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A land of milk and honey: The state of New Zealand dairying

26 February 2014

A land of milk and honey: the state of New Zealand dairying

Speech by Willy Leferink, Federated Farmers Dairy chairperson, to Federated Farmers 2014 Dairy Council at Federated Farmers, Wellington

It is my pleasure to welcome you here to my second to last dairy council meeting as your chair.

While our annual meeting in July will give me a chance to review the past three years, I’d like to look at the state of New Zealand dairying as we enter a General Election year. 

Ladies and gentlemen, we are, truly, a land of milk and honey.

While we dairy farmers generate the former, it is impossible without pasture pollinated by honeybees.  Honey just happens to be a delightful and healthy side benefit of this underappreciated agricultural worker.  And prices for honey are going through the roof as well. 

If no man is an island then no industry can operate in isolation. 

Everyone in this room is also a red meat farmer.  There will be many who are horticulturalists too while others will have interests in forestry.  Personally, I feel that oil, gas and mining should be classed as a primary export, since it gives some of us a share in what lies beneath the soil, as we benefit from what soil generates on top.

There will be even some of us who moonlight as beekeepers!

This joining together of the primary industries is why the state of New Zealand dairying is strong and should become stronger. 

Today, you will hear from Martyn Dunne, the Director General of the Ministry for Primary Industries.  Tomorrow, you will hear from the Minister.  They join a group of illustrious and informed speakers talking on what matters to our economy.

Two weeks ago, Minister Guy released the updated Situation and Outlook for Primary Industries, or SOPI.  It says dairy exports will increase $2.7bn over what was projected at the start of the 2013/14 season.

Those dairy exports are now projected to be worth $16.9bn.  I repeat that, $16.9bn.

What it means is that every New Zealander is a farmer; it is only a matter of degree. 

What it means is that every New Zealander has a stake in the success of our industry, even those who’ll turn bright red at the very thought.

The Ministry projects this 2013/14 season will see our total primary exports hit $36.4b, with dairying representing an impressive 45 percent of that total.

More remarkably, that $36.4bn in exports will come from the sheer hard work and determination of fewer than 150,000 people, who work in agriculture, forestry and fishing.

This makes us a magnet for international journalists who want to learn why we are the land of milk and honey.  We are talking journalists from Al Jazeera to U.S 60-Minutes to one from Norwegian Broadcasting this month.

I’ll also read what one European journalist sent our comms team last week:

We had nice trip in NZ = 4800 km in two weeks. Both islands from north to south. Beautiful land, excellent roads (especially for motor bikers) and pleasant people.”

We are a land of milk and honey and it’s high time we embrace that reality instead of hunting some economic nirvana.  It’s a little reality that escaped one MP speaking in the Parliament, only last Thursday:

This is a Government obsessed with mucking around in the same puddle of water we have been in, frankly, for far too long—more primary production, more mining, more commodity goods to be sold at commodity prices. The challenge for this country is to make the shift in our economy into totally new productive enterprises…”

Some muddle worth $36bn!  While I feel the late David Lange was a great Prime Minister, that’s not a lot different from this infamous statement said in 1988: 26 years ago?

Farming is a sunset industry and manufacturing and tourism will take its place.”

Instead of throwing rocks at us from the sideline, we need environmentalists, politicians and scientists to work with us for that better way.  For the media, my farm gate is open because it is important to understand what we do, than what someone tells you that they think we do.

So the state of dairying is strong and will remain strong for some basic reasons.

Dairying is the most expensive and capital intensive major primary land use.  Brazil has almost limitless potential as Dr Gareth Morgan’s kiwi-style slice of the Brazilian dairy industry proves.   Yet there’s little incentive for Brazilian gaúchos to move past beef and cropping, given alternate land uses generate adequate returns relative to the capital needed. 

In contrast, the major international dairy exporters like New Zealand have banking systems that understand dairying.  It’s a vital ingredient.

When it comes to banking the words of a famous Dutchman called Erasmus comes to mind.  If you swap “women” out for “banks” you end up with one of life’s modern truths: “Banks, can't live with them, can't live without them.” 

In our land of milk and honey we have processors, manufacturers and exporters who have a finite time to process and distribute our perishable product.  I haven’t even yet touched on food safety assurance systems, yes we had some glitches, but it takes years to develop any semblance of the capacity we have in this field in new Zealand. 

If you think milk powder is low value and simple to make, my challenge is to have a go at it in your kitchen.  I’d also add “good luck!”

While we will run out of suitable dairying land one day, that day is not now, tomorrow or even the medium term. 

We have technologies, now, that benefit production, the environment and animal welfare equally. 

Where that MP I mentioned is wrong, is that the long term growth of New Zealand dairying will come from doing things better on-farm, it’ll come from dairy companies focussing on the value-add ball and it will also come by taking our carbon efficient dairy expertise out into the world. 

In terms of the opportunity, the world needs the global production of milk to grow 29 percent within the next decade just to keep up with demand.  That’s going to be hard when globally, the average dairy farm has between two and three cows or buffalo’s.  Here our average herd size is 402. 

The United Nation’s Henk-Jen Brinkman says food insecurity is “a threat multiplier” as it creates a “vicious cycle from violence to food insecurity and from food insecurity to violence that needs to be broken.”  The Arab spring started over the price of bread.

I am telling you our land of milk and honey can help break that cycle directly by feeding more than 40 million people and indirectly with our know-how and leading by example. 

The priority shouldn’t be trying using the tax system in some quixotic quest for the ‘new economy,’ but harnessing our human, natural and technological resources to be the best land of milk and honey the world has ever known.

As Federated Farmers Vice-President Dr William Rolleston says, “we need to create a culture of cool, innovative science.”  We have that in centres like the Ridett Institute and if politicians feel they want to spend, then spend it thoughtfully on science, research and infrastructure.

Let us become the Hollywood and Silicon Valley of food.

Federated Farmers has not stood still.  Internationally, through the World Farmers Organisation and though our Government, we are pushing the trade agenda.  The Trans Pacific Partnership is a shining opportunity for this country to light the economic afterburners, so long as tariffs and protectionism are dealt to.

Domestically, our Sharemilkers and Sharemilker Employers have agreed to delete the draconian set-off clause.  This has been a source of bad blood negatively affecting sharemilking.  Its deletion forms part of a wider push to reinvigorate this vital ladder into farming, especially in this, the UN Year of the Family Farm.

The legal outcome in Horizons since we last met proves that old saying, “losing a battle to win the war.”  It also proves how Federated Farmers has the back of farmers.

Independent research by Nimmo Bell confirms every fear HortNZ and Federated Farmers had about the Environment Court’s version of One Plan. 

We can give thanks that Horizons councillors and senior managers also came to realise there were fundamental issues with the Environment Court version.  They used the time our joint legal action created to act and which the High Court then subsequently endorsed.

This was a true community effort so our thanks also go to the help local businesses, farmers and DairyNZ gave in saving jobs, businesses and farms.  What we have now will do more for the environment so it becomes a win-win but it shouldn’t have taken so many years to get there.

That’s one region down and we have other water plans like that in Canterbury.

My advice to councils is not to pre-determine the outcome but to genuinely use the collaborative process.  There is no shortcut to an enduring solution which works.  It is not about putting in place what council staff thinks the community needs, but it is what an informed community wants.  It needs to be informed by the peer reviewed science in combination with local expert knowledge. 

Federated Farmers is a partner for things that make sense in this land of milk and honey of ours, but we are not scared off fighting the farmer’s corner for what is right.

So expect water, the environment and taxes to feature prominently in this General Election year. 

Given Federated Farmers initiated the policy discussion around modern water storage we know our land of milk and honey needs water.  More so as the rain stays away and soil moisture deficits increase.

As Minister Guy says, “we don’t have a water shortage issue just a water storage issue.”  You cannot have a land of milk and honey without water, so let us go from here to challenge misconceptions and prove to our fellow Kiwi, just how responsible we are in managing it.

ENDS

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