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Brazil Global Focus Programme 2017: Ryan O’Sullivan

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I was fortunate to be part of a relatively small group of 8 Nuffield scholars, of diverse farming backgrounds and visit 6 countries on the ‘Brazil GFP’.  Countries visited were well developed or mostly developed in terms of their economies and agricultural industries and included Brazil, Mexico, US, Ireland, France and NZ.
One of the key benefits I believe the GFP offers is the context it gives of the global agri-food business and therefore the perspective around NZ as a producer and marketer.  As one large scale US, dairy farmer producer put it ‘NZ is small and cute’ which is pretty hard to argue with. 

As many scholars have noted before me, the GFP is also provides a personal challenge in terms of mental stamina, getting some sleep and relationship management among your fellow scholars.  This in itself is a valuable exercise personal development and self-awareness, as is driving a rental van in a mega-city full of motorists in a hurry.  I am sure the post GPS guidance era of scholars have it so much easier than the ones who went before trying to read road maps.

Common Themes

As one travels through multiple countries and talks to farmers, there are many common issues and themes that begin to emerge.  It is a universal thing, whether it is a group of farmers, bakers or candlestick makers, when they get together, the conversation eventually reverts to what are the challenges and issues, and despite different geographies, cultures and enterprises the themes were remarkably similar.  Some of them I will pick up on here.
Not many primary producers are getting well paid for what they do or earn a respectable return on capital.  There are of course exceptions that have a different strategy and they are were the ones well worth listening to.  Some examples, but not an exhaustive list of the businesses achieving higher returns included:
Farm to consumer businesses, or cutting out the middle men/vertical integration.  Requires large local consumer base and appears difficult to scale up.
Organic premiums on enterprises where yield drag was not too high, e.g. Soy bean production at 3 times the conventional price with only 25% yield drag compared to conventional.
Scale, high volume outputs with good economies of scale achieved on inputs and infrastructure, e.g. Large-scale US containment dairy or arable.
Niche production of a product where there are barriers to entry or a unique comparative advantage due to location, climate etc.

Urbanisation

Urbanisation continues to be a growing trend in all countries visited and results in more disconnect with farming and further diminishes attraction of farming to young people due to shrinkage of rural communities.  This disconnect also places more obligation on farmers to produce sustainably and improve environmental and animal welfare performance as the more urbanised a country becomes, the higher the expectation around these issues seems to be.

Succession Issues

Lack of effective farm succession is widespread and this results in older farmers operating businesses that keep getting smaller relative to the ever- increasing size of an economic unit.  Lack of scale and fresh energy in the business then leads to underperformance in output, returns and investment.

Labour

Labour and staff was predictably a regular issue that came up for discussion.  In many countries, available immigrant labour was more willing, but this is not a popular political solution.  Automation solutions are going to help, but not going to change the game in farming in my view.

Having a large domestic consumer population does not translate into higher returns and arguably at present, exporting countries like us are enjoying as high returns as anywhere.  The closer farmers get to the supermarkets, (with their inherent business model of lowering prices on the shelf), the tougher it gets.  As one producer said, the supermarkets make sure they keep us alive, but only just.

Changing traits

Consumer trends and the way food is retailed is very fluid and changing at an astonishing rate.  Producers and retailers of agri-food are presented with multiple consumer desires including conventionally produced/low cost, non-GMO, antibiotic free natural free-range grass fed, certified organic, locally produced and more recently plant based/synthetic.  It is difficult to pick an individual trend from the above list that is certain to deliver volume the best and value in the long term.  This list of traits was shorter 5 years ago and one wonders what other food traits will emerge in coming years?  In addition to this, there is the question of how most food going to be retailed through large stores, small ones, purchased via e-commerce delivered by a drone or eaten out of home.  The spend on out of home eating is either now ahead of almost catching up with in-home spend on food depending on country so as farmers we need to think about this. 

The rhetoric around the challenge of feeding 9 billion people within the next 2 decades has been a bit overdone as the world has the physical farming resources to feed many more than that right now.  It just requires a viable farmgate return for farmers to engage the land into production that is currently sitting idle or undeveloped.  While this observation might be defendable now, there are some very large water scarcity, land degradation and climate change issues on the horizon which will have an impact.  Focus is also moving to nutrition rather than food.  The obesity trend and an aging population, signal massive future healthcare costs to government, so quality nutrition will be the focus either through education or if that doesn’t work, regulation.

Political Climates

Politically, Trump and Brexit have raised genuine concerns from a lot of farmers we met.  US farmers are worried about budget cuts to Ag support and immigration clampdowns.  Academics are concerned about reduced R&D budgets and the post Brexit landscape is of concern to anyone producing in or exporting to Europe, including NZ and Ireland.

In closing, a highlight of the GFP for me personally was hosting the group through the South Island of NZ.  Despite my own familiarity with what we saw, it was great to receive the views and perspectives of the Aussies, Canadian, American and Dutchman in the group.  Hearing the group constantly ask where all the well-publicised environmental degradation was, how impressed they were with the knowledge, efficiency and capability of the hosts and the overall experience of friendly people, great food and stunning landscapes.  It was a good way to finish an amazing experience and a reminder how blessed we are to live and do what we do in NZ.

BRAZIL GLOBAL FOCUS PROGRAMME 2017: RYAN O’SULLIVANAFRICA GLOBAL FOCUS PROGRAMME 2017: NADINE PORTERCHILE GLOBAL FOCUS PROGRAMME 2017: MATHEW HOCKENJAPAN GLOBAL FOCUS PROGRAMME 2017: DAVID KIDDINDIA GLOBAL FOCUS PROGRAMME 2017: REBECCA HYDECHINA GLOBAL FOCUS PROGRAMME 2017: JASON ROLFE