Enough, already, of this whingeing

IT’S TIME for small dairy infant formula exporters to get over it.

It’s almost three months since Fonterra’s false botulism scare hit the headlines, but the small exporters are beginning to sound like an old record. Their catch phrase – “we are collateral damage”, frankly, doesn’t hold water any more.

Business, whether it involves selling food or toilet paper involves risk. Economic conditions, consumer demand, quality of product and brand and reputation in the market can either make or break your business.

This time last year, everyone was clamouring for the Chinese dairy market. Reports were rife of cartons of infant formula being swept off supermarket shelves and being sold through backdoor by retailers.

This was NZ Brand Inc in action. Propped up by New Zealand’s quality and clean-green image, everyone was jumping on the bandwagon of the lucrative Chinese market. One Auckland processor was packing 300,000 cans of infant formula a month for a range of small brands.

No one is taking anything away from these small and medium dairy exporters – they are astute businesspeople in their own right. However, their success in China has only been possible as a result of New Zealand’s great dairy reputation – fostered over the years by Fonterra.

When the dust settled on the false botulism scare, it became clear Fonterra wasn’t at fault. Agreed the co-op’s communications strategy left much to be desired, but blaming it for the demise of contracts and crash in sales is a bit over the top.

During the good days, everyone was happy to ride Fonterra’s coat tails and feed off New Zealand’s clean-green reputation. Now, everyone wants a slice of the co-op because their business has slumped.

Fonterra, the world’s fourth largest dairy producer, has its reputation to maintain. It’s not the co-op’s job to protect small exporters who have piggybacked on it into the Chinese market.

Every business has its risks. The Infant Formula Exporters Association should have had a crisis management plan in place to deal with road bumps in China. They haven’t been abandoned. The Government provided $2 million in travel grants for these companies to visit key markets as part of the rebuilding process.

However, blaming Fonterra and whingeing about the lost market doesn’t wash anymore and they must take greater responsibility. When the good days return, many will again be clamouring for a seat on the Fonterra bandwagon.

Smart appointment in high achiever

NEWS THAT Martyn Dunne, currently New Zealand High Commissioner to Australia and a former head of the Customs Service and senior army officer, has been named head of the Ministry for Primary Industries (MPI) is good news for the primary sector.

Dunne will take up his three-year term on November 18, succeeding Wayne McNee who left in July to join LIC.  Scott Gallacher has been acting director-general since McNee’s departure.

Primary Industries Minister Nathan Guy believes the appointment signals a fresh start for MPI. Federated Farmers has also welcomed Dunne as the new director-general, rightly noting that he “brings a completely new dimension to the leadership of the MPI”.

DairyNZ also welcomed his appointment. Chair John Luxton says MPI has a vital part to play in enabling the primary sector to make the most of the opportunities to grow our export value.

The State Services Commission says Dunne has been high commissioner to Australia since 2011, following six years running the Customs Department where he oversaw a strengthening of border protection.

Dunne’s professional background and high-rank military role, and his experience in trade access, customs and international relations make him a good choice to head the country’s most important government department.

This is a very important role, given that the primary industries remain the backbone of New Zealand’s economy, accounting for at least 70% of New Zealand’s exports generating annually about $32 billion.

MPI has been criticised in recent years, not least for its role in introducing the kiwifruit wasting disease PSA and for the muddled paperwork that stalled meat exports on China’s wharves this year.

The ministry has undergone a lot of change since it was formed from the merger of the Ministry of Agriculture and Forestry, the Ministry of Fisheries and the New Zealand Food Safety Authority. It now needs a sustained period of stabilisation and consolidation.

Let’s hope Dunne’s leadership at MPI will bring the ‘fresh start’ Minster Guy has called for as well as the stability New Zealand’s primary sector needs.

More questions than answers

QUESTIONS ARE piling up as the Government launches its inquiry into Fonterra’s false botulism scare.

One month ago, questions were swirling around Fonterra’s handling of product recall and how a dirty pipe at a Waikato factory could derail our global dairy exports. Fonterra management’s inquiry has traced back manufacturing of the potentially contaminated WPC80.

However, attention is now focused on the tests in New Zealand. Enter AgResearch, an SOE describing itself as “one of New Zealand’s leading research organisations”.  AgResearch’s purpose, its website says, is to enhance the value, productivity and profitability of New Zealand’s pastoral, agri-food and agri-technology sector value-chains to contribute to economic growth and beneficial environmental and social outcomes for New Zealand”.

If Fonterra is to be believed, it was AgResearch’s test results received on August 2 that triggered the precautionary recall of WPC80 from eight customers. The recall was complex as the 38 metric tonnes of WPC sold to customers had been turned into a variety of value added products – infant formula, sports drinks and animal feed.

For its part, AgResearch says it never confirmed the presence of Clostridium botulinum in the isolates provided by the co-op. It had detected the possible presence of Clostridium botulinum and recommended further testing.

This calls into question Fonterra’s testing regime. As the world’s largest exporter of dairy products, shouldn’t it have access to testing facilities that can confirm immediately the presence of bacteria and harmful substances in any of its dairy products?

It is clear Fonterra acted solely on the test results from AgResearch in initiating the recall and going public. Was it the correct decision? Apparently not, and in hindsight more tests outside New Zealand would have confirmed that the strain present in WPC80 was Clostridium sporogenes, and not the fatal Clostridium botulinum.

The damage to Fonterra, and New Zealand’s trading credentials, anxiety to consumers and losses to customers caught up in the recall is hard to measure. Surely, some of the eight companies involved in the recall will be recouping their losses from Fonterra.

Fonterra provides ingredients to customers worldwide. While the safety and quality of its products may not be questioned by these customers, they will be concerned about its loose testing regime— where one set of test results can be misinterpreted and set off a train of events as seen last month.

Fonterra, AgResearch and MPI will all have their say at the Government inquiry.  Whatever the inquiry concludes, steps must be taken to prevent a repeat of the WPC80 fiasco.

For Fonterra and AgResearch’s sake, let’s hope everything in life  happens for a reason and something better always comes out of it.

 

 

 

Time for farming to reach out

THE LATEST KPMG Agribusiness Agenda suggests a need for much greater understanding of the agribusiness sector by the country’s wider population.

“The importance of the primary sector to New Zealand’s economy is not well understood by wider society,” the report says. “We are now predominantly an urban-based population. Many New Zealanders’ knowledge of the rural sector is limited to media reports that predominantly focus on the sector’s issues and failings.

“If we do nothing, we risk a deepening ‘them and us’ divide. An important first step is to gain an understanding of why we do agriculture in New Zealand, from our many different perspectives. Then we can search out collective win/win solutions for the key issues facing the primary sector.”

KPMG suggests bridging the divide by achieving wider accord on the key issues.  It calls on the agri-sector to lead a fact-based conversation about the issues rather than sit by while mainstream media continue to portray agriculture in a negative light, eg dirty dairying, expensive local produce and animal cruelty.

Says the report, with most of the population living in urban centres, any direct connection many New Zealanders once had with the land is dwindling. So it requires the collective agri-sector to take on the responsibility of educating and informing the wider population about the contribution it makes and the resources it needs to deliver its contribution.

“Every organisation and person involved in the industry needs to be prepared to become engaged in these critical conversations. At the end of the day, the outcomes will impact New Zealand’s future prosperity.”

It is important the sector does not appear defensive in leading these discussions. The debate must be balanced and based on facts.

“Identifying the areas that need sector leadership is not rocket science. They include taking greater responsibility for biosecurity; water management (both usage and quality); attracting sufficient talented people into the industry; managing the sector’s impact on the environment; and creating a stable platform for capital investment.”

Let’s begin this much-needed conversation now!

 

Change the record!

THE NEW dairy industry accord designed to clean up waterways has been hailed by industry, councils and farmers, but it has drawn only lukewarm support from environmental groups.

The accord sets national environmental benchmarks for dairy farming, covering stock exclusion from waterways and riparian, effluent, nutrient and water use management. It also sets out new industry standards for conversions of land to dairying.

Most of the nation’s 13,000 dairy farmers are covered by the accord, which has the support of Fonterra, Open Country, Tatua, Synlait and Miraka and industry body DairyNZ, while Federated Farmers and 15 regional councils have signed on as ‘friends’.

Many from the local government and the regulatory sector describe it as an excellent mechanism for environmental improvements, unlikely to make farmers’ lives difficult farmers or to bankrupt them. It draws on the consensus approach to water management implemented by the Land and Water Forum.

The accord is not perfect and the last-minute decision by Westland Milk Products not to be a partner is a blow. Hopefully, Westland’s issues can be sorted quickly as an ‘all-in’ method by the dairy industry to water quality management is far better than a piecemeal, company-by-company approach.

Despite this hiccup, the accord is another positive step forward for the dairy sector and water quality in New Zealand and a long way ahead of where it was 10, 15 or even 20 years ago.

But you wouldn’t know this listening to the typically negative response from Fish & Game NZ. It described the new accord as a “mixed blessing” that did not contain enough positives for the lobby group to sign up to. It says while it is heading in the right direction, progress was far too slow and the public expected more.

Fish & Game has an important role as an environmental watchdog. However, it’s incessant and negative carping about the dairy sector makes it sound like a dog that barks and chases car tyres, but not much else. These animals usually don’t stay around long and unless Fish & Game changes its obvious anti-farming modus operandi, it too will come across as all yap and no substance.

Federated Farmers Nelson spokesman Martin O’Connor summed up its response well when he said the lobby “was never happy and ignored the fact farmers had spent huge amounts on environmental compliance in recent years.” As O’Connor adroitly added: “… It’s hard to farm green, when you are in the red.”

That’s something Fish & Game would do well to recognise.

 

Just how good is MPI?

THIS LATEST fiasco over meat shipments being held up on wharves in China raises the question of just how well the primary sector is being served by the Ministry for Primary Industry.

All we are hearing from MPI over this issue, and the previous problems, is it was a complete surprise to them. Yet some people in the sector say it is no surprise whatsoever and that MPI is simply behind the eight ball.

Isn’t it MPI’s job – together with MFAT – to develop strong links inside the bureaucracy of any country, especially China, and find out about any changes before they happen?

That is clearly not happening, and there is a view among business people who have traded for years with China that our people are not ‘cutting the mustard’. We wonder how many MPI people are fluent Mandarin speakers and how many of these are on the ground in China and if so how long have they been there?

Free trade agreements are only part of the story – the nice political fuzzies. The real action is in the technical area and on the face of it MPI appears to be lacking in this regard.

The meat hoo-ha closely tails the biosecurity scare in which MPI took six weeks to discover that the hoof of an animal in a PKE shipment was that of a local sheep. Six weeks is outrageous; six hours, even six days maybe, but six weeks is hopeless. Add to this the failures of MPI’s FMD exercise and the Psa issue and it’s starting to look bad. There are also complaints about the arrogant way that MPI handles some issues. The DCD scare is a classic example.

Have the constant restructurings bled the organisation of its institutional knowledge? New Zealand is at a crucial stage in its quest to develop new markets and protect our borders from catastrophic intrusions, but the organisation delegated to do this is missing-in-action. That’s not to say there aren’t good dedicated people in MPI, but recent results are worrying and do not instil much confidence in the wider primary sector.

The first task of the new chief executive of MPI must surely be to build confidence and vastly improve the communications in the organisation.

Thoughts for Feds

AS FEDERATED Farmers warms up for its national conference and annual meeting in Ashburton this week, it’s timely to take a look at how the lobby group operates.

Each of the seven national board members has a long list of policy responsibilities to his/her name: in one case one board member has nine topics. Such is the complexity of every one of these topics that for an individual to keep abreast of so many areas, as well as running their own business, is a tall order. Myriad meetings must be attended and the ability to effectively represent members becomes stretched, to say the least, through no fault of the board member.

The fault lies with the structure. Why do board members have to cover so many areas? Surely there is a case for greater delegation to members with expertise in particular areas? The board member may remain the spokesperson on a particular issue, but there needs to be a greater willingness to defer to specialist colleagues or sub-committees.

Feds’ policy analysts can support decision making, crunching the numbers and picking over the pertinent regulations. But unless they have been in the role for decades, few will have the in-depth specialised knowledge many of Feds’ members will have amassed in one area or another. The board member cannot be expected to have that expertise in more than one or maybe two areas either – which leaves at least three topics, and in most cases more, where knowledge is lacking.

Unless other members are seconded to pick up those areas, there’s a risk policy staff don’t just inform policy, they drive it – drive it from Wellington from an office several times removed from grassroots members. Little wonder some farmers are questioning the lobby group’s representation of members’ interests.

The fact is the federation does achieve much behind the scenes, which many grassroots members may never be aware of: they farm on, unaware of the potential regulatory roadblocks the federation has removed, or prevented being set up in the first place.

But Feds could do better if it better used the specialist knowledge that exists among its members. The current structure is a barrier to some getting involved. To put your hand up on one issue risks getting lumbered with half a dozen more. That risk needs to be removed.

Under the (Te) radar

THE AHUWHENUA Trophy was recently presented to Tarawera Station – a large Maori sheep and beef farm (about 30,000 stock) on the Napier Taupo highway.

The station was one of three finalists for this prestigious award. All three were sizable high-performing Maori enterprises, sustainable and with first-class governance structures and long-term plans that would be the envy of any mainstream farm.

About 850 people packed into the Napier Events Centre to see the trophy presented by Deputy Prime Minister Bill English and Maori Affairs minister Dr Pita Sharples. It was a brilliantly run event and competition – slick, entertaining and a great celebration of success. However, by and large, the success celebrated in Napier has gone unnoticed by the great unwashed. Mainstream news media ignored the field days run by the three finalists. Rural News was the only newspaper reporting on all three.

In some ways you can excuse New Zealanders for having a negative view of Maori, especially given that most news media are either too lazy or so obsessed with crime and politics that they can’t get their heads around Maori being successful. As Pita Sharples rightly points out, news media are obsessed with telling negative stories about Maori, but never cover the positives.

The Ahuwhenua Trophy has been contested for 80 years and has been won by small family enterprises, and large trusts and incorporations. The winners of this trophy are not just the best Maori farmers, they are up with and surpassing many pakeha farmers and corporate farms.

Maori are a powerhouse of the agribusiness economy. Without them our export returns would not look so flash. It’s said that about 10% of the milk and 15% of sheep and beef exports are produced on Maori farms. Through the Maori dairy company Miraka, in the central North Island, they are into further processing of dairy products.

But this in some ways is just the beginning. There are thousands of hectares of Maori land either undeveloped or underperforming and when that comes on-stream the numbers will change dramatically.

Noticing, rather than ignoring, Maori agriculture is a no-brainer.