Opinion editorial: Ruataniwha meeting

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Opinion editorial from Irrigation New Zealand

7 November 2014

There has been some criticism that the recent “It’s Now or Never” Ruataniwha meeting organised by IrrigationNZ and Federated Farmers did not compare the operational set-up of Hawke’s Bay’s proposed irrigation scheme with others elsewhere in New Zealand.

I would like to point out that the event in Waipawa was not advertised to be a detailed operational overview of the project - it was set up to inform farmers about what irrigation can do for them on-farm. Those farmers are now free to go and assess the scheme in greater detail, and have done so - the dam now has enough support to get it over the line and the focus has now moved to getting farmer uptake to over 60%.

The meeting we held was about information sharing at the farm-scale: comparable irrigating farmers from other parts of New Zealand sharing their experiences about how they have personally funded irrigation development, how it has improved their productivity and diversified their land use options, and how their wider communities have benefited from this personal investment.

We had a very clear objective for the event which was met - to provide accurate and quality information around irrigation investment on-farm. We gave Hawke’s Bay farmers and growers access to relevant data sourced directly from their counterparts in other irrigating regions, supported by our own research and surveys.

Calls from those opposed to Ruataniwha that farmers and growers should shy away from the project because they are not part of the initial ownership structure is a fallacy.

Despite what some have said, farmer-only irrigation scheme development is not the norm in the South Island; in fact, this could not be further from the truth. All large scale irrigation schemes developed in the past ten years have featured a mixed ownership and investment structure.

Lines companies like Alpine Energy and Electricity Ashburton, private entities like earthmoving company Rooneys and local government have all taken stakes in irrigation developments. For example, the Barrhill Chertsey Irrigation scheme is a 50:50 Joint Venture with Electricity Ashburton which receives a commercial rate of return on its investment; and the North Otago Irrigation Company scheme is underwritten by a loan from the Waitaki District Council. It is therefore incorrect to state that farmer financed irrigation schemes have been the only method used to date.

If you take a step back and think about what is required to get a modern irrigation development off the ground it looks something like this: an initial outlay of hundreds of millions of dollars for storage and distribution infrastructure, approximately $275million in the case of Ruataniwha. This is well beyond the debt financing levels of a group of individual farmers, particularly as they now have a significant capital outlay on-farm to install modern efficient irrigation equipment and alter their farming systems to meet new environmental standards.

To expect this outlay, and the cost of storage and distribution infrastructure, to be covered through debt alone is absurd. The reality is without council or other private investor support it is unlikely any irrigation scheme would have seen the light of day in the last couple of decades.

Central government in New Zealand has now recognised this significant stumbling block. Targeted funding is now available through the Irrigation Acceleration Fund for the early stages of development including feasibility and design, and more recently Crown Irrigation Investments is assisting with commercial loans to get irrigation projects over the line.

Interestingly nowhere else in the developed world has irrigation scheme development been left to a market only approach. Typically, schemes are constructed by a majority grant from both local and national governments with a lesser contribution from private individuals - usually ranging from a 60:40 to 80:20 public-private split.

In the case of Ruataniwha, farmers can indeed be part of the ownership structure – there is a clear pathway for those that wish to invest and in the long-term it very much makes sense for them to do so.

The other persistent criticism of Ruataniwha is that the cost is too high.

But you only need to hear a farmer’s view on this to see it in perspective: Rab McDowell, a sheep and beef farmer, who spoke at the Waipawa event, is chairman of Barrhill Chertsey Irrigation Ltd scheme which is recognised as one of the most expensive in the country. Yet the company’s latest share offer saw 30% more water being taken up and there is potential for more growth next year. North Otago Irrigation Company is also about to go to prospectus for its stage 2 and there is every indication that they will get the required uptake to get construction underway. South Island farmers are also paying big money for access to water but recognise the value of doing so.

Make no mistake, the Central Hawke’s Bay community is behind the Rutaniwha dam. The turn out and support shown at the ‘Now or Never’ meeting demonstrated this.

Communities in Hawke’s Bay are now turning their minds to the new business opportunities that present with major construction of the dam.

A further 25,000ha of irrigation will have huge flow-on impacts for local service industries both during the construction phase (dam and on-farm) and post construction (on-going maintenance and increased and more consistent production). There will be increased need for construction, agribusiness related service industries (transport, fencing, advisory to name a few), retail, education and health services among others. For every $1 an irrigator makes at least another $3 of wealth is created in the local community.

Attention now needs to be on how New Zealand best advertises the Hawke’s Bay ‘high value food production’ opportunity internationally – prime horticultural land, a climate that grows almost anything and with Ruataniwha - all with reliable water supply. This combination is a unique selling point on a global scale.

Hawke’s Bay has been given an amazing opportunity with this dam, and while IrrigationNZ supports robust debate as part of the process to evaluate Ruataniwha’s viability, energy should not be wasted by picking unnecessary holes in a project which, while not perfect, has been carefully thought through and modelled by experts and been voted on by ratepayers. It’s time for a more positive approach towards those locals aspiring for a better future for the region. It will be a game changer for the region, and that should be celebrated.

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