Save our farms….from those who wish to save our farms

Speech by Don Nicolson, President of Federated Farmers, to Federated Farmers National Council, Westpac Stadium, Wellington, 17 November 2010

Welcome to Wellington at Federated Farmers National Council for 2010.

We have an incredibly packed programme and major issues to debate.

Having recently returned from China, where I spoke on the New Zealand farming system at the China Yangling Agricultural High Tech Fair, I look forward to having a major discussion on foreign investment.

This will be a closed-session to the media, but it will be an important part of this Council meeting.

My speech this morning is about saving our farms…from those who wish to save our farms.

I cannot start, however, without first referring to the Canterbury Earthquake and the storms that hit Tararua, the Manawatu, Southland and South Otago, which made for a very black September, as the next edition of the National Farming Review is titling it.

Disasters can either make or break organisations.

I wish to pay tribute to the standout efforts of our elected members and staff in Canterbury, Southland and Otago as well as the Manawatu.

There are vital important learnings that we are digesting and will be taking to Government.

But Federated Farmers proved itself totally relevant and responsive. And that is why we now have a growing membership overall.

We worked hand in glove with Government, councils and the Rural Support Trusts. But Federated Farmers showed leadership and initiative. We made things happen as Roger Sutton of Orion Energy has commented upon.

Initiative is something that comes out of culture. We have 111 years of culture.

Initiative is still a hallmark of farming culture. Yes, we make mistakes, but we also learn from them and go forward.

I would like to pay tribute to those organisations that gave financial assistance to the Federated Farmers Adverse Events Trust.

Alliance Group’s huge generosity that was the catalyst. FMG – a kindred organisation, Ballance Agri-Nutrients and ASB Bank, who picked up the phone to say, ‘what can we do’.

There are countless others from Silver Fern Farms, to Arrow Brewery, to ANZCO, to DB in Christchurch or CRT down south and the staff at the Tay Street PakNSave.

If I haven’t mentioned you it is not a snub. I just do not wish this to sound like an Oscars speech.

So thank you for the countless other donations, which includes several provinces of Federated Farmers who dug deep. To you all, thank you.

That, by the way, includes the media. In a time of crisis we all came together.

The shame is why we are not so together outside of a crisis?

Save our farms…from those who wish to save our farms

To me Save our Farms reeks of hypocrisy and this is why.

The residential sector carries $192 billion in debt, whereas, for the entire agricultural sector, it is $47 billion.

So I ask, why just Save our Farms and not, Save our Homes too?

Or for that matter, Save our NZX?

Or even, Save our Dairies?

I am a cynical Scot by heritage.

So when I see a Remuera property developer as part of this group, I have my doubts about the purity of their motives.

Is it myopia or naked self-interest? If you are a Remuera property developer, wouldn’t you like to buy low? I mean, farms are also land banks

But no, they just wish to Save our Farms because we Kiwis love property. We all love property, but it seems, we love the property of other people even more.

Even worse, David Mahan, an expatriate and a business consultant in China, has gone one step further suggesting collectivisation. Yes collectivisation. He believes ‘the problem’ could be solved by making all farmland leasehold.

This is madness. Is there a problem, right now? No. Will there be a problem, possibly yes.

But let’s face it, if you are a high net worth investor, you could easily skip around the rules being proposed by Labour and National.

If you have at least $10 million in New Zealand you can apply for New Zealand residence under the Investor Plus category.

Rules need to be sensible but above all else, they must be clean and simple.

I look at Anders Crofoot, President of Federated Farmers Wairarapa and President of the NZ Grassland Association.

He’s an American who moved here in 1998 with his wife Emily and family. He took citizenship in 2005 and is an example of the talented farming migrants we need to re-fresh the New Zealand farming system with new ideas, new concepts and new blood.

Would he have moved here under Save our Farms hysteria or the rules now being considered by some political parties? No he would not.

But who is a New Zealander?

The 2006 Census reminds us that 23 percent of all Kiwis were not actually born here. Almost a quarter of all Kiwis.

I also need to remind people that the Chinese have been in New Zealand for a very long time.

One of our first ever dairy cooperatives was established in Taranaki by the great Chew Chong in the 1880’s.

The Real Estate Institute of New Zealand also tells us that rural land has been in reverse since 2008, because we are completely trade exposed.

So if we put up the ‘get lost foreigner’ sign, we risk turning New Zealand into less than a set for The Hobbit, but more like a backdrop for Southern Comfort.

Save our farms…. from big government.

Campaigns like Save our Farms miss completely the wrong target.

We need saving from Government, which is acting like a fiscal hoover that lies behind the pressure on the Kiwi dollar and a sluggish economy.

New Zealand doesn’t have either a savings or an investment problem, we have a big Government problem.

Today, Government consumes 44 percent of our economy – eight percent more than what it did in 2000.

That’s $30 billion more in real terms. $30 billion year-upon-year-upon-year.

But that sum, which is hard to comprehend, does not even include local government. But the scale of it is this. The combined growth is over two Fonterra’s. Two Fonterra’s.

So how did we end up in this mess?

The Mixed Member Proportional electoral system is my theory.

Look at the insulation that has gone into the domestic economy since 2008 and really, dating back to the late 1990’s, every bit as much as what has gone into homes.

The resulting ‘rough edges’, of the worst recession since the 1930’s, have been smoothed, or have they been brushed under the carpet? Governments have embraced MMP’s dark praetorian truth - you have to bribe the electorate on a scale that would have made Richard Seddon blush.

The only political game in town is to ‘maximise’ the party vote by hook or by crook.

Government is no longer about long term policy with some short term political considerations. Under MMP, a government’s sole focus is all about short-term politics interspersed with some longer term objectives, as long as these don’t trip up the former.

Just look at the minerals issue. Ask why eco-anarchists, like Roger Beattie, have to fight bureaucracy to export? Ask why we don’t commercially farm trout?

If we can’t do the small things like farming trout or even farming weka, what hope is there for the bigger ticket items?

Look at it like this. In October, the UK’s Chancellor of the Exchequer, George Osborne, announced a ‘repair’ job on the UK’s massive deficit. Some 16 percent of all UK public spending will be cut by 2014. Thousands of public servants will go and whole programmes slashed.

The ‘Con-Lib’ coalition uses words like cuts and austerity. These are non-words here.

In July, Treasury warned that the New Zealand Government its debt trajectory would pass 100 percent of GDP by 2050. Think Greece, Italy and Iceland.

Over the Tasman, our Australian cousins, have, for 25 years under both Labor and the Coalition, continued economic reform.

When you combine that with commodities it creates success. We’ve got the commodities, but our Government’s $30 billion spending growth, in real terms, is an economic millstone we cannot afford.

Save our farms…from poor investment and policy decisions

The outbreak of Psa in horticulture is a terrible warning about the biosecuirty threats we face.

I repeat Federated Farmers call for an Independent Biosecurity Conducts Authority to investigate each post-border incursion or complaint against MAF Biosecurity

Independence works for the Police and even for Real Estate Agents. So why not Biosecurity?

We need to know it is operating to the fullest of its abilities and that it has resources in the right place at the right time.

It is also time for Government to abandon the madness that is cost sharing. That’s like the Police charging victims by the hour for an investigation.

100 percent of the risk comes from imports.

Put another way, you simply cannot export a biosecurity incursion into New Zealand. Yet that’s the logic being used because MAF says, exporters benefit from the service.

Excuse me?

Two-thirds of New Zealand’s export wealth, some $26 billion each year, comes from the agricultural sector.

So who benefits? We farmers didn’t with an average 6.2 percent profit from every dollar we generated in 2009.

Someone benefited from the other 93.8 cents and it wasn’t us in this room.

Here’s another thought, if we’re going down cost sharing, does that mean we don’t have to pay for Government and council services we don’t use?

Look at broadband.

Over one million Kiwis, 25 percent of the population, are defined as ‘rural’ and are expected to put up with less money and less speed that the 75 percent who are ‘urban’.

Federated Farmers fought tooth and nail to get this investment up from $48 million to $300 million. That still is $200 million less than each urban quarter enjoys. $200 million.

Can Mr Joyce tell me his vision for the 25 percent who generates 66 percent of exports? With tourism that value figure will be much higher.

It reflects a nagging feeling that Government is looking for the next big thing, instead of backing agriculture to really grow.

Save our farms…from the Rolls Royce theorists

There are also many in Government, in academia and among commentators, who wish New Zealand to some Rolls Royce.

That we are so unique we can extract a high premium for ‘Made in New Zealand’.

If there’s a bar to jump farmers ask why, but our Government responds by asking for it to be raised even higher.

As a farmer, and as Federated Farmers President, our automotive benchmark should not be Rolls-Royce but rather, Toyota or Nissan.

In other words, we should focus on mass markets where premium is derived from craftsmanship, quality, reliability and trust that builds loyalty.

Research by the University of Otago's, Associate Professor John Knight, found a big difference between what UK consumers said and what they actually had in their trolley.

Research like this provides the empirical evidence we need to strategically plan for future profitability. If we take this research at face value, then 69 percent of UK shoppers motivation for buying can broadly be described as a combination of ‘value for money' as well as seeking out a ‘reliable brand'.

If this research was verified by further research then the opportunity to add value is through branding and the variety we offer. This accounted for 23.5 percent of the buying motivation for those surveyed.

This has potential implications for brand development around the provenance of our animal breeds and the way our regions influence taste profiles. Federated Farmers Meat & Fibre is working positively with Beef+Lamb New Zealand on this.

Made in New Zealand is not enough to get our goods into a supermarket trolley. Less than five percent of shoppers raised this as a factor. That's a true revelation.

This research raises big questions about the assumption of high value ‘Rolls Royce niches pushed by armchair exporters. It sounds great in print or a speech, but doesn't register where it really counts - the supermarket trolley.

What we now need is for Associate Professor Knight's research to be expanded in scope and applied to our fast growing markets in Asia, the Middle East and Africa.

We have to know what these consumers actually want, instead of dangerously transposing the personal preferences of policy analysts, politicians and commentators onto our consumers.

Save our farms…from curmudgeons

According to recent New Zealand media reports, we supposedly have one of the most polluted rivers in the western world, we have catastrophic biodiversity loss, our lakes are in decline and that we are a major emitter of greenhouse gases.

You’d think we were an environmental basket case. From environmentalists to Ministers, our compatriots are not slow to tell us what we get wrong.

But what about that we get right? That’s the bulk of what we do.

Since we lifted subsidies in the mid-1980s, the farm environmental performance has improved immeasurably. Farmers have moved to optimal farming systems instead of chasing subsidies that rewarded the wrong behaviours.

Frankly, subsidised agriculture harms the environment as well as economies.

It’s a trap that the Emissions Trading Scheme has fallen into.

Instead of growing trees for the wood, the carbonistas are chasing the subsidy into the same cul-de-sac the ETS has led New Zealand.

Federated Farmers believes the ETS is so flawed that it must be abolished.

And how many no’s does it take before reality will dawn? There is a better way.

As a country, we can contribute much more globally, than just flogging our economy with the dead horse that is emissions trading.

President Obama is the most recent world leader to kick a trading scheme into touch. The Chicago Climate Exchange, launched in 2003, actually ceased trading this month.

Emissions trading is, as one commentator observed recently, dying a slow death.

Yet New Zealand plans to stay the course, except, it’s the only one on it. The European Scheme doesn’t include the majority of its emissions and it doesn’t include agriculture.

We have been told by politicians that agriculture will not be included, if our trading partners don’t include agriculture as well. Well then, where’s the legislation? Can someone name another country with an all-gases, all-sectors functioning ETS, that we trade with?

We have a switch-off website and campaign in the works but I hope sanity will eventually prevail. The ETS is a seriously flawed solution to climate variation.

Yet, as the author of the supposed Cawthron ‘report’ that the ‘worst river in the western world’ claim was drawn from has said, the truth doesn’t make for sensationalist headlines.

We seem to have forgotten that New Zealanders have brought species back from the brink of extinction. In 1980, the Black Robin was down to a solitary breeding female and four other birds, but has now recovered to a stable population. The Takahe was assumed to be extinct in 1930, only to be ‘rediscovered’ in 1948.

New Zealand does not, by the way, emit 99.8 percent of the world’s greenhouse gas emissions.

Open markets drive efficiency and New Zealand agriculture proves that. Distorted markets don’t. The climate change debate is not prominent in Greece, Iceland or Ireland right now. I wonder why?

The worst trait of the New Zealand psyche is this sheer ability to find a grey cloud in every silver lining.

The latest NIWA report into lake water health, attaches 100 percent of the blame to farming when we’re not even 30 percent of the problem.

Yet if 25 percent of lakes in pastoral areas have declined, doesn’t that mean 75 percent have either stayed the same or improved?

But we even get blamed for a 40 percent decline in lakes in native bush catchments.

Could there be another cause? Could it be introduced water fowl? Could it be introduced species like koi carp or trout? Could it be introduced aquatic plants?

No it must be farming NIWA says with certainty. Given that certainty, can NIWA give me tonight’s Big Wednesday results?

But it’s the imagery we see on our screens that does the most damage.

How many times have you seen images of brown-green coloured dairy wash water coming out of a dairy shed, before cutting away to a shot of an aerator in a pond?

To farmers, we know this dairy effluent goes into the storage pond where the aerator encourages bacterial action that turns that liquid into fertiliser. This is then spray irrigated back to pasture, reducing the need for external inputs.

We recycle these valuable nutrients to encourage pasture growth.

But to Joe public, sitting at home with a TV dinner on their lap, they assume this effluent goes directly into their river or their lake. They are encouraged in that view by the likes of Forest & Bird, Tom Scott cartoons and snake oil peddling politicians.

That gets the revulsion factor, that yuck factor going. While this linkage is wrong we have to get our farming message through to a New Zealand that is now more urbanised than Japan, South Korea or the United States.

Our country is now among the top 34 most urbanised nations on earth.

My message to the media is that you have an obligation to inform your listeners and readers of the full facts behind what viewers, readers or listeners see, hear or read.

If you don’t know, ask us. As a staff member recently commented to a media personality, when will you talk to a farmer instead of talking at farmers?

If you wish to see, then call us. Come out on-farm and use that Mark I eye ball to see what we farmers actually do.

There’s a fantastic amount of inspiring work that contradicts the images our detractors deliberately paint of us.

So several days ago, I laid down a challenge to get every Member of Parliament, every regional council and as many members of the media onto our farms as possible.

We’re working on a programme to do just that.

We also don’t pontificate about green issues while flying off to Hollywood parties. Farmers do because we care about our farms and look to hand it on better than how we found it.

We’re not perfect, but we learn from our errors and we improve.

So let’s get out and front foot things. Let’s open up and create opportunities to inform and engage.

I’d like to thank our hard working staff, who care so passionately about farming and to Chief Executive, Conor English, whose humour and counsel is vital.

To my brilliant National Board members, I thank you for your support and encouragement. We are a dedicated band of brothers.

And to you, our National Council, thank you for the countless hours of work put in to keep farming viable for the next generation.

Can I perhaps end by suggesting that instead of a Ministry of Agriculture and Forestry we look to secure a Ministry for Agriculture and Forestry or a Ministry for Primary Industries.

We need our policy makers to be for agriculture and not of agriculture.

But you are the reason why Federated Farmers has turned the corner into membership growth.

Keep it up.

ENDS

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