Thursday, 30 July 2020

Challenges farmers face


Coming out of the Covid lockdown, and not to mention drought for much of the country, there are many challenges that farmers face. How those challenges all interact with one another is a challenge in itself.

The first and most obvious challenge is the on-farm feed situation.

In many parts of the North Island and the upper South Island, the drought we have just been through has been one of the worst in living memory for many farmers. It has meant that not as much supplement feed got made as would usually be the case, and because the drought dragged on it meant more feed was used in the summer period than would also often be the case. This, combined with the processing slowdown due to Covid-19 restrictions, and with getting product moving into the market, firstly in China and then here in New Zealand, meant that at a time when many farmers would have been looking to offload stock, they were forced to hold onto them for longer than desirable, creating further challenges around the feed supply.

Whilst the agsector hasn’t been as affected in a business sense by the lockdown as say toursim and hospitality businesses, it doesn’t mean that Covid-19 won’t have an impact. If there is a global economic slowdown or a recession, then this will have an impact on a number of the world’s commodity prices, which will be felt in the coming year. Already predictions for the new season’s dairy pay-out are well down on what we have just experienced.

The drop in income comes at the same time as increases in regulation and rules, which may not have an immediate impact, but will start to bite over the next few years.

There are questions I keep asking. Are all the assumptions about our agriculture future made before Covid-19 still relevant? Is the vision of more value and less volume still relevant? Is it still what New Zealand needs?

For many of the regulations we see coming our way, the proponents of them like to claim that all these extra standards, paperwork and on-farm impacts, etc, are all going to lead to more value. Are they?

New Zealand primary producers are already world leaders on many fronts, from the environment to animal welfare. If there is value to be had, are we actually getting it right now? If we then make life tougher for farmers with harder regulations, more auditing, more paperwork, will we actually extract extra value? Why would customers suddenly decide to pay more? The risk I see is that we ‘commoditise value add’, and all we actually do is add cost and not extract any extra value.

The Panel 

Andrew Hoggard - President – Federated Farmers

An update on Federated Farmers approach to securing support and funding during adverse events, as well as longer term solutions (water storage etc), through its local and national lobbying efforts are all relevant to enabling New Zealand farmers to put the economy back on its feet.

Neil Bateup - Chairman – Rural Support National Council

During a drought or any adverse event, the effect on farmers, their families and their teams can be quite profound. The RST can provide support and tips on how to keep yourselves safe and functioning well during these times and access to help when it is required. It is important to look to the future with hope.

Susan Kilsby - Agriculture Economist – ANZ

The impact of Covid-19 on farmgate returns: How have global markets reacted to the Covid-19 crisis and how has this impacted international market prices, exchange rates and interest rates?

Mike Chapman - CEO – Horticulture NZ

What applied in the pre-Covid world is no longer relevant. As a nation, we are going to have to trade our way out of our financial crisis, and there are three key areas for action for New Zealand to recover from Covid: trade infrastructure; and labour. The world needs food, but to get our food to the world's consumers, we need market access. Linked to this, is enabling competition with the safe importation of new plant varieties so we can keep up. Significant water storage schemes are also urgently required to accommodate previously unknown drought conditions. Availability of labour and suitable land are also vital requirements. Many New Zealanders now need to develop new skills and take on different jobs thanks to Covid.

Sirma Karapeeva - CEO – Meat Industry Association

The resilience and agility of the meat processing and exporting companies to continue to operate as an essential service during the Covid-19 lockdown, while complying with strict operating protocols to keep workers safe and prevent the spread of the disease, has taught us many valuable lessons we can carry on. Looking forward, the meat industry can play a vital role in New Zealand’s economic recovery by maintaining and creating jobs in the regions and bringing in much-needed export revenue.

Malcolm Bailey - Chairman – Dairy Companies Association of New Zealand

Covid-19 puts a spotlight on the importance of open trade to ensure the supply of essential goods and support economic recovery. It is more important than ever that the agenda for agricultural trade liberalisation be reinvigorated and the various statements made by global leaders on the importance of removing barriers and distortions from markets are converted into meaningful outcomes. A diversified set of markets, products, and sales channels has been a strength for New Zealand dairy as it has navigated Covid-19 related disruption during the first half of 2020. For New Zealand’s economic recovery, it is important that these trade opportunities be maintained and grown.