Clark: Federated Farmers – National Council
Tuesday 7 November 2006
Rt Hon Helen Clark
Federated Farmers – National Council Meeting
Tuesday 7 November 2006
Thank you for the invitation to address your National Council Meeting.
I know that at this annual meeting you set the direction for the organisation for the year ahead.
Year in, year out, there are many issues on which New Zealand’s agricultural producers and the government work together – ranging across trade and biosecurity, to science and research, environmental management, upskilling the workforce, and much else besides.
It is important both for the government and for Federated Farmers that we have a solid working relationship, because we need each other to get the best results for our country and for our farm business.
The agricultural industries have long been the greatest contributors to our export earnings. Indeed since the mid 1980s, agriculture’s contribution to those earnings has risen, while manufacturing’s share has shrunk.
The productivity growth in agriculture has exceeded that of all other sectors, apart from communications and transport over the last twenty years.
Agriculture has also developed large scale organisations with global market reach. It’s notable that the market capitalisation of our five largest meat and dairy co-operatives is greater than that of the entire New Zealand Stock Exchange.
Put simply, agriculture has done well for New Zealand. But, of course, like all sectors, it faces its challenges in staying competitive and increasing the value of its production.
The recent Food and Beverage Taskforce Report emphasised the need to extract more value from our food industry.
That requires more R & D, more innovation, better design and branding, and stronger market development across the spectrum.
Smart strategies to lift the value of our agricultural industries also help them and our whole nation to prosper under a stronger exchange rate.
Indeed to be a first-world, high performing economy in the 21st century, we need to plan for a future in which higher exchange rates may well become the norm.
Government-industry partnerships have a role to play in making these changes happen.
Government is a significant investor in science and research, and can use the tax system to make private sector investment more attractive.
And for the land based industries, the government’s role in opening up fair market access is critical – because it is these industries which face the greatest trade barriers worldwide.
Our government has been resolute in advocating through the Doha Round against agricultural export and domestic subsidies, and for improved market access.
The Round is currently suspended, awaiting the political will of major players to get it back on trade.
Success in the Round will mean a lot to New Zealand and to farmers. But it will not be the end of the trade barriers we face.
Already, as concern about what I consider to be the very real threat of climate change is mounting, new challenges to our exports are emerging which we must be in a strong position to refute.
I refer of course to suggestions that food which is transported across the world should be penalised – the so called “food miles” issue. There are suggestions of global warming premia being placed on exports from afar into Europe.
The government is going in to bat on these issues on the facts.
Our advice is that the carbon emissions from New Zealand’s meat and dairy industries, including the process of shipping them around the world, are considerably less in total than the carbon emissions which come from producing the same products in Europe itself.
Indeed, a strong case could be made for asking for a premium price for New Zealand products because of the less energy intensive processes we use.
I do believe that sustainability in our agricultural industries and across our whole economy is going to be a priceless asset for New Zealand in the future.
There is growing awareness that the patterns of consumption in the developed world go well beyond what our small planet can accommodate.
We are living as though we have the resource of three planets to use – not one.
These problems will worsen if the patterns of consumption in fast growing developing economies mirror our own.
The rumblings we hear now in our distant markets could become a roar in these circumstances – and to our great detriment.
Therefore the importance of positioning New Zealand as a leading, sustainable food producer and nation couldn’t be greater for our economic future.
To do this we need to be seen to be taking environmental issues very seriously and demonstrating the genuine sustainability of the goods we sell.
In my view, there is no greater environmental issue facing us today than climate change.
I know that there are some scientists who claim human activity is having a negligible effect on the climate.
Let me blunt.
Those views are now largely irrelevant.
Even if they don't accept the current evidence, the rest of the world and our key markets, believe it IS happening.
The Stern Report, commissioned by the British Government and released last week, concluded that the scientific evidence on climate change is overwhelming.
It also stated that climate change presents very serious global risks, and demands an urgent global response.
Taking strong action now must be viewed as an investment in the future. The less we do now, the greater the difficulty and costs of adapting to climate change in the future.
At the moment, even in some countries which haven’t ratified Kyoto, carbon has a price.
In both the United States and Australia, carbon is being actively traded in the land based sectors. In particular in the USA, farmers are seeing emerging opportunities in changing land use such as going to ‘no till’ agriculture and growing biofuels.
Agriculture is a priority stakeholder for the government on climate change.
It is the sector most vulnerable to changing climate, from adverse events to increased biosecurity risks.
For example, the 1997 drought cost the economy $1 billion and the 2004 floods cost $300 million. There is reason for deep concern about the pressures a changing climate will place on our ability to farm.
Agriculture, which accounts for about half of New Zealand’s greenhouse gas emissions, has everything to lose from climate change and everything to gain from concerted action.
This isn’t about blame. It is about managing the most difficult global challenge we face.
Developing new technologies in agriculture, which can be adopted around the world, is an area where New Zealand can make a major contribution to the global response to climate change. It is also potentially a very good business opportunity for the agriculture sector.
Although New Zealand’s agricultural greenhouse gas emissions have grown on average 1.5% per annum since 1990, greater efficiency has been leading to lower emissions per unit of product.
For dairying, in 1990, a kilogram of milk solids produced emissions of approximately 8.5 kilograms of CO2 equivalent, whereas in 2002 the same kilogram of milk solids only produced approximately 7.5kg CO2 equivalent.
These gains have come through farming animals more efficiently, and further gains are possible. So farmers can make a big difference, while at the same time reducing input costs and improving output.
There is a similar story with fertiliser.
The average dairy farmer spends 43 cents on fertiliser for every kilogram of milk solids, but the best farmers can get this down to 30 cents per kg milk solids.
Fertiliser plans can produce annual savings of $5,000 to $10,000 per dairy farm.
I have seen figures attributed to one fertiliser company, suggesting that 83 per cent of Waikato dairy farms apply more phosphate than needed.
The government expects there to be a drop in fertiliser sales of 30-40% over the next five years which will save money for farmers, reducing both nitrogen leaching and nitrous oxide emissions.
It is sometimes said that New Zealand’s greenhouse gas emissions are too small to make a difference. But even the United Kingdom is responsible for only 2% of global emissions.
That hasn’t stopped the UK being a leader in responding to the climate change challenge, with a whole raft of interventions. At the same time it has experienced good economic growth.
If we are to obtain international agreement that action on climate change must be taken, every country needs to play its part.
The European Union accounts for more of our trade than the United States, and Japan is our fourth largest trading partner.
Both the EU and Japan have been leading participants in the Kyoto Protocol and so we are in step with these major trading partners, as well as with the more than one hundred other countries which have ratified the Protocol.
I have little doubt that early movers on the question of climate change will be those who are able to best take advantage of the opportunities.
We need to start acting now to protect our economic and environmental interests. That means adapting the way we farm to avoid the worst costs from changing climate conditions and more adverse events.
It also means doing what we can to reduce our emissions to protect our ‘clean green’ image and make our contribution to the global effort.
That is a ‘hard ask’ for agriculture as there are no quick fixes. The government acknowledges this.
Climate change is a key part of wider sustainable land management.
Many things we do to reduce climate change will have benefits for water quality, soil erosion and flood protection, and vice versa.
Water storage will be critical in adapting to climate change.
The government expects, over time, that all sectors of the economy should play a fair and equitable part in the national response to climate change, reflecting the fact that some sectors will be able to achieve emissions more easily than others.
For agriculture, reducing emissions will be difficult as there are limited short to medium term technological solutions for reducing methane, other than a reduction in stock numbers.
However where there are technological solutions, such as for nitrous oxide, we should be implementing them.
There are some obvious areas where we can and should do more, such as research. We will be seeking your views on how we can work together to build on the excellent foundations already laid down by the Pastoral Greenhouse Gas Research Consortium.
We want to see trees fully integrated into land use to improve sustainability. The government will be pursuing measures to encourage tree planting. Those measures will need to be balanced with measures to address deforestation.
No final decisions have been made. The government is looking for a balanced package of measures that will include both incentives and disincentives.
MAF is in the process of finalising for government an options paper on a plan of action around sustainable land management and climate change.
I understand that Jim Anderton and David Parker have already held preliminary meetings with agriculture and forestry leaders, and more are planned this month. I hope Federated Farmers will participate fully in the dialogue around these issues.
I was very encouraged to see the emphasis in your President’s speech today on achieving greater sustainability in farming.
Charlie focused on the problem of nutrient loss, and has proposed a “ten by ten” goal: to achieve a ten per cent reduction in nutrient loss within ten years.
I hope the Federation will accept the challenge, and act to promote the practical initiatives Charlie has outlined to improve the environmental sustainability of farming, as many farmers already are.
I emphasise again that our future market prospects will be linked to the substance we can give to our country’s clean and green image.
We need to position New Zealand as the world’s leading sustainable agricultural producer. This can be achieved through government-industry co-operation.
In inviting me to speak today, Federated Farmers expressed its genuine interest in improving the working relationship with government.
By coming today I am reinforcing our government’s willingness to reciprocate. We are full cognisant of the critical importance of the sectors you represent for New Zealand, and we know that working together we can build a stronger, more sustainable economy for our country.