Address by Federated Farmers Dairy Industry Group 

February 14, 2017

Andrew Hoggard
Chairperson Federated Farmers Dairy

Address to the group’s national meeting in Wellington.

Dairy should do what it does best, not join the laboratory race

“Code Brown”…. last summer it was a familiar catch cry at the Invercargill swimming pool and a few others around the country. This summer, for those who had one, it has been the catch cry at the beaches in Auckland and Wellington harbours, and also around other New Zealand towns and cities.

The phrase “those in glass houses shouldn’t throw stones” has probably come to the forefront of many dairy farmers’ minds. Certainly towards the end of last year the dairy industry felt like it was being solely blamed for all of New Zealand’s water woes.

Dr Mike Joy and Greenpeace were leading the charge around blaming the dairy industry over the Havelock North water contamination.  Though they never quite came out and explicitly blamed dairy, they left anyone listening in no doubt as to whom they felt was to blame.

As we all now know the initial source was actually some sheep from lifestyle blocks surrounding the bore head. Not, in fact, any massive super intense over- industrialised dairy farm, which anyone who had ever actually been to Havelock North would have known because the area is predominately horticulture and viticulture (in fact the nearest dairy farm is some 40km away).

Then Greenpeace launched its infamous ads, and we had all the resulting noise from that. So with all the Code Browns many dairy farmers will to a degree feel like pointing out, that the problem just isn’t us.
It’s bloody hard to sit there and take criticism from those who are less than perfect themselves. However, pointing out the other side is less than perfect doesn’t make you any more perfect. So whilst it does feel good to take your critics down a notch or two, we still have a job to do and a major challenge in front of us.

Part of that challenge we face is in the media, both traditional and social media. If we want to really inform the public of the challenges that are being faced in this area then we need more articles that are well researched.  At present I feel most reporters face huge pressure to just get words out there, thus we have articles that are just duelling press releases basically, that often haven’t had the time to be thoroughly verified.

A great example is the recent story were we told that farmers had stolen 12,000ha of public land, then just a few days later the story is now that 11,000ha of land is being leased to farmers. However,  there will be a whole bunch of people who will only remember the first headline.

We need commentary and in-depth analysis from independent parties. Massey University does employ more than one lecturer. Far too often the true experts in a field are never heard from. There have been some great advances in the last year on telling our story particularly from Fonterra, but we need to do more, particularly us and our organisation.
The major challenge, however, is on farm, and I see it in four parts: profitability, environment, animals and people.
With profitability first, the last couple of years have been extremely challenging for dairy farmers, predominately from the low global prices, but on top of that also the non-stop criticism affecting morale.

Whilst the global prices seem to have improved for this season, and I think we can start to get confident that this season will deliver a milk price that is reasonable, we need to remain cautious going ahead.  A lot of the current market improvement is driven by world supply coming off its peak, with poor weather and poor prices reducing supply in NZ, Australia,= and in Europe. Now that the prices have recovered if favourable weather hits globally, how certain are we that supply won’t increase back again, and have we seen any great change in global demand that would enable prices to remain steady? I’m not sure we have.

 To be blunt it feels like the world is even more of an unstable environment to be trading in now than it was this time last year. That instability could go either way.

If the great wall of Trump is built, will it actually mean increased dairy trade opportunities to the south of it for us, and decreased competition from north of it, because all the people that do the actual milking got deported?

In Europe will the Dutch farmers be forced to reduce their herd numbers to meet their phosphate limits, or will there politicians push the limit further out?

Will the Trump/Putin bromance mean the Russian Dairy market opens up again, or will it remain closed? What will competition from plant-based alternatives to dairy mean, what will lab-grown alternatives mean?
 Again all of this is hard to know. The few things we do know are this, volatility is likely to be a constant companion, this means that dairy farmers need to factor this into our budgets. We need to be assume this risk is there and make sure our businesses are resilient for it. I know everyone hates that word, but it is the reality.  

 But risk management and making our farms resilient for the future isn’t just about the straight economics, it also encompasses the environment, animal welfare, and our people. When we look at the potential threat posed by lab-grown artificial alternatives, there have been various commentators citing the example of Kodak and its slowness to react to the change to digital, and how the dairy industry in New Zealand should learn from that.  They do fail to grasp that for me, I suddenly can’t go and sell my cows and buy a lab. I don’t have knowledge in that field, or skills in the field.

 My assumption will be this: if the majority of world demand shifts to lab produced food stuffs there will likely always be a demand for naturally produced foods, but this will be a select market and the consumers in this market will likely have high expectations. In my view our response as farmers to artificial food isn’t to join the laboratory race, but to instead ensure that we have the best provenance  story we can provide to consumers. That means the bar will be continued to be raised on those three areas I mentioned, the Environment, Animal Welfare, and our people.

Even if artificial foods don’t become a real threat then, quite frankly we still need to be doing the same thing anyway with our current competition, and societal demands.
 So in those three areas what are the things that I believe fairy farmers will need to be thinking about and focusing on going forward.
With the Environment, obviously the big focus within New Zealand is water quality, most farmers are well aware of this, and quite frankly it is vitally important every farmer is doing the basics well here, waterways fenced, and effluent well managed. Going beyond that, it’s being aware and understanding what is the state of your local waterways, and what you could do about improving or safeguarding it.

One clear goal I think the Industry and individual farmers should have is to totally prevent harmful levels of faecal contaminants entering waterways. Most dairy farms are likely already very close to that, but that shouldn’t just be a goal for Dairy Farmers it should be a goal for all.
What we are concerned about in NZ environment wise isn’t necessarily what the rest of the world is so concerned about.  Overseas more emphasis is placed on climate change and biodiversity. So dairy farmers here need to think what this might mean for the future.

Whilst we currently have a great story to tell around carbon efficient food production here in NZ, does any of us actually know how any changes to our systems might affect that claim, there is the potential that we could lose that world leading position without realising it.
In terms of Animal Welfare, despite the noise, we have a world leading regulatory framework here in New Zealand. However, as competition gets tougher, when we trumpet our free range, pasture fed status, expect to get questions around shade and shelter.

 The other important thing that is happening worldwide that farmers need to start thinking about is the concerns around Antimicrobial resistance. There is going to be a likely greater emphasis placed around the proper use of antibiotics in farming, again New Zealand is world leading in our low use of antibiotics. However, our customers won’t want to know just what the averages are, they will want to see best practice on all farms they purchase from. Best practice means correctly identifying the illness, and treating with the appropriate drugs, and that critically important antibiotics are only used where first line treatments are not sufficient.  
I would question whether every person on farm in New Zealand, making treatment decisions on livestock has received sufficient training, formally or informally, around treatment choices, in the future that is likely going to need to change.
That training won’t just stop at treatment choices, general animal husbandry levels of your staff are likely another area thought needs to be given to and whether or not you have the right protocols and procedures in place on farm, and yes in the future these are likely going to need to be written.
That of course brings us to how we manage our people on farm. We already know that whilst there has been good improvement in the last number of years, our compliance rate with the law as an industry isn’t where it should be. There can be no excuses for not having a written employment agreement with your staff, that requirement has been around since I was in the 6th form, but yet cases still emerge.

Recording hours and correct payment of wages are another area were we need to get everyone up to 100% compliance, however since not even the labour inspectorate can get holiday pay right, perhaps the powers that be might want to look at making that a little less confusing.
But the main thing we need to focus on is improving the image of dairy as a career. Farming is never going to be for the soft of hand, but work life balance is needed. The bad examples we all hear about, affect all of us because they discourage young people from going farming, we need more people expecting the good examples to be the norm and not the other way around. What it means in practice is having the right amount of people on farm, with the correct skill levels, and the right infrastructure and equipment available to get the job done right.

 In saying all that, politicians need to realise that even if we had 100% of New Zealand dairy farmers jointly winning the employer of the year award, we are likely never going to get enough young NZ people with the right attitude and skills wanting to leave the big smoke, and move to such exotic locations as Stratford, Gore, Hokitika, or Kiwitea.

Thus the need to have access to skilled and reliable migrant staff is important. There is a minimum standard of employee we need on farm if we want the dairy Industry to perform for the NZ economy, uphold high animal welfare standards, look after the Environment, and have an efficient and enjoyable workplace. You can’t expect farmers to fulfil the job of the Ministry of Social Development, and look after the people that fall below that minimum standard.

So the continued improvement in those three areas might sound like even more compliance, and potentially it could. So our politicians, regulators, and processors need to think about how they can make compliance simpler, far too much compliance in this country is repetitive, it’s not engaged in the most efficient way, or the most cost effective way, it doesn’t recognise how farmers already collect data, and find ways to utilise that. I believe it is possible for our farmers to set the bar higher and actually have a reduced compliance burden. This will require innovative thinking, not what has been the thinking of let’s just get farmers filling in another bit of paper. Often the most annoy part, and sometimes costly part, isn’t doing the right thing, its proving you did the right thing.
In conclusion the message I want to get through to my fellow farmers is this: change will continue to happen, expectations will continue to lift. Make sure you consider this in your plans going forward, and factor them into the prices you are willing to pay, especially for land. My personal experience has been that by moving earlier in these areas, the cost has been less, and quite frankly has made my business stronger and more efficient.

As an industry by continuing to improve in these areas this should enable us to defend the premiums we get for our products and hopefully attain higher ones, in a world where the competition is fought around these providence claims. This will help us mitigate that volatility and risk to a degree.

In most areas we are world leading, last year I was part of a farmer panel at the world dairy summit discussing sustainability, other countries talked about what they are thinking of doing or just getting started with doing. I talked about what we have done, and cheekily pointed out that it was done without subsidies. Looking back at my presentation I got a lot of pride at what in fact we have done as an industry. Let’s keep up the good work and retain that world’s best title.