Regulations and reality
Released 31 Jan 2012
James Houghton is Federated Farmers Waikato provincial president
LandCorp will no doubt be counting down the days until it gets its inefficient corporate hands on the 16 Crafar farms now the Pengxuin Group has been cleared to buy them.
It is good the uncertainty is over, but I wish the Overseas Investment Office's decision had included a clause that the farms remain in the care of the sharemilkers who have been making the most of these businesses under difficult conditions over the past three years. Because of LandCorp's greed, they will no doubt be made redundant when it installs a management based system instead.
I believe it is in everyone's interests, including the farm's owners, the industry and the tax paying public whom LandCorp should be answerable to, to utilise this efficient sharemilking system. It is about keeping New Zealanders employed in what has been proven to be the best career pathway in the New Zealand dairy industry.
As a farmer dedicated to helping clean up Waikato's rivers, I am heartened by Waikato Regional Council's decision to prosecute Hamilton City Council for its July sewerage spill into the Waikato River.
With farmers prosecuted to the fullest extent of the law if they breach effluent regulations, it is good the regional council is being even handed about another council doing the same.
The fines are up to $600,000 for the council and staff could face fines of $300,000. I will watch this case with interest.
Regulations preventing effluent, cattle or human, from entering our waterways at least have a clear purpose. Not all regulations do.
For example, there are the regulations which are supposed to ensure the growth of a competitive dairy industry, the Dairy Industry Restructuring Act (DIRA).
Despite these regulations, some of which require Fonterra to sell raw milk to its competitors for the same price it pays farmers, there are very few dairy companies focussed on supplying milk to the New Zealand public.
It now looks like Fonterra will have to release even more raw milk to its competitors at its farmgate price, after the government decided this would be a great way to encourage more competition and maybe lower the price of milk.
Putting aside whether milk is expensive or not, this is bound to fail.
This will simply allow more international corporates to mine Fonterra for its premium quality liquid gold. Experience tells us these corporates do not enter the local market; they instead sell their cheaply gained premium product overseas. Very little of the proceeds make it back to our shores.
There is certainly no incentive for new market entrants to source their own milk supply, which makes the suggestion of increasing the amount of DIRA milk a slap in the face for the likes of Open Country Dairy, who have set up their own supply chain.
This government pronouncement predictably prompted another backlash around farmers' earnings. Good to see the old Kiwi knocking machine, that preoccupation with dragging everyone down to the lowest levels, going strong.
It is time New Zealanders asked real questions about dairy's value to our society and the assumptions which have grown up around farming and Fonterra.
Are dairy farmers making a decent living at the moment? If they work hard and don't have too much debt, yes. Hard work is the key. Dairying is a seven day a week, 24 hour a day job. Making sure hundreds of cows, employees and regional council staff, are healthy, happy and productive means modern farming is mentally as well as physically demanding work.
We don't get paid extra for working on public holidays, although we make sure our staff do, because when the cows are in milk, we can't just skip a day.
If you paid a few extra cents for a latte while enjoying your day off yesterday, you can be sure none of that surcharge was to cover the extra costs of milking cows on Anniversary Day.
The fact is farmers just get a fair return for their efforts.
New Zealanders also need to realise dairying is not a closed club. Anyone is able to enter this industry and work their way up. It is hard work, but anyone who is interested should look up the AgITO website for starters.
Kiwis' attitude to Fonterra also needs re-examination.
Finland, a country with many similarities to New Zealand, including population size and a mountainous beauty, is home to Nokia. The Fins are justifiably proud of their home grown global company. We should be equally as proud of ours.
Fonterra is not a faceless corporation sending all its profits overseas. It is a wholly New Zealand owned cooperative. It does not receive government subsidies; instead it is the other way around. By earning a lion's share of our export earnings Fonterra effectively helps subsidise hospitals, schools and local police services.
What is there to hate?
Either way, I believe consumers should be looking harder at how much supermarkets make from milk. There has been a lot of finger pointing at farmers; should we also blame vegetable growers for the price of broccoli?
Should we perhaps tax junk food, to pay for subsidies on natural, healthy foods? Should the government get that involved in what we eat?
