Charlie Pedersen - Food for thought
Released 01 May 2008
Federated Farmers President
Address to Provincial AGMs
Introduction
For our annual conference or One Event this year we have decided to adopt the phrase "Food for Thought". It is I believe a statement that helps focus on the challenges that we are facing and gives us a focus for the future.
For a start we have to remember that we are first and foremost - food producers - that's what farmers do. I think that's an important point because I'm not sure that many people today understand what farming is about and certainly very few have links with the land. In my youth and yours there were townie relatives who came and holidayed in the country. Today people have a relationship with their supermarket and I'm certain many have little idea of how a farm operates.
On the other hand we as food producers are well aware of the needs of the consumer. Science has enabled us to produce better animals that allows our processors to produce more appealing cuts of meat for supermarkets to sell. New cultivars of grass and grain have been developed, new fertilizers produced, some very high tech equipment introduced, and by and large these innovations have gone unnoticed by the vast majority of New Zealanders.
We are the most efficient food producers in the world and many countries have unashamedly copied our practices and technology. Our country is free of most major pests and diseases and we have a great weather patterns that are conducive to pastoral production. We have a can do attitude and have long tossed away the shackles of farm subsidies which some of our trading partners are still wedded to. Although most of the markets for our products are at least 24 hours flying time away, we as a food producing nation have come up with some smart science to enable our food to get to market in great shape. I always like to acknowledge the contribution that our scientists make and continue to make to create a healthy and wealthy New Zealand. Scientists, like ourselves, are too often taken for granted in New Zealand - yet our critics would be much the worse off if it wasn't for both of us. Finally on this subject, there is a tendency to talk up the role of manufactured goods and tourism and they are certainly significant export earners. But our tourism industry is based on our natural environment - much of it preserved by food producers and a lot of the manufactured goods are primary industry related. I find it irritating that tourism figures are always inflated by including New Zealanders spending in New Zealand. Your own spend on travel, restaurants, and accommodation in New Zealand is all counted in tourism figures.
Our World
As food producers it's vital for us to be aware of some key statistics because it helps guide us in terms of policy and production. In essence, the population of the world is increasing, standards of living are rising, albeit slowly, but developing countries will not be able to keep pace with demand for food. According to the United Nations Food and Agricultural Organisation or FAO, the population of the world will have risen from around 6 billion people in 2002 to 8.3 billion in 2030. During this period it's predicted that the number of hungry people will decline from the present 777 million to about 440 million. An improvement but also a sad and terrible statistic. To make matters worse commentators are now saying that conversion of food growing land to the production of biofuels is jeopardizing this improvement and could even make things worse than today.
The FAO also says that developing countries will become more reliant on food imports with these rising from the current 103 million tonnes to 265 million by 2030. To meet the demand of the rising population and the incremental rise in living standards, food producers will have to become more efficient. The FAO says 70 percent of the increase in crop production will come from higher yields.
Water and in particular irrigation holds the key to increasing the world's food supplies and FAO predicts developing countries are likely to expand their irrigated area from the present 202 million hectares to 242 million by 2030. Better management of water, biotechnology and other emerging technologies will all help to improve food security. But then let's not forget about the impacts of political instability, climate change adverse events and the like and who knows what could happen.
Our Competitors
Sir Winston Churchill once jokingly said - "In parliament the opposition is on the benches across the floor, the enemy is sitting behind you." In a way that's the situation for New Zealand food producers.
Our opposition is the protected producers of Europe, North America and Japan and the emerging low cost producers of Asia and Latin America. We have known this for years and our trade ministers, officials and Federated Farmers leaders have done a remarkable job to retain and develop new markets for our products. Fonterra and its predecessor, the Dairy Board and the other producer boards and the meat industry have worked hard to retain our market share.
Having said that I find it hard to accept the present problems facing the New Zealand meat industry. I sometimes wonder what has been learned in the past 30 years. Companies have a habit of undercutting each other in markets and there still seems to be a limited ability to satisfy consumer preferences and trading conditions in emerging markets. There are capacity issues in our freezing works, relatively low levels of investment and profitability in processors and a shortage of skilled workers. The frustrations and ructions in the meat industry are predictable.
In a sense all the problems outlined above are within our control as food producers.. But in recent years some new impediments to food production in New Zealand have emerged I am loath to use the political analogy and call them enemies, but their actions are hardly in the national interest that is if you consider the production and export of food as being in the national interest.
These are people who are very happy to enjoy the strong economic growth that's provided by our efficient land based economy. But they are people who have or don't even try to have any understanding of our industry and its production systems. They seem hell bent on loading compliance costs on farmers in the form of local government rates and Resource Management Act compliance costs all of which impact on our ability to produce food profitably, which in turn feeds the world and drives the New Zealand economy.
Take rates - many farmers pay more than $10,000 a year in rates simply because of the capital they need to have to be in business. We are taxed on the value of our farms. That's grossly unfair. The infamous Maggie Thatcher Pole tax would be much a much more fair way to fund local government but the majority who live in the towns are not likely to allow a fairer system that sees them pay more. The MAF farm monitor report shows that rates are in the top six of farm expenses. That's why we launched our rates campaign and will continue this until common sense within central and local government prevails. It's perhaps interesting to note that in 2007, total local government expenditure rose by more than $500 million. No surprise to farmers they funded more than their fair share of that.
Lack of compensation through the RMA is another impediment to us as food producers. We estimate that it costs farmers $81 million a year to comply with this Act of Parliament. The Act is now being used to reduce the amount of food farms can produce, and if this happens it may make some farms unprofitable. We're seeing an appetite to impose restrictions all over the country. In my view regional councils have exceeded their mandate on these issues, by ignoring the economic impact. Protecting the environment is important-but taking actions that could start the close down of farming is another. Balance must be found , and that's why the economic impact of restricting food production should be assessed as is expected under the RMA..
Food producers in New Zealand are also caught up in the web of rising fuel prices - both nationally and internationally. There are major transport issues within New Zealand. I know that the government now sees transport as a high priority, but years of neglect and spending the road tax on other things have made the job much harder.
Then there are groups of our fellow New Zealanders who conveniently forget that $17.2 billion or 47% of our export earnings come from food production and that around 40% of employment is in the food industry. Let's not forget again the flow-on effects of agriculture into the manufacturing, tourism, financial services, communications, education, technology and transport businesses. No export dollars are earned selling lattes on Lambton Quay and sadly most New Zealanders don't understand how much more valuable an export earned dollar is to the economy and their standard of living.
Many of these people seek to ‘control' agriculture. I guess we have to accept that we as food producers are the victims of our success. Tall poppies are largely unwanted in New Zealand. We could learn quite a bit from our Aussie mates. They reward their tall poppies and don't attack them. Listen to their cricket commentators ‘talk up' the Australian test team even if it's having a bad day. A increasing number of Kiwis have been misled into believing that this country will easily do without its export sector, driven by food growers.
The threat to our freedom to farm is real. At the extreme end here are zealots who think we need to be shut down and they know best. They are spreading misinformation like we as food producers trade on a green and clean image. That view has been disproved over and over but we still hear it. The zealots have something in common with us. They have a strong interest in the environment and that includes water, so do we. As food producers we need water, but we recognize that others have rights too, and a successful society is one based in fairness and not greed. Some people have got it into their heads that food producers don't care about the environment, that it's a case of produce at any price. That's simply untrue. We like to swim and fish in our lakes and rivers - why would we want to run down these precious assets. Can anyone tell me where those fish and ducks go to the toilet? To listen to their advocates you would think they never did. If farmers were not interested in the environment why would our members be supporting the ‘clean streams accord' or participants in the 10 in 10 campaign which aims to reduce nutrient loss from their properties over the next 10 years.
I struggle to understand how the critics of food producers eat our food on one hand and critercise the system on the other. Many years ago when I was a member of the Young Farmers movement they had a slogan that said" don't abuse a farmer with your mouth full". Most of our critics live in urban areas where there is significant pollution of waterways through effluent disposal and plain carelessness by people washing pollutants down stormwater drains which flow into our waterways and the sea. As well as choosing to ignore that urban waterways are by far the most compromised. They live in the most altered and unnatural environments in the country and have such strong ideas about what we do in the country, the pot calling the kettle black I say, even hypocrites comes to mind. The dirty dairying campaign was a misleading and mischievous act by Fish and Game which has been strangely quiet on its role in allowing the introduction of dydimo and then being reluctant tot assist with controlling the spread of this destructive invader.
Biosecurity is a huge priority for New Zealand and I would urge MAF to be more vigilant than recent events show them to be.. We work positively with MAF, but recent failures at the border have diminished our confidence and we fear that just one more failure could wreak havoc on our industry. A 99% success rate is not good enough if we are serious about protecting our unique status. We pray to God that none of the real nasties will reach our shores but hope MAF will have systems in place to prevent serious bioincursions.
The Future
We acknowledge that environmental issues are mainstream and support continued improvement as long as economic damage does not occur. Federated Farmers will continue to show leadership in this area, but we will not have proven science and sustainable farming practices tossed out the door because of some shonkey philosophies and the political survival of fringe elements. These interest groups are well organized and are deliberately painting farmers as villains of the environment. We know that's untrue and even if it was true I am yet to meet any of the critics of food producers willing to go without any meal to speed up the improvement of water quality somewhere. I put great faith in our New Zealand scientists to come up with the silver bullets we badly need. We need to produce more food from every hectare, to stop the world going hungry, and we need to do it with less negative effect on the environment, if we can.
To that end I applaud the work being undertaken by then Pasture Renewal Charitable Trust. The Trust is running a campaign to educate those in the agricultural sector about the benefits of pasture renewal.
Pasture production is the fundamental platform for 35% of New Zealand's gross domestic product and increasing production will ultimately contribute to national wealth. The stark reality is that too little new grass is planted and the simple act of doing so can dramatically improve the performance and profitability of every New Zealand farm and reduce its environmental impact.
When the Environment Report of 2007 was released. The Minister for the Environment claimed that the water we drank and swam in as children was cleaner than it is today. Many Wellingtonians can remember how their harbour ran red with blood and offal from the meat works at Petone and Kaiwharawhara back in the so called good old days of the 50's and 60's. I don't know exactly where the Minister swam as a boy in Wellington, but I swam in the Manawatu river. The regional council can show the Manawatu is a vastly cleaner river than it was when I was young. Yes things have changed, and for the better. The critics of farming cannot show any lakes and waterways that are degraded by food production only. They can show many like Lake Rotorua that was used by the town as a place to dump their sewage for years and years. It is more than a bit rich to point the finger at the local farms now the lake bottom is rich with nutrients from human excrement.
Don't get me wrong I strongly believe we as farmers must find ways to eliminate or significantly reduce where we do have negative effects, but I have had a gutsful of the now common public view that cows are the root of evil.
To meet the demand for food, farming systems have to become more intensive, but that does not mean that effects will rise. As I said earlier, we are guided by good science and a desire to be good citizens of New Zealand. Intensification of agriculture is a world wide trend and calls to live in the past and cap or reduce production are misguided.
We are also being blamed by some individuals for the rise in food prices. People see the high returns that some farmers have received recently and the high value of farms and put two and two together and get six. We know that one season of high prices is usually followed by a season of lower prices. This year we are experiencing a drought which MAF estimates will cost farmers about $1.24 billion. This works out at $25,000 for the average sheep and beef farm and $79,400 for the average dairy farm. These are averages and it's predicted that some individual sheep and beef farmers incomes will fall by as much as $100,000.
If food prices are rising, the actual food producers share is certainly not. We will soon be releasing some very compelling data on this very subject and it'll be interesting to see who's making the most money out of food, I bet you already know it is not the producers.
Conclusion
As New Zealand food producers we are facing some of the greatest challenges in our history. The fundamental issue hinges on farming remaining viable. Every day new roadblocks seem to be appearing. Compliance costs such as rates and RMA consents together with transport costs are making our life harder. Interest groups are constantly attacking us to serve their own political needs. It's hard enough trying to gain access to export markets and to get reasonable prices without having your own people weighing in against you.
If ever the food producers of New Zealand needed a strong organization to represent them it's now. The Federation needs your support and I urge you here at the local level to do everything possible to get your fellow farmers to join our ranks. Explain to them the issues I've outlined to you today and impress on them the importance of a strong united voice.
Ours is a positive message and one that provides food for thought for us and for all New Zealanders. Every New Zealand household needs a farmer, more than they know
And every New Zealand Farmer needs the Federation, more than they know.
