NZ Primary Sector Strategy: an Alternative to the Race to the Bottom

Irrigation NZ CEO Andrew Curtis (NZ Farmer’s Weekly 25th Nov p 3) highlights one of the big problems with the New Zealand primary sector; our continued focus on producing large volumes of cheap commodities for international markets.

We’re not to blame for the declining water quality because the big bad markets want cheap stuff.  He uses this as a reason – or rather an excuse – for discounting the PCE report on Water Quality in New Zealand: Land Use and Nutrient Pollution.

Producing lots, cheaply, is apparently our preferred strategic position.  First we fed Britain and were taught by our agricultural colleges to maximise production – never mind the negative effect beyond the optimum production level on profit and risk.  Britain paid us relatively well because we were inside the family, so to speak.  But when Britain did a runner into the EU in 1973, we did not change our thinking and decided to feed the world cheaply instead.

The PCE report highlighted one of the consequences of this worst of all strategic positions; our declining environmental standards.  There are other consequences, including our lack of market position, which means we have to ‘take’ the price offered instead of ‘make’ the price. That means that every ‘cost efficiency’ gain we make on the land is quickly gobbled up by the stronger buyer; we save a dollar, and our prices come back a dollar, or more.  All benefits are temporary, and the costs come in the medium and long term beyond the annual budget.  Then we make more cuts in costs and standards – environmental and social – to maintain our margins for the short term.  And still we are generally getting poorer, and we have less family-owned farms and people living in our rural communities.

Agricultural commoditieWorld Bank

The obvious message ought to be that market position is far more important than a focus on gross production.   But our education, policy and research focus remains on producing the new highly-bred highly-fragile thoroughbred of GE grass and converting our gullies and swamps into the same because we cannot see the opportunities and benefits they can provide.

There’s a problem with this idea of land as a uniform production factory; when your focus is on measuring the wee grass plant at your feet in the metaphorical paddock of agriculture, you’re not really well placed to point out to the students either the potential in the shrub next to it, or that there is a grave danger of a metaphorical, and largely unpredictable, bull surprising the living daylights out of you when you least expect it.  “What bull?”

But what a trip!  We produce more (to save the world and all those billions of people earning less than $2 a day); the agricultural commodity prices come down; we desperately seek to cut more costs even if it means over-capitalisation and debt (praise be for the irrationality of land values that reflect production not business profit/risk); our overheads climb and with it our business risk; margins squeeze and we amalgamate family farms seeking scale; homogenise and industrialise the land; corporatise and relocate our head office from RD 2 Waipukurau to Symonds Street Auckland, reduce labour costs and call them ‘units’; bring them in from overseas; and demand the right – nay, the need – to pollute.

And state that reports by the PCE highlighting a problem contain nothing new and ‘don’t blame us.’  So boo sucks to you other New Zealanders that want to swim in your own rivers.

And we wonder why the public is a little tetchy.

It’s a bit like a bunch of engineers in a factory still running on colonial grounds responding to a drop in value by saying, “I know, let’s build a bigger factory, argue for reduced working conditions, reduce the quality of the product, who’ll notice?, throw some costs over the fence or into the future, and job’s right for another quarter.”  Yeah, that’ll work.

Andrew Curtis is arguing for ‘Business as usual, but better’, along the lines of the factory owner above.  There is no challenge to our commodity strategy, just a shrug that that’s how it is, and we like it that way.

That won’t cut it any more.  There was another PCE report of almost a decade back, Morgan William’s Growing for Good.  It argued for a redesign, a change in strategy.

Poet, novelist, essayist and land use philosopher Wendell Berry of the US made the same call back in the 1970s in the face of corporate agricultural expansion at the expense of family farms.  He referred to the crisis in agriculture as a “crisis of culture.”  He was right.  That was in 1978.  No one listened.  New Zealand is now going through the same trends a few decades later, and people would be well advised to read of Berry’s observations and philosophies.  We are repeating the same mistakes, with the same excuses.

More recently, in 2010 a special United Nations Rapporteur Olivier De Schutter has argued for the vital need to shift away from this failed strategy, and the need to shift from industrial agriculture to one that focuses on agro-ecological systems.  Deafening silence.

So here’s a thought for the NZ primary sector ‘leaders’ out there.  How about we get off this low price corporate-trending commodity race-to-the-bottom, and focus on holding and increasing our prices.  We should not feel guilty for charging Madame in New York $150 for her lamb cutlet marinated in free-range kiwifruit yogurt, laid out on a happy-forest Totara platter.  I’d charge her for the platter as well.  The more the merrier.

There are a number of things to consider in any strategic shift.

First, get rid of gross production as having strategic relevance to a modern NZ primary sector.  That will give many Lincoln and Massey agronomists apoplexy, but that’s what they gave me 30 odd years back, so fair’s fair.  It’s about value, not volume; and if are going to maximise anything, then we should be using our smarts to maximise long-term value, not volume.

Emphasise market position and price making, especially in relation to the mega-trends of food safety, environmental quality, and community values.  Market the hell out of it and sell on quality and ethics, never, ever, on price.  Horticulture doesn’t get a premium on Chile because the markets like us.  It’s because we push quality.

Control as much of the value chain as possible from paddock to plate (or sheep’s back to soft wool lingerie).  Don’t let the middlemen wide boys make short-term deals that make our people the losers in the long term.  Increase, diversity and localise the value chains.  Maybe even shift back toward niche local processing by decentralising our cooperatives – back to the future.

Think productivity (output per input) within the farm gate – which means re-building the services the environment provides for free.  The environment is the farmers’ friend in both increasing price and in reducing costs, so please, no more empty clichés like “you can’t be green if you’re in the red.”  A substitution back to nature and away from a scary junky-like reliance on high energy inputs which are currently nice and cheap – currently……

Rethink the design of landscape systems within the farm – there are savings to be made and revenue to be earned if we get out of this fixation with 1000 acres of pure ryegrass and 1000 acres of pure radiata pine.  Build diversity and resilience in the face of an uncertain future world.  Homogeneity’s bedfellow is mediocrity.

A rethink of primary sector strategy is far more important than justifying poor water quality to a more and more sceptical public, or another “we need to increase production” clarion call, or any self-justification by blaming it on the commodity markets.  We need to get off the whole commodity gambit, or at least as much as we can, and take back control of, and diversify, our supply chain in the interests of our farmers, our communities and our future.

Anything else that emphasises ‘business as usual’ is just another justification for mediocrity and a lemming-like march toward some future cliff.

Chris Perley

Submitted to NZ Farmer’s Weekly

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2 Responses to NZ Primary Sector Strategy: an Alternative to the Race to the Bottom

  1. truffle2 says:

    Nice one Chris.


  2. Paul Bailey says:

    So looking forward to a change in focus in 2014…

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