KPMG Misses The Micro In The Macro

KPMG Misses The Micro In The Macro

Federated Farmers welcomes KPMG’s Agribusiness Agenda but observes that details affecting farming on an individual farm scale has been missed, due to a macro overview.

“We welcome KPMG’s statement that ‘farm businesses must be viable and profitable if farmers and growers are to continue to invest’, but this is another strategic helicopter overview,” says Lachlan McKenzie, Federated Farmers associate spokesperson for water.

“KPMG confirms what Federated Farmers and other business leaders have repeatedly said, the Emissions Trading Scheme (ETS) will increase volatility and costs on agribusinesses.

“Persevering with the ETS will see it become an efficiency transfer scheme from New Zealand to the lower cost producers KPMG identifies.

“Yet KPMG pushes the ‘clean green “golden goose”’ message, which is at odds with recent research, done for New Zealand Trade and Enterprise (NZTE) in the United States.

“We know Americans don’t respond to ‘clean green’ or ‘sustainability’ but do respond to quality, local craftsmanship and community responsibility. Telling that story to our end consumers is what we need, instead of a hollow but lofty sounding slogan.

“NZTE deserves praise for testing the ‘clean-green’ assumption, which has a vice-like grip on policy. Federated Farmers would like NZTE do similar work in Europe, along with our emerging Asian, Middle Eastern and African markets. Markets that KPMG correctly identifies as becoming increasing important for our exporters.

“Yet pastoral agriculture is not like manufacturing integrated circuit boards. It demands the right mix of climate, soils and topography in what’s loosely referred to as the pastoral sweet spot.

“There are very few countries on earth that can run an efficient grass-based system but frankly the scale of population growth makes this all a moot point.

“In the next five years alone, 309 million mouths will join humanity, equivalent to the United States current population. Over the next forty years the global population will increase by 2.4 billion mouths or more than two times the population of India.

“Over the past decade, inflation on farms has been well ahead of the Consumer Price Index. A Ministry of Agriculture and Forestry report shows that farmers retain just 6.2 cents out of every dollar we generate from New Zealand agricultural exports. Unfortunately KPMG isn’t providing many practical hints on how that will lift.

“Indeed it takes a Eurocentric view of the proposed National Animal Identification and Tracing Scheme (NAIT) but fails to tell me how this will enhance my profitability. Council rates, a sizeable cost input, doesn’t get a mention at all.

“Where I think KPMG is spot on, is in their support for our push to get a larger slice of the funding package for rural broadband and the need to future proof the economy by way of water storage. We have the annualised rainfall but we don’t store it to use over drier months and Federated Farmers is pleased to have KPMG on the same page as we are.

“Similarly with research and development (R&D), it is Federated Farmers policy for New Zealand to have a R&D spend equivalent to three percent of gross domestic product by 2029,” Mr McKenzie concluded.

ENDS

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