NZ's Primary sector must not tolerate its weakest links

MEDIA RELEASE – 13th November 2013

KPMG Agribusiness Agenda

New Zealand’s Primary sector must not tolerate its weakest links

•        Industry must be prepared to remove those not prepared to meet baseline standards
•        Regulation needs to be balanced to avoid overburdening a strategic sector of the New Zealand economy

The global reputation of New Zealand’s primary sector lives or dies on every participant in the industry doing the right thing each and every day.  In a connected world it only takes one person to fail in fulfilling their duty to the environment, their animals or the community for significant pressure to come to bear on the whole sector’s license to operate.

The message that the industry can no longer tolerate weak links is a central theme in the latest volume of the KPMG Agribusiness Agenda 2013 which is released today. The fourth volume of the Agenda, titled “Balancing the needs of the environment, communities and businesses” discusses the issues associated with building a world class, sustainable primary sector in New Zealand.

“The message from industry leaders was clear that the industry must take all the necessary steps to ensure it is a truly sustainable producer of food, fibre and timber products” commented Ian Proudfoot, KPMG’s Head of Agribusiness, “Failure to back the claims we make with substantive actions creates real risks to market access and is unlikely to be acceptable to the wider population in New Zealand”.

“This means that sectors have to be prepared to stand up to those failing to meet their obligations and take action to remove them from the industry if they are unwilling to make the necessary changes.”

Proudfoot continued “it should, however, be recognised that a sustainable sector is about more than just ensuring the right things are done by the environment, it is about building deep partnerships with the communities that sector exists alongside and developing robust, profitable businesses that have the capacity to survive the volatility that is inherent in the primary sector”.

Building a sustainable sector is consequently not only about increasing the level of regulation and cost heaped onto the industry. 

Global research by KPMG, quoted in the report, indicates that if the food production sector was required by regulation to fully pay its direct and indirect environmental costs, an operating profit of US$89 billion would have become a US$110 billion loss in 2010. 

Mr Proudfoot said “this would not be sustainable in a world needing to produce 70% more food over the next 30 years.  The challenge is setting regulation that incentivises the sector to reduce its environmental intensity and bear an appropriate share of cost while not overburdening it, leaving it uneconomic and uninvestable”.

Other themes in the report include:

•        New Zealand companies must be active in tracking market trends and deducing the sustainability standards customers will set in the future.  They should be implementing these higher standards today to position ourselves as a provider of premium, sustainable products.
•        Wider engagement with communities that the industry operates in is critical to building links between rural and urban populations.  Companies are challenged to think about community engagement as a core part of the investment necessary to develop sustainable businesses.
•        The conversion of agriculture land to dairy was a point of significant discussion.  It is important that as a country our land use is strategically managed to maximise the economic value it is able to create while balancing the environmental impacts.
•        The need to ensure that production systems consistently utilise best practice and the impact this has on intensity of production are key to maximising the contribution that the primary sector can make to the economy.  At the core of the discussion is public concern around more intensive, housed farming systems.
•        For most, the discussion around water is not about irrigation and increases in production but is about the quality and safety of our rivers, lakes and streams.  The sector can’t afford to ignore this perspective and must be active in achieving measurable improvements through wide collaborative initiatives.
•        It is also recognised that science is a critical component in achieving more sustainable outcomes across the primary sector.  This includes the need for a mature conversation about the role that GM has in our primary sector and the need to build farming business with sufficient resilience to withstand increasingly regular weather shocks.

KPMGAgribusinessAgendaVolume4_MediaEmbargo.pdf

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