coast last Wednesday skirted around their property alongside State Highway 1 at Hook, just north of Waimate.

”It was close, but it’s all good.”

The fruit was ”all coming on quite nicely”, with strawberries already on sale. Those he took to the Otago Farmers’ Market in Dunedin on Saturday sold quickly and customers told him they were ”tasting good”. . .

One year anniversary of trade deal marked:

Primary Industries Minister Nathan Guy and Trade Minister Tim Groser have welcomed the one year anniversary today of the Economic Cooperation Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC).

“Since then exports to  have increased over 20 percent compared with the same period the previous year, a $150 million increase,” says Mr Groser.

“Over 69 percent of New Zealand’s exports to Chinese Taipei are now tariff free, representing savings of around $78.4 million to date.”

The agreement will see complete removal of tariffs on New Zealand’s current exports to Chinese Taipei, with 99 percent eliminated in four years.  . .

Timber exports scheme cuts greenhouse gases:

Associate Minister for Primary Industries Jo Goodhew has welcomed the implementation of a programme that allows timber products to be exported to Australia without chemical treatment.

“After a successful trial last summer, the Secure Pathway Programme has been opened up to industry in a bid to reduce the use of methyl bromide during the flight season of the burnt pine longhorn beetle,” Mrs Goodhew says.

“All exporters now have a new option for treating products such as sawn timber, timber mouldings, panel products and veneer sheets.

“The alternative process creates a physical barrier between the wood product and this wood boring beetle, preventing infestation and reducing the usage of methyl bromide.” . .

Trade barriers economically and morally indefensible.

November 27, 2014

Federated Farmers’ vice president Anders Crofoot  spoke to the Australian Farm Institute’s Agriculture Roundtable Conference on the role free trade has played in sustaining and growing the New Zealand farm system.

In many ways my speaking to you, a New York Yankee from the Wairarapa, underscores a dimension of our farm system and human capital that is underrated.  That being how international it is.  I would argue the primary industries are the most international aspect of New Zealand business.

Our isolation means we have to be, and that has been ingrained since the first waves of organised European migrations in the 19th Century.

At first, the majority of the New Zealand farms were focused on producing wool and meat from sheep, and milk from cattle. Exports were limited to non-refrigerated or salted items.

Technology, in the form of refrigeration, towards the end of the 19th Century, had a disruptive influence and radically transformed farming from a domestic focus, to an export one.  Of course this was within the British Imperial family.

Refrigeration saw meat and dairy products being exported, the firs shipment leaving New Zealand on the 18th of February 1882, from Dunedin. The creation of these new markets changed farming by attracting skilled migrants to New Zealand, which lies in a pastoral “sweet spot.”  The right water, sunshine hours, temperature and soils.

Capital enabled mechanisation and technology to be imported, while inventiveness and the ‘no.8 wire’ mentality here started to create new technology.

Refrigeration and a large guaranteed market in Britain saw a first golden period for farming here, which lasted until 1973, when Britain joined the European Union.

Farming then became less prosperous due to the country’s reliance on one market and a narrow basket on primary exports.  In the 1970’s, on-farm costs rose with oil shocks, returns fell, but land prices remained high.

1984 Reforms

This resulted in a cornucopia of subsidies and tariffs in a vainglorious attempt to hold back the world.  These crumpled in 1984 with the defeat of Rob Muldoon’s National Government, and the election of a radically reforming Labour Government of David Lange and Roger Douglas.

Suddenly and expectantly subsidies and trade protection were removed, and New Zealand trade was gradually liberalised. Remarkably it was cheered on and championed by Federated Farmers, who foresaw the cancerous effect of subsidies and protection. Since 1986, productivity in New Zealand’s agricultural sector has improved by an average of  5.9% per year.

Until then, nearly 40 percent of the average New Zealand sheep and beef farmer’s gross income came from government subsidies.  Farmers were paid to rip out native vegetation, ironic given today’s environmental climate.

They were encouraged to produce without regard to markets; but unfortunately we don’t get rich by selling to ourselves.

By 1985 UK trade was dramatically decreased. However, Muldoon’s parting gift of a free trade agreement with Australia in 1983 (CER) started to blossom.

The effect of reforms on outlook and trade

You may think that this major policy change, of removing farm subsidies, would have destroyed the make-up of our farm systems.

On the contrary, our farmers came through that experience stronger than ever.

For farming, there is life after subsidies, and while the late David Lange predicted that farming was a sunset industry in the 1980’s, and that manufacturing and tourism would take its place, a compatriot of mine, Mark Twain, would answer in reply that the rumours of agriculture’s death have been greatly exaggerated!

A lack of subsidies and tariff barriers forced New Zealand producers to grow up and talk to the markets they were selling into.

The removal of farm subsidies in New Zealand has given birth to a vibrant, diversified and growing rural economy. Early predictions were  that 8,000 farms would fail, but in the end, only 800 did.

As of 2013, 73 percent of New Zealand’s merchandise exports were from the primary sector.  That is five percent higher than in 2008.  Of the 2013 figure, about 45 percent is from the traditional pastoral side of meat, wool, dairy, seeds and crops.

The removal of subsidies has proven to be a catalyst for productivity gains. In the twenty years since 1986-87, the value of economic activity in New Zealand’s farm sector had grown by 40% in constant dollar terms and continues to do so. Such improvements in productivity are readily apparent at the level of the individual family farm.

Lambing percentages, lamb export slaughter weight and milk fat processed per cow have massively increased. The diversification of land use prompted by the removal of subsidies has been beneficial for farmers and has increased the size and scope of the New Zealand agricultural sector as new innovative products have been developed.

Farmers are now farming better than ever, contributing $14 billion (6%) to our countries GDP from behind the farm gate.

They are much more conscious that their activities must make good business sense.  No longer are they chasing subsidies, pursuing maximum production at any cost.  Farmers maintain cost structures that reflect the real earning capacity of their farms.  They invest in protecting their environment and the value of their land is based on its earning capacity in the market.

Good management of the environment is an integral part of sustainable agricultural practice by farmers, where farmers are producing more from less.

With the removal of subsidies, agricultural practice is now driven by the demands of the market and by consumers.  The removal of subsidies has also broadened the base of farming to encompass diversified activities, such as rural tourism, and blended forms of agriculture where dairy farms in the Bay of Plenty and Nelson also grow horticultural products.

New Zealand now boasts the lowest level of agricultural support for industrialised countries in the Organisation for Economic Co-operation and Development (OECD).  The level of assistance to agriculture in New Zealand now represents only one percent of farming income.

In 2013, the worst drought in 70-years, covering the South Island’s west coast and the entire North Island saw only 146 Rural Assistance Payments (RAP) granted.  Given these are means and asset tested it underscores just how little support farming receives here in contrast with the EU, where farmers are getting payments due to Russian sanctions!

What support New Zealand farmers do receive is mainly in the form of government funding for agricultural research.

Agricultural labour productivity is consistently the leading sector for labour productivity.

A key difference between New Zealand and other countries is that New Zealand exports the vast majority of its agricultural production.  Upwards of 95 percent is exported. We produce enough food to feed at least 24.4 million people, although some estimates are higher.

This makes New Zealand a significant player in world trade of foodstuffs, being the largest dairy exporter and the largest exporter of lamb, while by no means being the largest producers.  We are also the largest global exporter of a number of herbage seeds.

This also goes to highlight the knife edge the world sits on between food surplus and food deficit; food security.

External perspectives on trade

Thanks to a structural realignment domestically, New Zealand farming turned from a myopic dependence upon “mother Britain” to having to hustle for markets and opportunity.

Before I address that opportunity I wish to highlight something Federated Farmers President, Dr William Rolleston, recently wrote about.

We have become accustomed to looking at trade barriers and threats “symmetrically” – things like quotas, subsidies and tariffs, “Buy Local” campaigns, or British farmers objecting to Tescos promoting New Zealand lamb.

Earlier this year, The Economist magazine noted the United States’ Farm Bill was

“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).  Given a blank slate, nobody with an interest in either alleviating poverty or improving farming would construct such a law. Yet here it is again.”

As an American New Zealander I must concur with the Economist’s conclusion.

Yet there are also “Asymmetrical Trade Threats,” highlighted recently by Fonterra Co-operative Group Chief Executive, Theo Spierings.

On TV3’s The Nation, he put the impact of Ebola to New Zealand at $150 million, yet not one New Zealander is infected.

What has been affected is about six percent of Fonterra sales.

Animal disease provides another threat.

A new assessment of Foot & Mouth Disease puts the estimated cost of a large-scale outbreak at $16 billion over six years for New Zealand.  This would also tip us into recession.

Markets live on fear and rumour and last year’s non-Botulism scare gives a hint as to what effect a major animal disease outbreak could result in.

Ebola and potentially Foot and Mouth Disease join another example of an “Asymmetrical Trade Threat;” the Eastern Ukraine.

Even what Russian separatists do in the Ukraine materially impacts the price of our dairy exports and our wealth as a country.  So the knock-on effect Ebola has upon the economies we trade with and the dislocation of up to three billion litres of milk caused by Russian sanctions.

These largely unforeseen and unpredictable, Asymmetric Trade Threats are costing us hundreds of millions of dollars.  The now discredited ‘food miles’ concept could have fallen into this category as could future consumer movements.

I put that out there because we need to be attuned to “a tree falling in the forest.”  No matter how removed, technology disease and political events seemingly unrelated could impact us..

Trade today, trade tomorrow

Now for the good news.

The Helen Clark-led Labour Government and the John Key-led National Government have built on a platform laid down since 1984.

You cannot secure free trade if you do not live the dream, and Exhibit A is China.  Our exports to China have jumped 160% since the FTA came into force in 2008.

In 2004-06 we exported some $2 billion worth of goods to China.

In the year to September 2014, that stood at $11.35 billion and 37 percent up on the same point in 2013.

Last December we signed a free trade agreement with Taiwan that has seen trade break the billion dollar barrier being 19.5 percent up on the same point in 2013. It is now our seventh largest trading partner.

Even Britain remains our sixth largest with exports up over ten percent in the year to September.

Free Trade has enabled and not hindered New Zealand.  We are richer and better off for it.

Our trading partners rely heavily on the Asia Pacific, which underscores why we need the Trans Pacific Partnership (TPP).  But it must be a partnership we can embrace.

When it comes to the TPP, Dr Rolleston recently wrote:

“I find it remarkable you can largely tell a persons position by the acronym they use.  As we call it the TPP we fall into the supporter category, but those who add an ‘A,’ making it the TPPA, generally fall into the opposing camp.  Supporters use partnership, opponents prefer agreement.”

Whatever your view, no one under the age of 40 will realistically recall what New Zealand was like when we had a tariff for every occasion.  Something a comprehensive TPP must aim to put on the path to extinction.

If TPP members play favourites with certain countries over others, we could easily end up being worse off than we were before a TPP.

A TPP that doesn’t address trade barriers at and behind the border is no agreement.

If some countries cannot stand the trade heat then they need to get out of the negotiation kitchen, allowing others who can to cook up an agreement which New Zealand has deserved since the 1984 reforms.

There’s also no reason why countries in the slow lane cannot join later when the scale and ambition of the TPP is known.  The Three Musketeers’ motto, “all for one, and one for all,” defines whether the TPP will stand as a beacon or fall into the trade abyss, like Doha sadly seems to have done.

If we compromise just to get agreement over the line, agriculture will be trapped permanently in a too hard basket.

While there’s much conjecture about TPP benefits, Tim Groser, our Trade Minister, has correctly noted that the China Free Trade Agreement underestimated economic benefits “by between 10 and 17 times.”

The recent agreement with Taiwan has seen bilateral trade surge 19.5 percent in the year to September, bearing in mind it was signed only last December.   It seems we do very well if agriculture and agri-food is enabled and not hindered by such agreements.

This is why the TPP must address trade barriers at and behind the border

If everyone plays ball the members of the TPP will account for a quarter of global trade.  This is a huge prize and winning a two-year seat on the United Nations Security Council has to give us some diplomatic clout.

Trade restrictions open up opportunities for corruption.

They interfere in relationships between producers and consumers and promote inefficiency.

They are expensive and the people who are hit hardest by that are the poor.

Trade barriers are economically and morally indefensible.


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