Primary sector confidence high

ROD ORAM
Last updated 05:00 01/06/2014
Biosecurity detector dog teams
BIOSECURITY HITCHES: Auckland biosecurity detector dog teams, from left, Sarah Carley, Michelle Stebbing and Amy Oatridge with their dogs Bounty, Egypt and Ollie.

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OPINION: From ambition and ingenuity to concern and confusion, all the glories of the primary sector were on display at its summit last week in Wellington.

But one big dynamic united speakers and delegates alike: the sector is brimming with confidence. It is determined to play an ever-bigger role in New Zealand's development. One way or another, it is trying to fix its problems and capitalise on its opportunities.

Doubling of exports, and lifting exports from 30 per cent of GDP to 40 per cent, by 2025 are the over-arching twin trade goals the Government has set for the economy as a whole.

"I see every reason to be relatively optimistic" the country could achieve them, Trade Minister Tim Groser told the summit.

Doubling exports would take an annual compound rate of growth of between 5.5 per cent and 7.5 per cent. We achieved a rate close to that for a period in the 1990s and parts of the export sector were doing better than that now, he said.

Primary exports had grown at an annual rate of 8.5 per cent over the past 15 years. Sub-sectors had done even better. Processed foods had grown by 15 per cent a year and beverages, led by wine, by 24 per cent, although their contributions to exports were still dwarfed by commodities.

"Even I defend commodity exports," Groser said. "There's nothing intrinsically wrong with providing high-quality, high-value and safe commodities." Moreover, "we're shifted up the value chain all the time".

Treasury, however, gives a far more cautious prognosis. Its data accompanying the Government's recent Budget showed exports rose 2.6 per cent in the year to March 2013 but fell 0.7 per cent in the year to this March, with high prices failing to fully offset drought-reduced dairy production.

In the next four years, Treasury forecasts exports will grow by 1.4 per cent, 2.1 per cent, 2.7 per cent and 2.6 per cent, for an average of 2.2 per cent a year.

There was no doubt about overseas demand for our products, Michael O'Connor, an agribusiness expert from PwC, told the summit. "But we need to think about the supply side."

Our dairy sector in particular faced growing competition from other countries such as the United States, he said, citing the OECD-FAO's latest annual outlook for global agriculture.

The report forecasts that New Zealand's rate of growth of dairy production will fall from an annual average of 3.8 per cent in recent years to 1.5 per cent. The report also predicts international dairy prices will be steady or moderately declining in real terms.

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It was abundantly clear at the summit that land and water constraints, and the relationship between the two, are the greatest brake on production growth, particularly for the dairy industry.

Farmers now accepted they had to farm within nutrient limits to protect the quality of the country's waterways, said Ian Mackenzie, Federated Farmers' spokesman on water and the environment.

This was their response to the Government's work on a new regulatory regime for water, which would eventually set nutrient limits in catchments around the country.

The issue then became how to allocate the available nutrient capacity between all users, such as farmers, industry and town water treatment plants.

To help in that process, Federated Farmers and other players in the primary sector are developing, with the ministries of primary industry and the environment, a Good Management Practice framework. This will incorporate the likes of soil and nutrient management, riparian planting and other farming disciplines.

The intention is to build this knowledge of individual farm's soil types, production system and other factors into a Matrix of Good Management for each water catchment to help make allocation decisions.

Fed Farmers also hopes that it will be possible to trade nutrient allocations between all users to ensure the best economic return. Eventually, all farms will have audited farm-environment plans, Mackenzie said.

But developing this complex new freshwater regulatory regime is challenging to the Government and all the other participants in the process. Inevitably, it is taking time.

Meanwhile, some major projects are floundering because they are premised on controversial, customised regulatory frameworks. One example is the Ruataniwha dam and irrigation project in the Hawke's Bay.

If the nutrient management system and limits proposed by the board of inquiry were implemented, they would make the Ruataniwha scheme economically unviable, said Mackenzie and Andrew Curtis, chief executive of Irrigation NZ.

The quest for better farming practices and higher production was widely on display at the summit, such as in one session on the fast-growing technologies for precision farming.

An example of this is a project by Ravensdown and Massey University to develop aerial surveying of hill-country farms to enable highly tailored top-dressing. Tests show such fertiliser application could potentially deliver at least a 25 per cent improvement in pasture growth.

Similarly, Traci Houpapa, chair of the Federation of Maori Authorities and acting chair of Landcorp, described a range of initiates to help Maori landowners progress. The upside is large, given that only 20 per cent of their 955,000 hectares in production is deemed to be at or above industry average performance.

To safeguard our protective capacity, though, we need to do far more to protect our ecosystem from damaging plant and pest intruders.

This was the strong message from three leaders of the NZ Biosecurity Institute - Sara Moylan, Rebecca Kemp and Ronny Groenteman, respectively from Wellington and Auckland regional councils and Landcare Research.

Our biosecurity brand has been "dumbed down to beagles at the airport" and the vital work of protection is being starved of resources, they told the summit.

The even bigger question of national brand proved to the hardest issue for the summit. Detailed, practical answers to four big questions proved elusive:

What does New Zealand stand for?

How do we translate those attributes into value creation in the primary sector?

How do we capture more of that value in international markets?

How do we more effectively work together to achieve all of that?

Disclosure: Rod Oram chaired the Primary Industry Summit.

- Sunday Star Times

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