Story-telling: Getting to the truth about NZ agriculture

The time is right to be telling the story of New Zealand food production. But what should we say? And are our marketers up to the job?

Is it a perfect storm or are we merely being buffeted by the winds of change? Is this some kind of tipping point? It's an extraordinary moment in time for New Zealand agriculture, with its future economic development at stake. Yet the discussion is more around what shouldn't happen rather than finding a strategy to achieve the prosperity most New Zealanders want.

The Trans Pacific Partnership Agreement (TPPA), Foreign Direct Investment (FDI) and the state of the environment are all part of the mix. Add climatic variability and consumer whim (the more politically correct term for which is ‘preference’) and the moment is right for a national debate based on facts, evidence and data, rather than half-truths and lies (the more politically correct term for which is ‘misunderstandings’).

The underlying problem is perception and a lack of understanding about the impact of alternatives. The fundamental problem is the lack of knowledge about what the future might bring. Forecasts, economic or climatic, make the point – they are increasingly wrong (the politically correct term for which is ‘not achieved’).

The potential exists to tap new sources of money. TPPA has the potential to bring an extra $2.7 billion to New Zealand’s GDP by 2030. That is, of course, an economic forecast and based on assumptions that might not come true – but whatever is gained is new money that would otherwise have been taken by other countries in the form of import tariffs; it will be circulated and invested in infrastructure and support services on farm and eventually by the Government in things which benefit New Zealand people, including infrastructure and support services...

Then there's FDI. For years OECD reports have suggested that New Zealand suffers from a lack of acceptance of money from overseas, and recent interest from Asia has resulted in a jingoistic reaction. Yet the latest report on investment in dairy farms from overseas has shown that America is the biggest contributor. Overall, Canada has been the biggest investor recently and the investment has been in forestry.

This new money results in new infrastructure, new jobs, and sometimes new markets – which is certainly what Silver Fern Farms (SFF) is anticipating. The proposed investment by Shanghai Maling not only allows SFF to get rid of debt (thereby removing $30 million of interest payments from the accounts) but also increases the value of the company by over seven-fold (from 35c a share to 257c before any dividend payment). This increase reflects the value of the brand, which represents quality and safety of product. Shanghai Maling has indicated that it wants to put SFF products into its premium niche.

It has also indicated that the ‘deal’ is not exclusive, meaning that if premium markets other than China want to pay more for the product, those markets will be supplied.

The question for New Zealand should be how many more ‘premium markets’ might there be to explore? The TPPA is fundamental in terms of access, but are New Zealand marketers ready for the challenge?

Successful marketing is increasingly about capturing the imagination. Not through gratuitous use of ‘cute’ (check Martin van Beynen’s column), but the real New Zealand primary production of protein story: free range, pasture-fed, high animal welfare, high human welfare, high environmental standards. It is taking some time for this story to emerge through our companies, yet it's the one for which an increasing number of people are prepared to pay.

There are undoubtedly detractors for each of the components.

Free range and pasture-fed is under debate because of the increasing use of herd shelters and supplements. However, almost all dairy herds in New Zealand have access to grass for considerably more days than required to meet the free-range definition in the USA (120 days a year) or UK (180 days a year).

In addition, forage makes up the bulk of the diet whereas in the USA it must be ‘at least 30%’. The use of supplements in addition to good pasture grazing management increases milk production and increases nitrogen use efficiency – less nitrogen is lost per unit of milk production). The infrastructure enabling efficient management of supplements on farm (shelters, storage bunkers and feed out wagons) and in New Zealand (the transport firms have geared up) has reduced the impact of the droughts and floods since 2007.

For the meat industry, sheep are pasture-based and only a very small proportion of the beef herd is raised or finished in feed lots. The fact that 70% of beef has its origins on a dairy farm increases the efficiencies of the industry, particularly in greenhouse gasses (the FAO estimates a factor of 3.7 times more efficient).

New Zealand is ranked ‘A’ in animal welfare, with only three other countries of 50 worldwide: the UK, Austria and Switzerland.

High animal welfare in New Zealand involves no use of hormones to increase milk production (e.g, as allowed in the USA) and less than 1% of the beef herd is raised with the use of growth hormones (in comparison with 40% in Australia and the majority in the USA). New Zealand is the third lowest user of antibiotics in animal production in the world and their use is under veterinary prescription. Many countries allow the prophylactic use of antibiotics.

High human welfare is debated because agriculture involves long hours, but the minimum pay rate is high, and the Holidays Act and Occupational Safety and Health Laws are in place to protect workers’ rights.

High environmental standards are also being disputed because of what is perceived as deterioration in soil and water quality. The State of the Environment Report released by Ministry for the Environment and Statistics New Zealand in October indicated a critical issue in erosion caused by human activity and a significant issue in compaction.

Between 1998 and 2013 total nitrogen has increased 12% in rivers and can, in conjunction with sunlight, phosphorus and ‘lack of flood events’ trigger algal blooms. Water clarity improved in two-thirds of monitored sites, despite erosion. And Escherichia coli concentration was below what is considered to be a problem for wading and boating at 98% of sites.

The use of animal shelters can assist with soil and water problems as animals can be removed from pasture during bad weather, thereby avoiding pugging and compaction. In addition, the dung and urine captured in a shelter reduces the impact of excreted nutrients on the environment. It is of note that median nitrate-nitrogen dissolved phosphorus and E. coli concentrations were reported to be higher in rivers flowing through urban environments than through pastoral land cover (but the distance of rivers through urban environments is short in comparison with pastoral areas).

So the story is there for the selling. Marketing it to achieve a premium for product in new markets means understanding the realities. It means considering the alternatives and welcoming the opportunities that the TPPA and FDI presents. It means analysing the information and choosing a path in partnership with others.

A tipping point, according to Canadian journalist and author Malcolm Gladwell, is ‘that magic moment when an idea, trend or social behaviour crosses a threshold, tips, and spreads like wildfire’. Facts, evidence and data assist with making sure that the magic moment leads to a prosperous future, the politically correct term for which is economic development.