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Sutton Speaks To FF Meat and Fibre Council

Hon Jim Sutton Speech Notes

Federated Farmers Meat and Fibre Council, Duxton Hotel, Wellington

Chairman Chris Lester, ladies and gentlemen, thank you for inviting me to speak with you today.

This is a relatively good time to be a farmer. The weather has been reasonably well behaved. Prices are fairly good. The low Kiwi dollar is causing a boost in returns. This is a happy conjunction of events that doesn't happen too often in a farming career.

Of course, the pessimists can always find a dark lining to any silver cloud.

The low Kiwi dollar is lifting the price of imports, especially fuel. There is a shortage of labour in rural areas. Farmers are still carrying fairly high levels of debt.

And then there is the uncertainty created by the restructuring of producer boards.

The Government can, unfortunately, do nothing about the weather and little about the exchange rate.

However, this Labour-Alliance Coalition Government is more active than previous governments in creating a supportive environment for exporters and rural communities.

The Sustainable Farming Fund is one example of that.

I promised before the election that such a fund would be set up. Now it has, with about $5 million available for the first year. Applications for projects totalling five times that amount have been received after only a short notification period. I hope the first grants will be made within the next month, and that projects will be underway early next year.

The innovation that those applications show is exciting. The benefit they will bring to the communities implementing them will be worth many times the investment by Government and those communities.

The Labour-led government is also working hard to ensure access to international markets is maintained and improved.

As well as being Agriculture Minister, I am also Trade Negotiations Minister. The two portfolios link together well as more than 60 per cent of New Zealand's export earnings come from the primary production sector.

I make no apology for that.

There seem to be many people ? including the previous Government's senior ministers ? who think that agriculture is a dying industry, a sunset industry on its way out. They don't think it has a place in the modern, progressive, 21st century country we all want New Zealand to be.

Just goes to show how wrong some people can be.

Agriculture is here to stay. It is a dynamic, exciting industry. Agriculture will continue to underpin this country's future export earnings and already leads our knowledge economy.

Farmers and orchardists have long paid for research and development in their sectors. And they are quick to take up new advances in technology ? such as that developed by Richmond meat company which means that meat products can be traced back to individual farms and animals using computers and dna testing.

Farmers and growers are quick to pick up and promote new varieties of fruit and vegetables ? such as the gold-coloured kiwifruit which Zespri is pouring into overseas markets.

Agriculture is our comparative advantage. We can produce milk, meat, wool, timber products, certain varieties of fruit and vegetables, cheaper and better than anyone else in the world.

I note that, since we removed all protection and price support from agriculture in the mid 80s, its contribution to our GNP has actually risen significantly, from 14 percent to 16 percent, as farmers have adjusted land use and product mix to reflect changes in consumer preferences.

To maintain access to lucrative markets sometimes requires drastic action. Taking the United States ? the world's largest economy ? to the World Trade Organisation's disputes panel for its lamb safeguard was one of those "drastic actions". Such action is expensive. And there can be a secondary price in goodwill.

The panel's initial finding has been released to the parties to the dispute. This is supposed to remain confidential till the final ruling has been published ? some time next month ? but I am sure you're all aware that the initial ruling is in favour of the New Zealand and Australian case.

This is good, but obviously we shouldn't count our chickens before they hatch ? or our lambs before they're sold. Rulings have been known to change between the initial draft and the final version. Negotiating market access is the best contribution the Government can make to improve farmers' lives.

But agriculture is your industry. And while the Government is determined to be as supportive as possible, it is important that you, the stakeholders, take the leadership role in deciding the future direction of your industry.

It seems to me that much of the reform going on in the Meat Board and the Wool Board are driven by those boards themselves. Many farmers appear to be largely limiting themselves to just expressing discontent.

Your industries are worth more involvement than that!

I know we are not always going to agree, your organisation and I. That's part of life. But it is really important that proposals are debated properly by all those affected by the decisions ultimately made.

I am pleased to hear that wool growers had taken on board concerns about the implications for research and development in the McKinsey proposals. I remain convinced that a 1 per cent levy is not enough to keep New Zealand wool at the leading edge.

There is intense competition from substitute fibres such as synthetics and cotton. The wool industry needs to be certain it has got its sums right when making decisions on funding for off-farm research and development investment.

I know some have questioned my "interference" in woolgrowers' business by raising these points before the Wool Board AGM.

But growers need to be aware that funding for off-farm wool R&D comes from three main sources: private commercial funding ($6.9 million to the Wool Research Organisation of New Zealand last financial year); government funding through the Foundation for Research, Science and Technology ($4 million to WRONZ last financial year); and levy funding via the Wool Board ($3.8 million to WRONZ last financial year).

Government policy is that R&D should be a partnership with industry. Government investment in any mature industry is dependent on the industry's own willingness to invest. If industries aren't willing to maintain their investment in R&D, then why should the taxpayer? There is a long queue of people who are enthusiastic about the potential of their respective industries lining up for a piece of the Public Good Science Fund.

So if woolgrowers intend to cut the amount they spend on wool research, then they should not expect the Government to maintain its contribution regardless.

Farmers must also get involved in the debate about whether to form a merged Meat and Wool industry good organisation, rather than just let it happen through inertia. The concept may very well be a good one, but farmers need to ensure that they can shape the future structure and direction such a body moves in.

Another area I would commend to farmers to pay attention to is the image of farming that is presented to the rest of the population.

You and I both know that farming can be an exciting, satisfying, and worthwhile industry to work in. But we need to work to make it an attractive career choice for young people.

Two days ago, I was rung by a reporter from the Christchurch Press, who wrote a story about how the boom in agriculture meant there were now about 2000 jobs going begging in the southern South Island's rural sector.

I'm not so sure that's good news.

Farming can be a good career. Agriculture has a good training culture, and I am very supportive of that.

But I am concerned that a widespread perception of unacceptable employment conditions is turning young people off. Perhaps farmers need some training themselves on how to be good employers?

It was all right when I started farming ? most people of my generation were working on family farms. We worked like slaves, but we had no other expectations.

Young people today expect fair rates of pay, recognition for the work they do, and reasonable leisure time. I don't think my generation expected that. We anticipated our rewards when we graduated to farm ownership.

There have been too many horror stories about employment conditions on farms. They are keeping young people away from farm doors for all those jobs that are going begging. Wildly exaggerated complaints about the Employment Relations Act don't help either. This is a moderate piece of legislation, widely acceptable in an international context. Prospective employees will draw their own conclusions about employers whose rejection of "good faith" is too dogmatic.

I would like you to take the lead in making farm work and farm management a career opportunity worthy of attracting some of our brightest and best. The future of our country depends upon it.

In closing, I'd like to thank you and all farmers for the sterling effort agriculture is making in its leadership of the export-led recovery.

The Government is aware of the hard work the rural community puts in, and we are working to be as supportive as possible.

Thank you and I look forward to answering any questions you may have.

Office of Hon Jim Sutton

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