Hon John Key
Prime Minister

2 July 2009
Speech

Speech: Federated Farmers National Conference

Thank you very much for inviting me to your One Event National Conference.

I’d like to start by acknowledging your President Don Nicolson, the Board of Federated Farmers, and those of you who have travelled to be here from farms and rural communities all over our beautiful country.

It’s a great pleasure to be speaking to your annual conference once again, and it’s an honour to be speaking as your Prime Minister.

If I can look back for just a moment, I’d like to repeat a few words I said when I addressed your annual conference two years ago.

National and Federated Farmers share many of the same values – a firm belief in free enterprise and individual responsibility, a deep respect for property rights, a realisation that governments don’t have the answer to every problem, and a conviction that hard work, initiative, ambition, and success should be encouraged and celebrated, not taxed and regulated out of existence.

Those are very much the values we are bringing to this Government. And – despite the global recession and the difficult economic times we face – they are very much the values that will drive us in the years ahead.

I know you had a busy session yesterday and that Agriculture Minister David Carter spoke about many of the issues you are concerned about and that the Government is working hard on.

I don’t want to go over too much of the same ground, but I do want to touch on some of the challenges and opportunities that I see farming facing in the years ahead, and talk further about some of the larger initiatives we have announced in recent months.

As you know, the National-led government views agriculture as a key driver of New Zealand’s economic engine.

We value the contribution that farmers make to our economy, our lifestyle – and the Crown accounts.

When things are going well on our farms, this flows through into the small towns, the provincial cities, and into our big cities.

Conversely, when the primary sector sneezes, the New Zealand economy catches a cold.

It’s fair to say that – just like all developed countries – New Zealand is facing some real challenges at the moment.

But despite these difficult economic times, I am very optimistic about the future of farming and the future of our economy.

Because even though many Kiwis – and many farmers – are struggling, we need to look beyond this recession and focus on the longer term opportunities we face.

The high-quality products you grow and produce are one of the keys to our recovery and our future prosperity.

During this recession, demand for food has declined far less than demand for manufactured goods.

And despite this recession, the middle classes in China and India are continuing to grow.

As they grow, their appetite for high-quality food will also grow.

New Zealand is well-placed to feed that appetite.

We have a temperate climate, quality land, relatively abundant water supplies, and the world-class expertise and know-how of our farmers.

We are well-positioned on the edge of Asia, and have a growing number of free-trade agreements with countries in the region.

We have a clean and green brand, and a reputation for producing safe, high-quality food.

Our challenge as a government, and your challenge as farmers, is to make the most of these competitive advantages and the extraordinary opportunities they present.

If we succeed, agriculture will play a critical role in lifting New Zealand’s productivity, the value of our exports, and the growth levels of our economy.

That won’t necessarily be easy.

Other countries are increasing their agricultural production and positioning themselves to compete with us in our markets.

What’s more, after several years of expansion and intensification, our farmers have to contend with pressures on the resources they rely on – land, water, and – despite rising unemployment – even skilled workers.

And all of this is happening in the context of a world where consumers are increasingly aware of carbon footprints, climate change, and environmental performance.

So if New Zealand is to meet these challenges and make the most of our opportunities, we need to play to our strengths.

We need to harness the experience born of generations of farmers.

We need to make the most of our cutting-edge technology and know-how.

And we need to protect our environmental credentials.

All these factors will play a part in differentiating what New Zealand produces and ensuring better prices for your products.

The question, of course, is how this is best achieved.

The Government has an important role to play in answering that question, and I’d like to take a few minutes outlining what we are doing.

There is no one big idea we can implement to make the most of our opportunities in agriculture – or, for that matter, in any industry.

But there are hundreds of small, relatively unexciting, pragmatic, but important things we need to do.

Individually, these things may not seem to make much difference.

But when you take them together they will have a significant impact.

From working to remove barriers to free trade, reforming the Resource Management Act, amending the Building Act, and reducing compliance costs for small businesses.

Right through to bonding vets, doctors, nurses, and teachers in hard-to-staff rural areas, boosting investment in State Highways and broadband, and allowing trucks to carry larger loads.

These and many other things are important and we are driving progress on them.

But there are three larger initiatives the Government has announced in recent months that I would like to explore in more detail today:
• The Primary Growth Partnership,
• Our plans for tackling climate change, and
• The Water and Land Forum.
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Our primary sector has a long history of continuous improvement.

Doing things smarter on and off the farm has boosted production and the value of our agricultural products.

This in turn, has driven better returns to farmers and growers, and to our economy.

From historical developments such as refrigerated shipping, aerial topdressing, the adoption of electric fences, and the boning out of slaughtered meat, to more recent successes such as the development of ZespriGold kiwifruit and significant gains in lamb weights over the last decade or so.

Just the other day I was told that Fonterra has developed a new process for making mozzarella cheese that cuts the time down from three months to twelve hours.

That’s half a day from cow to pizza.

We believe that the success, the know-how, and the innovative thinking in our agricultural industries provides a massive opportunity for New Zealand, and that there is capacity for even bigger gains in the future.

And because our agricultural industries have the scale, the market share, and the supply chains to be truly competitive on the world stage, we believe the government has an important role in helping farmers make these gains.

That’s why in this year’s Budget we announced the Primary Growth Partnership.
The Partnership is aimed at driving innovation and doing things smarter right across the primary sector value chain.
From education, research and development, and product development, through to commercialisation, market development, and technology transfer.
PGP is a bigger commitment than the Fast Forward Fund which it replaces. It is also less complicated.
As David outlined yesterday, Budget 2009 provides $190 million of Government funding over four years for PGP.
It will start at $30 million this year; go to $40 million next year; $50 million the year after that; rising to $70 million per year ongoing from 2012/13.
Funding will be increased as industry shows capacity and the need to invest even more.
With a matching commitment by industry, that’s up to $140 million a year that will be invested.
There will be five sections of funding with each proportioned a dedicated amount.
The rest will be contestable.
These sections are:
1. Pastoral (including wool) and arable production;
2. Horticulture;
3. Seafood (including aquaculture);
4. Forestry and wood products; and
5. Food processing (including nutriceuticals).
In addition to these five sections, $5 million will be proportioned for Greenhouse Gas research – and I'll talk more about that shortly.
PGP is an ambitious project.
And it is a true partnership between government and industry
Its priorities and strategic direction will be led by the industries that choose to be involved.
The more that industries put into each section, the more that government will fund it.
Its success will be determined by how much you support it.
So our challenge to you and to farmers all over the country is to get together and contribute to the fund.
By working together, we have a better chance of developing the innovations we need – the aerial topdressing of tomorrow – to make the most of our commercial advantages, drive higher value products, and boost farm returns in the years to come.

An area where innovation will be increasingly important is in our response to climate change.

New Zealand’s greenhouse gas profile, where the bulk of our emissions come from ruminant farm animals, is unique.

If we can make real gains in reducing agricultural emissions the payoff to farmers and New Zealand’s economy will be – relatively speaking – much larger than for any other country.

That’s why we are taking climate change seriously, and that’s why a major component of the Primary Growth Partnership will be focused on tackling agricultural greenhouse emissions.

We have always been clear that agriculture will be part of New Zealand's emission reduction efforts.
Equally, we have always been clear that there must be effective and affordable technology that allows farmers to reduce emissions without reducing productivity.
That’s why, last month, we announced that the Government is establishing a Centre for Agricultural Greenhouse Gas Research.
The Centre will develop technologies that reduce emissions and improve on-farm efficiency and productivity.
We want to be world leaders in the field of agriculture greenhouse gas research and development for one important reason – because we have to be.
The Centre will have three areas of focus:
1. Methane from farm animals and waste systems,
2. Nitrous oxide from farm animals and nitrogen fertiliser, and
3. Soil carbon from agriculture and horticulture.
We have allocated $5 million dollars a year from the Primary Growth Partnership for the centre.
It will also be able to bid with industry partners for PGP's additional contestable funding.
Just as importantly, we are exploring how the Centre can be expanded internationally.
An international centre for research on agriculture greenhouse gas emissions can provide a platform for broader engagement with the international community.
It can also allow New Zealand to make a vital contribution to the challenge of climate change.

The Centre will be a key part of our sensible and pragmatic approach to responding to climate change.

We need to make sure that our efforts to tackle emissions don’t simply result in key sectors of our economy shutting down and exporting jobs overseas.

We need to balance our environmental responsibilities with our economic opportunities.

Our review of the Emissions Trading Scheme is firmly focused on this goal.

As David mentioned yesterday, the select committee reviewing the Emissions Trading Scheme is due to report back to Parliament in the next month or so.

In the meantime, the Government has delayed some of the dates that the forestry sector had to meet under the current legislation.

The review is very important and we await its findings with great interest.

We have made it very clear that we want a more balanced emissions trading scheme than the one Labour put in place.

It’s also important that our ETS is well aligned with Australia’s to ensure that our businesses, our farms, and our consumers do not face a comparative disadvantage.

While we wait for the select committee, the Minister for the Environment, Nick Smith, is kicking off a series of public meetings around the country on New Zealand's 2020 greenhouse gas emissions target.

Setting a 2020 target for emissions reduction is an important part of our international obligations.

We have already set a long-term goal of 50 by 50 – reducing New Zealand's emissions to 50% of 1990 levels by 2050.

Setting an interim target for 2020 requires careful consideration, especially in the recession.

The target needs to be realistic and achievable, and it must be both environmentally effective and economically efficient.

It’s important that Federated Farmers and your members have a say on the target by attending the public meetings and contributing to this process.

The third area I want to emphasize today is every bit as important to farmers as innovation or climate change – our precious water.

If we want to grow our agricultural output and the quality of the goods we produce we need water.

We simply can’t do without it.

New Zealand has plenty of water.

But it’s not always in the right place at the right time.

Our fresh water resources are the envy of many other countries, and they are one of the keys to our competitive advantages in agriculture.

About 600,000 hectares of farmland are irrigated and – depending on how you calculate it – at least three times that area is suitable for irrigation.

That’s a huge potential gain we can make in farm productivity.

The problem is that the management of our water resources has not kept up with the extra pressure.

In many parts of the country, water quality is poor or deteriorating, and demand is outstripping supply.

This has already created real costs, such as the $450 million that has been allocated over the next 10 to 20 years to clean up Lake Taupo, the Rotorua lakes, and the Waikato River.

That’s why we are establishing the Land and Water Forum to help set the direction of water reform.

The forum is a collaborative approach involving major water users in agriculture, industry, and power generation, as well as environmental and recreational groups.

And that’s why we are looking at including water in the government’s plans for infrastructure development.

I have already indicated that if the numbers stack up, and if farmers are on board, I can see a role for the Government in assisting with large-scale water storage infrastructure in Canterbury.

A similar approach may be a possibility in other parts of the country.

These are just some of the many areas where the Government is taking significant steps to help farmers and our agricultural industry make the most of our opportunities.

But as people who work the land in all conditions, at all hours, through droughts and floods and snowstorms – far from the world of politicians and bureaucrats – you know better than anyone that there is only so much that the government can do.

We do not – and never will – have all the answers.

When it comes to on-farm innovation, when it comes to protecting our environment, and when it comes to using our water resources as sensibly as we can, by far the greatest responsibility falls on you.

And so, as you wrap up your conference today, and head back to your farms, your families, and your communities, I want to leave you with a final thought.

The high-quality agricultural products you produce are one of New Zealand’s great competitive advantages.

The National-led government wants to work with you to make the most of the opportunity that this competitive advantage presents for New Zealand’s future.

If we succeed, we have much to gain.

Agriculture will continue to play a critical role in lifting New Zealand’s productivity, the value of our exports, and the growth of our economy.

To help achieve these goals, the Government is taking many actions from regulatory reform through to boosting infrastructure.

We have launched the Primary Growth Partnership.

We are tackling climate change by improving the Emissions Trading Scheme, setting an emissions target for 2020, and establishing an ambitious Centre for Agricultural Greenhouse Emissions.

And we have started on a path to reforming the management of our fresh water resources for the benefit of farmers and all New Zealanders.

But – at the end of the day – we know that the future of New Zealand’s agriculture is not up to us.

In so many ways that future is in your hands.

And that future will only be as bright, as innovative, as clean and green, and as prosperous as each and every one of you wants it to be.

Thank you very much.

ENDS

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