IT’S NO secret that current wool prices are awful, but the outlook for the fibre has been terrible for many years.

For some types of wool, more has been put in storage than has sold in the last nine months, mainly due to lack of demand from China.

According to reports, current wool exports to China are 40% lower than last year. This highlights the folly of the industry relying on China alone.

As Wools of NZ chair Mark Shadbolt says, “The world is our market so as soon as you allow 60% of all of our exports to go into one country then you are exposed.”

Things are not flash, especially at the stronger-wool end of the spectrum: sale prices for 39 micron wool have been about $3.25/kg versus $5.80 a year ago; 35 micron $3.35 vs $5.85; and 29 micron $6.65 vs $7.85.

These prices make wool basically worthless. How is it that a natural fibre with huge environmental positives and other benefits is worth nothing?

In the dark, distant past, NZ’s economic prosperity was put down to ‘coming off the sheep’s back’ – meaning wool – but not so for decades. Today, Beef + Lamb NZ estimates that wool only makes up about 9% of sheep and beef farm income. This figure is likely to fall further if the current market for crossbred wool does not improve.

Blame for the dismal state of the wool sector is pinned to over-reliance on China, the industry’s lack of added value and poor promotion.

Growers are not without blame. They basically gave up on wool promotion when they voted to can the wool levy a few years back. Others gave up completely on sheep, changing to dairy farming, hence the huge drop in the national sheep flock and the growth of the national dairy herd in the past decade.

The sheep flock’s drop from 70 million to below 30 million in 20-odd years has done more than anything else to slash wool’s annual earnings from $1 billion to $500 million.

Cheap political stunts such as proposing that public servants be forced to specify woollen carpets in government offices is about as forward-thinking as were carless days and forcing people to get a doctor’s prescription in order to buy margarine.

Such schemes may sound good to struggling wool producers, given the sector’s parlous state, but do farmers really want to go back to the days of relying on the whims of self-styled, political demi-gods for their economic survival?

If so, the wool industry deserves to go the way of supplementary minimum prices, the Berlin Wall and party telephone lines.

TO USE the latest America’s Cup parlance, the New Zealand primary sector is ‘up on its foils’ at present.

According to the latest Rabobank survey, farmer confidence and spending intentions jumped to record levels in the second quarter of this year, buoyed by improved commodity prices.

The survey, completed in June, shows net farmer confidence rose to 54% from 27% in the March quarter, hitting the highest level since the survey began in 2003. Spending intentions were also higher in all farm sectors: 40% of farmers expect to spend more in the next 12 months, up from 31% last quarter and also at a record high.

Meanwhile, the bank reports that farmers in all sectors were also more positive about the outlook for the agricultural economy in the June quarter, with 71% citing improved commodity prices as a key reason. Especially so dairy farmers, 77% of whom cited better commodity prices, while sheep and beef producers were at 66%.

“Buoyancy in the pastoral sectors is underpinned by strengthened farmgate returns across the industries,” says Rabobank NZ general manager for country banking Hayley Moynihan.

“Sheep and beef farmgate prices continue to hold steady at strong levels for beef and higher than first expected for lamb; and lower supply from NZ and other key export regions will underpin good returns over the coming months.

“Dairy commodity prices continue to strengthen thanks to steady demand and lower supply and this has recently been reflected in strong opening price signals for the new 2017-18 season by many dairy processors.”

At least half the farmers surveyed were anticipating the performance of their own farm business to improve over the next 12 months, lifting net confidence to 47%, the highest reading since late 2013.

Add to this the rollicking performance of the horticulture sector – kiwifruit, apple and avocados to name just a few — and the primary sector as a whole is looking good.

However, any one of our industries’ very own nemeses (dare we say ‘Jimmy Spithill’?) — such as currency, commodity price movements or lobbyists Greenpeace, Fish & Game or other activists — could arise to attack our good fortune at any time.

Farmers need to be prepared for these hiccups and ready to change tack. As Dairy NZ chief executive Tim Mackle warned dairy producers at last week’s SIDE conference: “Prices will fall again”.

“Farmers cannot be complacent and must focus on costs because there will be a next time,” Mackle stressed. “The key message is this: it doesn’t need to be quite as difficult as last time if we maintain our costs, get our debt sorted and get on with it.”

In the meantime, let’s hope our farmers and the wider NZ economy continue to enjoy the purple patch the primary sector now experiencing. Long

AS THE curtain comes down on another successful Fieldays, NZ’s farming sector has experienced something uncommon nowadays – a raft of positive media coverage.

Positive descriptors such as innovators, economic powerhouse, world-leading food producers, celebrating farming and emerging leaders – to name but a few – were interspersed among the myriad of media stories covering the event.

Contrast this to the regular, daily bashing farming usually takes from urban-dominated media and certain self-important, inexpert, opinionated talking heads.

As Primary Industries Minister Nathan Guy says, the rural story needs to be told straight from the woolsheds and dairy sheds

“It’s going to need to be from someone in a Swanndri, not a suit,” he says.

Who else can be relied on to explain that farmers have spent at least $1 billion of their own money on environmental measures onfarm?  Certainly not the myopic anti-farming crusaders and their acolytes such as SAFE, Greenpeace or Fish and Game.

Yes, those in farmers who are polluting waterways or treating animals and workers badly need to be held accountable and punished. But these are far and away a minority in the sector – not that you would believe it by the media coverage farming usually gets.

As Guys says, if we really want a message to change the public perception of farming, “it can’t just come from politicians”.

Who else can explain that farmers have fenced enough waterways to cover the distance from Auckland to Chicago and back again? Who else can show the world-leading and innovative things going on every day on New Zealand’s farms?

Events such as Fieldays and environmental award competitions are good, but they happen only annually. Plenty of other good things are happening in our industry every day and we all must take the opportunity to highlight these.

In the age of social media, farmers themselves have the ability to influence public opinion – just as the anti-farming types are doing every day.

Guy has challenged the farming sector to promote our industry to our friends and family who might not know much about it.

We should all take up that challenge – today!

THE RECENT release of the progress report on the last three years of the Sustainable Dairying Water Accord has sparked all the naysayers of the dairy industry into another series of spiteful attacks on farmers.

Granted, the report does highlight things that haven’t yet been achieved, but to be fair it doesn’t attempt to make excuses either.

The reality is that dairy farmers have had to retreat into survival mode during the past two seasons as, firstly, prices dropped dramatically, then nature weighed in with tough weather events. So fencing off wetlands probably wasn’t at the top of farmers’ priority lists.

And with the drop in payout has come retrenchment, with farm owners being compelled to operate with fewer staff and work longer and harder just to keep the banks at bay.

Amazingly, farmers have achieved much in mitigating harmful environmental effects on their properties. For example, those in the Horizons region have done this in the midst of a crisis about planning rules and policies, which have now turned to custard with the virtual collapse of the infamous One Plan.

Not even the farmers are saying everything is right, and they willingly acknowledge they have to do more to meet new standards. Sadly, they are not helped by some of their own who take a ‘she’ll be right’ or arrogant approach to environmental standards.

But let’s not forget there are rogue scientists, NGO advocates and others who are just as feral as the occasional farmer. Free speech is fine and no one disputes the right for everyone to have their say. But has this basic tenet of democracy been taken a step too far?

We are now hearing that dairy farmers’ children are being bullied at school. It seems the rhetoric of the anti-dairy lobby has found its way into influencing the behaviour of young people. This is disgusting, and likely prompted by the extreme views and sound bites.

All this goes to show that extreme language can have consequences that go way beyond reason. The anti-dairy lobbyists need to tone down their messages, or is that a mission impossible for them?

TRADE AND New Zealand’s position on it has been high on the agenda recently.

In mid-March the Government announced a refresh of the country’s trade agenda to increase our exporters’ competitiveness — the primary sector is a key player — in an increasingly challenging global trading environment.

The US derailing of the TPP and its retreat to a more isolationist stance under the Trump administration, the UK Brexit and a host of non-tariff barriers imposed by countries around the world are just some of these challenges.

Meanwhile, last week’s visit to NZ by China’s Premier Li and a trade delegation emphasises the importance of NZ’s burgeoning trading alliance with the Asian tiger. News that we will soon begin talks on upgrading our free trade agreement (FTA) with China and the first trial shipments of chilled meat to that country is great for NZ’s primary sector and our wider economy.

There appears to be a growing mood among some politicians and commentators – those trying to cash in on the populism of the Trump and Brexit movements – that trade, especially freer world trade, is dubious. That is not only wrong, it is dangerous and deceitful.

Trade is the lifeblood of NZ’s economy, and to truly grow and prosper we need to expand and develop our trading links with the world. Freer trade not only benefits exporters, it accounts for 60% of NZ’s economic activity – both imports and exports.

A freer, more open world economy not only secures NZ greater access to more markets and higher prices for our exports, it also enables us to enjoy a much wider range of goods and services than ever before.

At least 90% of NZ’s farm production is exported, making international trade crucial for Kiwi farmers’ livelihoods and vital for the whole economy. Given that NZ is the world’s twelth-largest trader of agricultural products (by value), the number one sheep meat and dairy exporter, and the number two wool exporter, all NZers should well understand that freer trade is not only fundamental, it is vital to our agricultural sector.

Agricultural exports continue to face major barriers worldwide, notably high tariffs, increasing use of non-tariff barriers and domestic subsidies. Efforts to reduce or eliminate these – as outlined in the new trade strategy — have never been more important.

The sheep and beef sector is our second-largest goods export income earner — at least $7.4 billion last year. This supported directly about 60,000 jobs on farms and in processing companies, and thousands more in other sectors in urban and rural communities.

Our largest goods export income earner is the dairy industry which, along with all NZ, would enjoy huge gains from the removal of trade barriers: a recent report by the NZ Institute of Economic Research says the NZ economy would gain about $1.3b annually from removing tariffs on dairy alone.

It is vital the Government remains focused on international trade liberalisation, further improving market access and tackling non-tariff barriers.

MANDATORY LABELLING of fruits and vegetables is back on the public agenda.

A recent joint survey, by Horticulture NZ and Consumer NZ, shows 70% of consumers want to know where their fruit and veges come from. Only 9% of those surveyed did not support mandatory country-of-origin labelling (CoOL).

Coinciding with the survey results is the drawing of a bill on mandatory labelling of fruits and vegetables, introduced to parliament by the Green Party.

Horticulture NZ chief executive Mike Chapman says the country’s 5500 commercial fruit and vegetable growers – along with Hort NZ – wanted to compile evidence to show the government that there is a need to follow other countries, including Australia, in CoOL labelling of fruit and vegetables.

Chapman says NZ law does not currently require the country of origin of fruit and vegetables to be disclosed to shoppers at the point of purchase.

“We want that to change.”

He is hoping the Green’s Consumers’ Right to Know (Country of Origin of Food) Bill before parliament will be voted through to a select committee, “so NZers can tell the government directly what they have told HortNZ in this survey”.

Consumers Institute chief executive Sue Chetwin believes the current voluntary system is not working.

She says these survey results confirm strong public support for labelling and the results send a clear message to political parties that the law needs to change.

Chapman and Chetwin make good points. It is time for the government to have another look at mandatory country of origin labelling.

What is the problem with consumers knowing where the food they a buying comes from?

In fact, it sounds like a really cool idea.

THE DEBATE about New Zealand’s water quality has become too simplistic, with far too much finger pointing and blame in mostly farming’s direction.

It is clear that our water quality is bad enough to require action and, in some instances, it is getting worse.

Action is needed. Too often critics claim nothing is happening, everything is getting worse, no-one cares and the regulators are all in the pockets of profiteers. That’s untrue.

The hard part of improving water quality relates to ‘diffuse’ pollution. This is the rural run-off and leaching below the land from farming and stormwater run-off in our towns and cities. Both are big issues and require big changes to the way we live and the way we use our land.

Change has already begun. For instance, rules have been in place in Canterbury since 2012 setting limits on the amount of nitrate that farmland is allowed to lose below the roots of plants. While nitrate isn’t the only problem for most of Canterbury, there are now limits that address this.

However, for some people this progress is too slow. But the radical alternatives sometimes advocated, i.e. prohibiting any further intensification of land use, are not actually practical options. Regional councils would need to be able to demonstrate that such a step was both reasonable and necessary. They would struggle to show that a complete ban on further dairy farms, for example, was reasonable and necessary, because of the limits they already have in place.

Right now across all the ‘red’ zone of Canterbury – areas where independent hearings have agreed that water quality is unacceptable because of its nutrient content – landowners are not allowed to increase their nutrient losses. To convert from pastoral agriculture to intensive dairying isn’t prohibited. However, farms would struggle to convert from, say, sheep or arable farming to dairy cattle without increasing their nutrient losses.

Many farmers are already reducing their nutrient losses. Some are reducing their stock numbers, without necessarily seeing a reduction in their overall farm surplus. Some are changing what they feed their stock. Many have changed their irrigation practices, reducing the amount of water they apply. For example, there is now much less border dyke irrigation in Canterbury than even a decade ago.

Many farmers are planting their stream banks, beyond the requirements of stock exclusion rules. A few have built enclosures for their animals, capturing all the effluent. And a great deal of research into effective means of improving water quality is going on in a variety of organisations.

These changes will take time to make a difference. Our water quality will improve over decades, just as it did in getting to its current state.

We need to move beyond the notion that we must choose between the needs of the environment and our economy. We won’t have an economy if we destroy the environment. But improving the environment requires considerable resource, i.e. an economy.

It is time we moved beyond the righteous wrath of those who imply that nothing is happening to improve our water quality. A great deal is already underway.

FONTERRA’S NEW discussion booklet on revamping its governance is titled ‘Let’s have the Conversation’.
But the lacklustre 20-page document will struggle to stimulate farmers, already in favour of a radical change in the board size.
After being stunned in November by 54% shareholder support for a leaner board, the co-op’s board and Shareholders Council agreed to speed up the process.
Farmer shareholders were told that several years of preparatory work had been done by a joint board/council review committee locally and overseas.
Sadly, for farmers the discussion document doesn’t reflect this, it outlines what most farmers already know.
Last week, the board and council held farmer meetings around the country to discuss the discussion booklet; next month the co-op will develop its proposal based on farmer feedback.
In April, a draft proposal will be submitted to farmers; a second discussion booklet will be distributed, followed by another round of farmer meetings.
Farmers will vote on the final proposal in May.
A proposal floated by former directors Colin Armer and Greg Gent called for a nine-member board, appointed by farmers; this gained 54% support at the last annual meeting but fell short of the 75% support required to force a constitutional change.
The dilemma facing Fonterra’s board is that most farmers are already in favour of a smaller board; they voted for the Armer/Gent proposal despite, defying a recommendation from the board and council.
It’s clear that farmers have made up their mind; a fitter and leaner board is the way to go.
One issue up in the air on board representation is the future of independent directors; currently Fonterra has nine elected and four independent directors.
The independents wield lots of influence and can end up holding the balance of power; when Armer lost the chairmanship to incumbent John Wilson by one vote in 2012, the independents are believed to have backed Wilson.
The Armer/Gent proposal seeks only farmer-elected directors on the board.
In its discussion booklet, Fonterra argues for having qualified independent directors.
Farmers will be mulling over their options in the coming months; they want a smaller board. They must decide on the number of directors, both farmer-elected and independents.
Expect the board and council to bat for independent directors.
Farmers have already defied the board and Shareholders Council once on the issue; they won’t hesitate to do that again.

News that the Trans Pacific Partnership (TPP) is to be signed in New Zealand early next month, will no doubt fire up outrage, ridiculous claims and pontifications from the usual array of serial protestors, desperate politicians and other economic Luddites.

These people seem to throw out all sorts of fantastical claims about the evils of trade and are never seriously challenged.

Just how our country is supposed to pay for ever increasing demands for better health, education, superannuation and social welfare and not increase trade with the rest of the world seems to get lost in the venomous rhetoric spewed by those opposed to the TPP and other trade deals.

The fact is that as a trading nation – where agriculture is our biggest trading sector – NZ needs deals like the TPP, the China FTA, CER and the proposed EU trade deal – for our economic survival.

No deal is ever perfect and the TPP is certainly – from a NZ agriculture point of view, especially dairy – not perfect. Despite only minuscule progress for our dairy exports, the deal has delivered some good wins for NZ primary sector.

As NZ special agriculture envoy Mike Petersen said – at the conclusion of the negotiations last October – the TPPhas delivered an “outstanding” result for the NZ primary sector.

“We have basically gained free trade access for the majority of our primary sector products – with the exception of dairy and some beef – to 11 new markets with a population of 800 million or 40% of the world’s trade.”

How is that a bad thing?

A recent World Bank report on the “Potential Macroeconomic implications Trans-Pacific Partnership” estimates that the New Zealand economy will gain a definite economic boost from TPP.

As President Obama told legislators in the US – during his final State of the Union address, last week, a Trans-Pacific Partnership opens markets, protects workers and the environment, and … supports more good jobs.

“You want to show our strength in this century? Approve this agreement,” he implored.

It would be nice if New Zealand politicians could also take up President Obama’s challenge and put aside petty politicking for once and ‘approve this agreement’!

Don’t hold your breath.

‘GROSSLY IRRESPONSIBLE’ is how New Zealand’s special agricultural trade envoy Mike Petersen has – rightly – described animal rights group SAFE’s placement of an anti-NZ dairy farming advertisement in a British newspaper.

As Peterson says, the group has deliberately gone to the UK market and misleadingly said that the actions of these few, rogue dairy farmers are commonplace in the NZ dairy industry.

Unfortunately, this will cause some damage because some consumers in the UK will not see SAFE’s comments as coming from a bunch of nutters; with them its messages about NZ dairying will resonate.

Nevertheless, it is clear the actions of these few, bad farmers – and some rogue operators – has sullied the entire NZ dairy industry’s reputation and opened the window for SAFE’s attack.

The agriculture sector needs to come to terms with the cold, hard fact that it is always under scrutiny: groups like SAFE, Fish & Game, Greenpeace and others are always looking for a chance to have a crack. Farmers and their industry organisations have to be exemplary in their actions – especially regarding animal welfare and environmental behaviour.

And transgressors have to be punished, such as by losing their ability to farm or by dairy and meat companies refusing to take their products. If not, the whole industry will suffer, as in this most recent case.

Is that tough? Yes. But doing nothing, or trying to ignore those bad farmers, will do our farming sector more harm than good.

If you don’t think farming has an image problem among urban people, just read the comments on online stories run in the mainstream media about farming issues. Far and away the vast majority of the comments are negative and dismissive of farming and farmers. If you don’t believe this, read the comments on the bobby calf issue.

SAFE is a bunch of nutters on an anti-farming campaign – but that is what the industry must put up with.

As Federated Farmers dairy chair Andrew Hoggard says, care needs to be taken in responding to these types of campaigns. A heavy-handed response only gives SAFE and other anti-farming groups more of a platform and oxygen for their cause.

Hoggard sums it up nicely, saying that as an industry farming needs to work hard to prevent the things consumers find abhorrent; and the industry must get tough on farmers who flaunt the regulations governing farming.

As a sector, agriculture has to walk the walk, not just talk the talk in this regard. That is the only way it will continue to garner public support and consumer confidence.