A shake-up for the land and her export billions
The Government wants to accelerate improvements to production and sustainability on the land to greatly increase export earnings over the next decade. But big change will be needed, Tim Murphy reports.
A new package to grow our agriculture, food and fibre industries, improve the environment and stimulate jobs has a multi-billion dollar financial target and an even bigger set of challenges for farmers and growers.
The final report of the Primary Sector Council - Fit for a Better World - sets an ambitious agenda to 'transform' farm and forestry practices sustainably and in keeping with Te Taiao (the natural world) to address the climate crisis, while finding new $1 billion export products and saving and developing free trade for our products.
After a long period of consultation and research, the council's vision for New Zealand's primary industries is all encompassing: "We are committed to meeting the greatest challenge humanity faces: rapidly moving to a low carbon emissions society, restoring the health of our water, reversing the decline in biodiversity and, at the same time, feeding our people."
It wants to do all these things, and to do them fast.
The Government on Tuesday accepted the vision and the need for speed, declaring it wanted these industries, which in 2019/20 brought in $48 billion a year in export earnings, to grow that total by another $44 billion over 10 years.
For an administration facing a global pandemic and a domestic economic meltdown, with the two other big foreign exchange earners of tourism and international education being moribund, the Fit for a Better World plan provides hope.
Prime Minister Jacinda Ardern and three ministers, Damien O'Connor (Agriculture), Stuart Nash (Fisheries) and Shane Jones (Forestry) have taken the Primary Sector Council's 24 page report and turned it into the Government's own 24-page 'roadmap' or 'action plan' to 'accelerate our economic potential'.
The political document is bolstered by pages of case studies - the likes of Allbirds shoes, First Light wagyu beef and a mussel spat business - and merges existing plans such as the push for aquaculture to be a $3b industry by 2035 with spending announced on tree planting and water improvements in the Budget and this month. It groups the goals of the action plan under three titles: Productive (changes to what and how we produce food), Sustainable (regenerative agriculture, the Government's existing emissions targets) and Inclusive (wellbeing, jobs, communities).
Key to this political plan is the promise to accelerate current targets, for example bringing forward the date for that $3b aquaculture industry, and to add a range of research, technology and regulatory investments to help the agriculture, food and fibre industries transform themselves fast to make New Zealand unique in the new Covid-changed world. First up was an investment of $84m into the Sustainable Food and Fibre Futures Fund, run by the Ministry for Primary Industries.
A need for urgent change
The Primary Sector Council report sets out the scale of the challenge and opportunity in a Covid-changed and climate-challenged world.
"We believe there will be strong demand for naturally and ethically produced, nutritious and safe food and fibres – and we in New Zealand could meet this demand.
"There is opportunity for us if we transition fast enough. We are better placed than many others. We have a temperate climate, good water availability, first-world education and science systems, low population density and the strength of our reputation for producing safe food."
But there is urgency and there will need to be big change if the country truly moves to take its chance. "We need to be frank about where we are at now and the changes we have to make. We need to have honest conversations. We will have to bold and determined. And we need to work together."
It makes clear that our farmers and producers trying to send ever greater volumes of commodity products to small numbers of overseas markets is a doomed strategy.
Selling commodities in undiversified markets is a race to the bottom. Yet we have let that be our default position.
The council writes: "The greatest risk New Zealand’s Agriculture, Food and Fibres sector faces just now is under-estimating how much we need to change.
"In the past we’ve usually evolved step by step into the future. Right now there are signals all around us saying we as a sector must take a great leap. We need not to transition but to transform. We’ll need to use all the clues and smarts we can access to help us.
"And, keeping our eyes fixed on the markets will be the key to our success, because that’s where we need to secure the competitive advantage," the report says.
"For a start, we need to be very clear that we are not a volume producer – and we should stop acting like one. Selling commodities in undiversified markets is a race to the bottom. Yet we have let that be our default position. Instead, we must select the market niches where we can excel in providing and capturing value – and keep a razor-sharp focus on those."
As well as change on the land, which would be transformed in keeping with Māori natural world principles and with sustainability and the climate crisis at the forefront, the plan says the way taxpayer and industry money is invested for research and technology must change too.
By 2030, the council hopes "our businesses and production systems should be almost unrecognisable from today. Within five years, our support agencies like science, technology and tertiary education should be unrecognisable from today – preferably earlier."
New billion dollar products
One of the aims is to identify and develop new billion dollar products.
"We will strategically focus on growing our billion dollar-plus industries, developing new billion-dollar industries, nurturing entrepreneurship, and supporting the development of more premium value chains that we own and that return value to us in New Zealand. "
"We need all four, if we are to continue to contribute economically at the current level - and they require different types of support. They will not just happen. Potential candidates for new billion-dollar food or fibre industries are ones that produce very good yields in New Zealand microclimates, where we have unique intellectual property and where we can capture value."
Retaining NZ ownership of value chains
One of the council's calls is for the country's foreign ownership laws to be reviewed for 'value chains' - with a hint at concern over water resources falling into overseas hands.
"With continued population growth and climate change, the focus on food and water security globally will grow. There are strong incentives for other nations and international corporations to seek to secure low-cost supply of New Zealand food, fibres and water," the report says.
"This creates a potential conflict with our strategy to market distinctive, high-value foods and fibres to discerning global customers. It’s a matter of where returns land along the value chains and the capacity to build high-value supply chains in the face of commodity competition and free-loading.
"While New Zealand needs, and should encourage, foreign direct investment, building and retaining ownership of our premium value chains is critical for our future prosperity. This is not just about land, but also about innovation, intellectual property, and processing, supply chain and marketing capability."
Why the urgency for NZ
So what is it that makes addressing the challenges so uniquely critical and urgent for New Zealand?
The report says this country has "the highest degree of economic dependence on production and marketing of food and fibres among the nations with developed economies. Food and fibres contributed 77 percent of New Zealand’s merchandise export earnings in the year ending June 2018, at nearly $42 billion worth out of a total of $55 billion."
Second, "among the nations that rely on food and fibres for a significant proportion of their income, New Zealand has the smallest domestic market. This makes us more reliant than most on successfully exporting produce – and more vulnerable to problems with trade."
Tuesday's launch won support from Forest & Bird for "a new sustainable vision for the primary sector, but says it needs to be backed up with strong rules, meaningful support, and a change of attitude from industry laggards."
Greenpeace was less positive: "The Government’s roadmap lacks the truly bold and transformational decisions needed to save our rivers and reduce our emissions from too many cows. The only way New Zealand can meet its emissions reductions obligations is by reducing the number of livestock and diversifying our economy away from an unhealthy reliance on meat and dairy exports."
The National Party agriculture spokesperson David Bennett predicted: "Farmers will shudder at the document’s multiple suggestions that the entire sector needs ‘transformation’. No one will deny the need for progress and evolution, but we should acknowledge that we currently are the most productive and sustainable food and fibre producers in the world and build on this.
“Labour’s strategy has a pure emphasis on land-use change. The underlying theme is that Kiwi farmers need to change what and how they produce. Land-use change should be driven by market signals, not by Government regulations.
“Goals like doubling New Zealand’s ag exports are unrealistic when other goals such as lowering biogenic methane 24-47 per cent from 2017 levels will require major production reductions, and are estimated to cost the economy $5-$12 billion."
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