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Lifting The Bar For Hawke’s Bay Farming

Land/Farming

Hawke’s Bay’s agri-businesses have much to be proud of in terms of performance. We generate approximately 40- 50% of our GDP directly or indirectly from our primary production sector. And much of what we produce, we export. But we could do better still. By Tom Belford

Tom Belford09 February 2017

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Numerous studies – such as Call to Arms, refl ecting a panel including Sir Graeme Avery – have indicated the full potential of New Zealand’s agricultural sector, and by implication, the possibilities for Hawke’s Bay. What might we aspire to?

Call to Arms noted that Denmark, equal to Canterbury in size, generates over two times as much agricultural revenue as all New Zealand; Holland, equal to Southland, generates over $55 billion in agricultural output. Both countries outperform with some of the best environmental practices as well.

New Zealand’s ag sector has grown 3% per annum over last the 25 years; we could reach 4% simply using known best practices – better soil management would be good for $3 billion per year in added value.

If all New Zealand pastoral farmers performed at the top 25% level, they’d increase exports by $3 billion per year in value – and 50% of the land in Hawke’s Bay is used for pastoral farming (sheep, beef, dairy).

So, what limits our ability to produce even more value from this sector going forward?

New Zealand’s ag sector has grown 3% per annum over last the 25 years; we could reach 4% simply using known best practices – better soil management would be good for $3 billion per year in added value.

Many would say, with no disagreement from me, that more dependable water supply and effi cient use would unlock more production in the farming and growing part of the HB ag-biz sector, leaving aside what the best means to that end might be.

But water isn’t the only, or main, factor. Here are some equally, if not more, important limitations:

• 1 Less than optimal farming practices, with slow adoption of best practices and inappropriate focus on intensifi cation and volume rather than profit.

Virtually every edition of the farming ‘trades’ like Farmers Weekly and Rural News repeats the same basic story – in every sector, from dairying to sheep & beef to horticulture, the top 20% or so ‘get it right’ and make money consistently, the middle 50%-60% struggle along with some good years (when overseas markets, currency and interest rates, growing conditions favour) and some bad, and the bottom 20%-30% are lucky if they’re solvent.

There’s no shortage of ‘know how’ – the same media is replete with ‘hands-on’ success stories in all farming sectors, such as dryland farming, dairying, and cropping. And the successes are win/win – productivity and profi tability increases alongside environmental improvements, often because of more intelligent use of inputs. The problem is changing farmer behaviour.

• 2 Inadequate focus on growing premium products and/or adding value through processing.

KPMG ag-biz expert Ian Proudfoot calculates that the $34 billion generated from New Zealand’s agricultural exports (2014-15) represents a mere 15% of its total value, given that it was processed and retailed overseas for $250-$293 billion.

If that ratio is projected onto Hawke’s Bay’s food and beverage exports, currently valued at $1.6 billion, then it would appear there’s potentially $10.7 billion of total value. Wouldn’t we like a bigger piece of that pie?!

How might we achieve that? By focusing on premium products, not low-value commodities (see John Bostock’s article), and capturing more of the ‘pasture to plate’ value chain (see Keith Newman’s article).

• 3 Enormous soil erosion and insuffi cient attention to improving soil health.

Hawke’s Bay has a serious soil erosion problem, the consequences of which are both loss of productivity and degradation of our waterways and estuaries. Just two of our sub-regions alone generate 2 million tonnes of sediment each year – the Tukituki catchment generates 879 tonnes, with 1.1 million tonnes from the TANK catchments (Tutaekuri, Ahuriri, Ngaruroro, Karamu). Parts of the region are worse.

We know how to mitigate soil loss and how to improve soil quality (i.e., carbon content, humus). Doing it requires investment in aff orestation and riparian planting, best practice in farming systems, and political will.

• 4 Inadequate marketing, including lack of a ‘HB appellation’ that clearly signals safe, sustainable, quality food.

We do have some very eff ective food and beverage marketers in Hawke’s Bay. They tend to be concentrated at the premium end of the product spectrum – Bostock New Zealand, First Light Foods, Village Press, Rockit Apples, some wineries – joined by some of the bigger commodity players like Mr Apple and Heinz Wattie’s.

Most observers agree that HB’s ag-biz future lies in niche, premium products, whether it’s the best apple, fi g, olives/ oil, feijoa, wine, goat products, medicinal ingredients, or mānuka honey (even water, if it’s sustainable!). ‘Best’ to overseas consumers means much more than taste; it requires health, safety, sustainability, purity and animal welfare values embedded in our products (read Kim Thorp’s article on the global marketing value of ‘natural’).

• 5 Increasing shortage of well-trained farming personnel.

Another constant lament of the ag-biz trade media is the growing shortage of primary sector training and expertise. The jobs are there … and the need is multiplying. What we lack is the trained personnel – from scientists to processing technicians to seasonal workers.

MPI forecasts the primary sector will require between 20,000 and 50,000 extra staff by 2025 depending on sector growth. In the apple industry alone in HB, we will need 2,300 people in permanent ‘apple’ careers, about 700 more than we have now, and even more seasonal workers.

Our local growers are well aware of the worker issues, and programmes are slowly getting rooted, with innovative collaboration between the industry, Māori organisations and EIT. But perhaps a ‘refresh’ of our region’s relationship with Massey University (recently signaling a return to its agricultural roots) – and even our high schools – is needed as well.

These factors must be addressed in the context of climate change and energy cost, which will aff ect weather suitability for various farm products, increasing input and transport costs, water availability, even biosecurity threats. New HB-suited technologies must be embraced (and their IP value exploited). At the same time, increased farm productivity must be achieved in tandem with meeting more stringent environmental expectations and standards.

Going forward

 I submit we need a multi-pronged, Hawke’s Bay-centric strategy to seize the positive challenge that beckons. The strategy includes:

• 1 Applied knowledge – total command of what constitutes best practice with respect to production, environmental protection and ecosystem services, and the technologies involved, refl ecting constant systematic scanning of the New Zealand and global horizon for information that has practical value to HB growers facing HB conditions.

• 2 Effective outreach and engagement to propagate relevant knowledge to farmers and growers. We must change behaviours, moving the middle 60% up the performance ladder. New Zealand used to have an extension service that worked, I’m told. Can we move back in that direction?

• 3 Dogged pursuit of opportunities to off er premium products and to capture more of the ‘pasture to plate’ value chain.

• 4 Incentives – fi nancial and regulatory – for adoption of new technologies and practices. This will require intelligent political engagement with sector leaders not mired in the past.

• 5 Improved use of Māori-owned land, taking full advantage of the new fi nancial resources and emerging technical talent in that community … in a partnership model.

• 6 Global marketing expertise – both macro-intelligence re trends and competition relevant to HB and ‘nuts and bolts’ assistance with eff ective exporting. Business HB is sinking some roots here and potentially deserves greater support for its work in the ag-biz sector.

• 7 Better integration, and acceleration of current eff orts and programmes that target some of these needs.

• 8 And a HB-focused institutional base to advanced those objectives … a HB Future Farming Centre.

Future Farming Centre

It’s mystifying that we aspire to be an ag-based regional powerhouse, yet have no regional institutional base to enhance, organise and leverage our capabilities and competitive advantages.

The centre would be intended to bring greater focus, integration, priority and profi le for a comprehensive set of smart farming initiatives designed to raise the bar for farm productivity, resilience and environmental responsibility in the region.

A critical aspect of this work involves identifi cation, modeling and trial of ‘smarter farming’ options specifi cally suited to our region’s farming and growing environments and added value opportunities.

The goal is integrated systems where productivity, profit, environment, risk, uncertainty and farmer objectives can be balanced. Such farm systems would incorporate factors such as erosion, nutrient management, and GHG emissions into a resource use that ensures best returns within any required environmental limits.

The centre would:

Collect and disseminate ‘best practice’ knowledge, including design of farm- specifi c management plans,

Sponsor demonstration projects,

Identify relevant government (local and central) and private sector resources and tools,

Employ extension staff ,

Promote agriculture as a education and career path for HB youth, and,

Recommend local government policies and programmes with respect to best practice incentives and requirements.

The centre would capitalize upon a number of complementary projects being pursued within the region, generally with leadership from HBRC. For example, approximately 1,000 Farm Environmental Management Plans (FEMPs) will be designed for the Tukituki catchment by 2018, and potentially provide the basis of broader farm plans we can add greater value to.

Meantime, HBRC is now accumulating far more region-wide knowledge in terms of soil mapping and quality monitoring, hydrology, ecosystem services, and environmental health monitoring – all of which can be applied to improving farming practices.

And planning is underway for climate change adaptation and resilience, including alternative water storage and retention options, as well as planning to mitigate our massive soil erosion problem.

In addition, farm sector groups, such as Dairy New Zealand and Beef and Lamb, are improving tools to help enhance farming productivity and environmental mitigation. Independent players have launched related initiatives, such as Doug Avery’s Resilent Farmer programme, and HB-based LandWISE.

Getting serious

All of this activity needs more cohesion and shared vision … and identifi cation of the marketing advantages (i.e. fi nancial benefi t) it can yield.

It needs an organisational champion looking out for the unique aspirations of the Hawke’s Bay ag-biz sector, broadly defi ned. This mission is far beyond the capacity of any existing ‘pan-industry’ semi-annual coffee klatch or occasional breakfast speech … which is pretty much what we have now.

We need to get serious about our ag-biz future.

Either muddle along, each sector doing its own thing, the leaders in those sectors ignoring the laggards … with no one feeling the need or responsibility to optimize all of our land use across all sectors, across the region, and across all farmers/growers and complementary service industries.

Or we can equip ourselves to be a powerhouse, fully exploiting our local talent and natural attributes, accelerating recognition for the story we can tell in the markets that will pay us more for our premium, sustainable products.

Much detail must be assembled in consultation with industry, iwi, academic and environmental players to fl esh out and rigorously test the Future Farming Centre concept, including plotting its funding and governance model.

My intention is to develop this proposition, with the Regional Council as an initial convener and enabler, with the aim of putting enough fl esh on the bones that we can test broader support for the Centre in the next Long-Term Plan (LTP) process, which commences at the end of this year.

Meantime, readers’ comments and critique are most welcome.

Tom Belford09 February 2017

BB33

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