New Zealand Institute of Primary Industry Management

May I begin by greeting everyone in the languages of the realm of New Zealand, in English, Māori, Cook Island Māori, Niuean, Tokelauan and New Zealand Sign Language.  Greetings, Kia Ora, Kia Orana, Fakalofa Lahi Atu, Taloha Ni and as it is the evening (Sign)

May I then specifically greet you: Andrew Macfarlane, President of the New Zealand Institute of Primary Industry Management and fellow Institute Councillors; Members of the Institute and in particular foundation and life members; Hon Damien O’Connor MP; Distinguished guests otherwise; Ladies and Gentlemen. 

It has been with great pleasure that my wife Susan and I have accepted the invitation to attend the 40th Anniversary Dinner of the New Zealand Institute of Primary Industry Management here in Blenheim.

I would like to take an opportunity to speak on the changes that New Zealand’s primary industries have undergone in the last 40 years and to outline some of the challenges that lie ahead. 

I will say at the outset that I am not a farmer and unlike my wife Susan, I do not have a green thumb.  But in the three years since I was appointed as Governor-General, I have had a strong connection with rural and provincial New Zealand. A decade as an Ombudsman likewise sensitised me to a number rural issues.

We have travelled from the Far North to the Far South and from the Far West—the West Coast that is—to the Far East—the Chatham Islands.  Many of those visits have been an opportunity to connect with people working in New Zealand’s primary industries.   We have toured sawmills, fish processing cheese factories and farms as we have moved throughout New Zealand and elsewhere.

And while I might not know a lot about forestry, I can with all honesty say that with the number of trees I have planted both here and overseas, I will have certainly done enough to earn more than a few carbon credits!

But seriously, as well as seeing New Zealand’s primary industries first hand, as Governor-General, I have accepted the patronages of the Auckland Agricultural and Pastoral Association and New Zealand National Fielddays Society and including the privilege of opening the 2008 Fielddays.  Susan is also the Patron of Rural Women New Zealand and has addressed its national conferences as well as attending a number of other meetings.

The theme of this year’s conference is Riding the Wave—Weathering the Storm.  The title is highly topical, not just due to the challenges of the present day, but also from an historical perspective.  Even a cursory examination shows that riding waves and weathering storms have always been part and parcel of the history of New Zealand’s primary industries.

The last 40 years—the lifetime of this organisation—is a period when primary industry underwent significant upheaval.  As will be well known to everyone here, the advent of refrigerated shipping in the late 1800s transformed New Zealand’s economy to the point that in the 1950s we were known as the market garden for Britain.  This guaranteed access to the British market led to New Zealand having one of the highest per capita incomes in the world in those years. 

By the end of the 1970s this was no longer the case.  New Zealand had slipped to 20th in the OECD ranking for income per capita.  This slide was initiated by external events, but then quickened as a result of domestic policies creating a highly protected and inward looking economy. 

Externally, Britain’s entry into the European Economic Community in 1973 largely removed the preferential access our agriculture products had enjoyed.   In 1955, Britain took 65 percent of New Zealand’s exports.  By 1973, this had dropped to 26 percent and by 1990 to 7 percent.

If this wasn’t enough of an upheaval, the oil price shocks of the early 1970s pushed the prices of imported oil up threefold.  Prices for wool—a major New Zealand export—plummeted over a short period of time. 

Trade barriers and subsidies were used to protect New Zealand’s industries, from manufacturing to agriculture.  Even so, our economy was not well. Unemployment soared, debt levels rose sharply, inflation was in double digits and was curtailed only by a wage and price freeze.

From 1984, New Zealand began an unprecedented process of economic restructuring.  At the time there was agreement that change was needed, but also concern as to whether the reforms would deliver the desired results. 

Even so, the effect was dramatic and the agricultural sector in particular was one of the first to be affected.  Assistance to farmers fell dramatically, becoming the lowest in the OECD.   Essentially assistance to farmers—through price supports, tax concessions, subsidies, and advisory services—were removed over a very short period.

With all major restructuring processes, there were adjustment pains and some farmers were adversely affected.  Despite this pain, a slow recovery in farm profit began.  Farmers began to respond directly to international market signals and capital flowed into more efficient, diverse and profitable farming operations.

There was a rapid recognition that the New Zealand agriculture sector would have to find ways to diversify products, and markets – which in many cases meant farming in a smarter fashion, as well as more efficiently.  Good land was farmed more productively while marginal land was placed under forestry or retired.

Our agricultural and primary industries emerged from this period as a more dynamic, diverse, responsive and internationally competitive sector.   While tourism, manufacturing and services have grown as big export earners for New Zealand, the backbone of our economy remains our primary industries.  For example, in 2008, of New Zealand’s $36.6 billion of merchandise exports, some $23.5 billion was from the export of live animals, meat, dairy, wool, fruit, wine, vegetables and forestry .   

A key part of that ongoing success has been the foundation of New Zealand agriculture on the family farm.   The people directing the milking the of cows, shearing of sheep, herding of sheep and cattle and planting of crops or trees, have been in the thick of it, sleeves rolled up and hands dirty.

Of course, when a combined approach has proven more logical, collectives have been formed.  At one end of the scale, Fonterra, is the world’s leading exporter of dairy products, responsible for more than a third of international dairy trade.

The primary sector has faced significant challenges in the past and as your conference theme rightly notes there are many more currently facing the industry.  I will not focus on the very immediate challenges but will  instead, focus on three more longer-term and interrelated issues of particular relevance to Institute members. 

You will not be surprised to hear that the first is the environment.   It is a topic that covers a gamut of issues from sustainable farming and forestry, to dealing with waste products, such as dairy shed effluent, to reducing agriculture’s carbon footprint and tackling climate change and dealing with its ramifications.

Each of these is a subject in its own right. But what is important to recognise is that while much work remains to be done in improved environmental management, there have been significant achievements.  Forty years ago, considerable amounts of waste were poured, largely untreated into our rivers and streams and into the sea.

And this was not just an issue for agriculture—municipal councils pumped largely untreated sewage into the sea.  While, for example, Auckland ended this practice in 1960  and New Plymouth in 1984,  until Wellington’s Moa Point Treatment Plant opened in 1998, about 80 percent of Wellington’s sewage was discharged untreated to coastal waters at Lavender Bay, via a short outfall.  

But we cannot rest on our laurels as public expectations toward the environment continue to evolve.  In a New Zealand context, this awakening of environmental awareness can be seen, for example, as long ago in Sir Dove Meyer Robinson’s successful campaign to save the Waitemata Harbour from sewage in the 1950s or the national Save Manapouri campaign of the 1970s.  Particularly among Pākehā New Zealanders, it reflects a growing sense of connection to the land, in many ways akin to that long expressed by Māori.   As New Zealand historian, the late Dr Michael King noted: “We have moved from the belief that the land belongs to us and to the feeling that we belong to the land.”

This change of attitude, that sees us less as owners of the land and more as its temporary custodians, has also been felt in primary industry.  With the central role of the family farm in New Zealand agriculture—where farms have passed from one generation to another—this philosophy has always been there.  But it has been given added impetus by growing awareness of the need to care for the environment.

Environmental stewardship makes sense from a number of perspectives.  As the ownership of land not only involves rights, but also responsibilities, it becomes clear that one cannot forever take from the land without giving something back.  Few farmers would want to bequeath to their children or the community, land that had been misused for short-term gain.

But caring for the environment also makes sense from an economic perspective.   The fencing and planting of riparian strips is a good example of this.  From an environmental perspective, fencing to keep stock out of waterways and proper planting to filter sediment, reduces pollution. 

But from an economic perspective, reducing the speed of run-off slows stream flows and reduces the erosion of valuable land.  With reduced flooding, and a barrier to keep stock out of streams, losses from sheep and cows falling into streams and drowning are significantly reduced. 

From an environmental perspective, riparian buffers provide shelter and food for wildlife and corridors for plants and birds. Streamside vegetation also reduces water temperatures and supplies food for aquatic insects that in turn provide food for fish. 

But from a farm management perspective, trees growing alongside streams can improve production by providing valuable shelter for stock from winter winds and shade from the summer sun.  They can also provide an alternative income source if timber trees are planted.   With the added impetus of climate change and the need to reduce carbon emissions, planting vegetation and trees has a further benefit.

Caring for the environment has also become important from a wider, international perspective.  I have already referred in passing to climate change.   As an exporting nation it is vital that our “clean, green image” matches the reality.  In politics, it is often said that it is not how things are that is important, but how the public perceives them to be that matters.  In a competitive international market place, New Zealand has already seen how environmental concerns can potentially impact on our trade.  Sometimes those concerns are genuine, but they can also be used as a ruse to restrict trade.  Once misplaced and ill-informed views gain credence, they can be mightily difficult to change.

Allied to the environmental challenges primary industry faces, is the challenge of ensuring and encouraging dialogue between town and country.  New Zealand is a highly urbanised nation, with those living in what Statistics New Zealand describes as “main urban centres”—those with more than 30,000 people—accounting for more than 70 percent of the population.   

Increasingly, fewer New Zealanders have a direct connection with rural life than was the case in the past.  This means that primary industry has to be on the front foot in selling itself, not only to the rest of the world, but also to New Zealand.   While most New Zealanders know only too well the importance of primary industry to our nation’s wellbeing, the sector cannot take as a given that urban New Zealand will immediately rally to its call or understand its issues.

This brings me to my final point or challenge, which is allied to the first two, namely that of education.  Improving environmental management while also improving productivity and profits requires people working in our primary sectors with a wide variety of skills.  Those skills include not only financial management, but also animal husbandry and environmental management.

Sadly there was a time when school leavers with average grades were often encouraged into agriculture.  While there will also be a strong element of manual labour in primary industry, the successful farmers are increasingly those with tertiary qualifications.   The primary skills of a tertiary education—being able to tackle problems by critically analysing often complex information—is as valuable on the farm as it is in business or the professions.

It is an area where members of this Institute intersect neatly with our primary industries.  So complex is modern agriculture, horticulture and forestry that no-one person can know all there is to know. As the organisation that supports the people who support the farmers, it is incumbent on your members to widen your ambit. 

Increasingly, for example, large corporate organisations are accounting not just for profit and loss, but also for their environmental impact. With time, these standards will be applied more widely.  In a competitive international market if, for example, a major supermarket chain in Britain or the United States says it wants products that meets certain standards, if New Zealand cannot meet those standards, there will be others who will happily do so. Recent issues such as the certification of Halal produced meat is a case in point. 

Farmers and other leaders in primary industry need advice and support that goes beyond simple land valuation or farm accounting. It is with interest, by looking at your conference programme, that the Institute is cognizant of these needs.   Speakers have addressed topics as varied as climate change, effluent management, farm governance and succession planning, online software, fertiliser use and rural mentors.

In conclusion, the challenges faced by New Zealand’s primary industries are many and varied.  They extend beyond the more immediate concerns of currency fluctuations or capital structures, to deeper issues of the environment, education and communication. 

But as I have noted, New Zealand’s primary sector has met equally daunting challenges in the past.  It has evolved and changed and will continue to be at the heart of New Zealand’s economy for many years to come.   In meeting those challenges, the industry’s leaders will increasingly look to members of this Institute for advice.  For 40 years this Institute has been at the forefront of supporting our farmers and other primary industry leaders.  Its members have provided sound advice on a range of industry issues and research and I am certain that with that legacy it will continue to do so.

The point was well made by my predecessor, Sir Charles, Lord Bledisloe, who took a great interest in matters agricultural.  While his comments were made at the height of the Great Depression of the 1930s, they bear an uncanny resonance with today.  He said:  “It is safe to prophesy that whatever alleviation of transient economic distresses …maybe effected by international fiscal adjustments and preferences, the victory in the inevitably fierce competition between the world’s primary producers will rest ultimately with those countries which recognise the economic value of scientific research and apply its findings without undue delay to the winning of wealth from the soil.” 

And on that note of anticipation, I will close in New Zealand’s first language Māori, offering greetings and wishing everyone good health and fortitude in your endeavours.  

No reira, tēnā koutou, tēnā koutou, kia ora, kia kaha, tēnā koutou katoa.