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2016

Farmer capabilities: what’s next for New Zealand dairy farmers.

Executive summary

T he New Zealand dairy industry is constantly evolving with changing practices, expectations from beyond the farm gate increasingly affecting farm practices, and consumer demands shifting – both in terms of product quality and the method of production. These issues are particularly noteworthy when looking at the Golden Bay population where this study is based, given its diverse population and views. 

With increasing complexity and an increase in expected social and environmental responsibility leading to increased compliance that effects many aspects of the way we farm, from the feed used, farm inputs and human resource management to animal welfare, health and safety, and the environment.

These changing demands require farmers to continuously develop their farming capabilities to remain profitable. Many farmers are not fully aware of these changing expectations with a common view that it is just a “fad” and external parties cannot influence of farm procedures. This is not the case and the sooner this is realised; the sooner farmers can begin to upskill themselves in relevant areas they are deficient.

This report covers the issue by surveying a population of farmers in the North-West South Island to ascertain what they perceive to be the biggest issues dairy farming and whether they have the skills to overcome these challenges.

The results of the survey and literature review show Market Volatility and the increasing Social License to Farm are the principal challenges to both the dairy industry as a whole and farmers individual agribusinesses. The skills required to overcome these issues are possessed in varying degrees amongst the farming population.

Discussion is held surrounding the variation of skill competencies between generations and genders, and the importance of building farmer networks as this is seen by farmers as the most important source of new information and skills.

The importance of education and industry training will become more significant to success in the future, with the increasing complexity of dairy farming in New Zealand. At present there are promising trends for both degree level completion and industry training participation.

Alice Reilly

Courageous leadership: A look at present day leadership in New Zealand agriculture.

Executive summary

This report is a look at leadership in agriculture in New Zealand.
The purpose of this research is to provide a context in which leadership exists in the agricultural sector today. If we can understand the present situation and the reasons that has shaped leadership in this way, then this will give us far greater insight into the structure, skills and psyche of the sector. Once this analysis has been completed, discussion can then be had regarding what kind of leaders the future will need.
When the current context is used as a framework to look at the structure that currently exists, a pathway can be plotted to achieve this new leadership, while avoiding mistakes made in the past based on who farmers are and how they choose leaders. This gives the sector the best chance at success, by momentarily looking back and then looking forward with the current constraints in mind.

“Leadership has changed and these days’ leadership is very much about how you can get the best out of your team and the people around you. Leadership in the old days- it was very much about ‘I’ll lead, you follow’. John key is a good example of this [new] kind of leader. People say he flip flops, but it’s not flip flopping at all. He’s very good at understanding that you have to take people with you and that’s the only way you can be an effective leader and so it’s very much about the most effective leadership style for today’s environment which is taking people with you and someone that leads from within rather than someone that leads from in front. We are a much more inclusive society today. In a small country like NZ, if you go out in front and try and lead, there’s always people that want to chop you down, so I think the leadership style matches our personality in many ways. We don’t like tall poppy’s and people that go out in front. We like people that lead from within.”

The research undertaken, and the resulting report, seeks to answer questions around leadership in New Zealand Agriculture. What do we have currently and why has this evolved? What are the things that are working and not working and what aspects of leadership, sector structure and knowledge/skills do we need for our industry to have the best chance at success? The ultimate discussion focuses around the opportunities on how we achieve this leadership and strengthen our back bone industry of New Zealand. Agriculture needs to be made more resilient and economically viable enough to withstand any challenge it is likely to face in the future.

The key opportunities discussed are:

  • A collaborative sector through combining meat, dairy and Maori Agribusiness. This is imperative and it needs to happen from the farmers right through to governance. Collaboration will allow New Zealand agriculture to align its reputation and identity as closely as possible. This will require leadership we don’t currently have and policy that currently doesn’t exist.
  • Leaders are made either by becoming accidental leaders or seeking out higher governance roles. Both leadership beginnings will be required in the agricultural sector, with training and self-awareness to understand the limitations and insights of both.
  • Diversity of the leadership within the industry is imperative. That needs to include women, Maori and other ethnicities and younger leaders. This is not about gender equality; but different perspectives helping to enrich discussion and solution based leadership. The millennials could well be the key to looking at challenges we are yet to face, with renewed vigor and courage.
  • The leadership that is required for these challenges is different to leadership in its current form.
  • A radical change in how we sell our produce and who we sell it to is required, to attract a premium to allow farming in New Zealand to stay economically viable in the face of increased costs and regulation.

There is no doubt the agricultural sector needs strong, courageous, brave, skilled leaders with good judgement. Some of this currently exists, but a larger cross section of leaders with diverse perspectives need to display these attributes. If we have these ideas about the weaknesses in the sector, we can rectify these going forward. Training and leadership organizations will help this and there should be a larger focus on professional and personal development by leadership teams and potential leaders. However, the future challenges the industry is likely to face will help to cultivate strong and courageous leadership, and this leadership will prosper.

Had time permitted, ideally more leaders would have been interviewed to bring more depth of discussion and perspective. However, the research undertaken here can be built on at some stage. More research into leadership theory by Hogan, Marlow’s hierarchy of needs and different leadership styles would further develop this research. This topic would be worthy of a comprehensive thesis, as leadership is often talked about but rarely understood.

New Zealand growers priorities.

Executive summary

The aim of this research project was to understand the main issues that growers perceive are (or will be) affecting their businesses and industry. A survey with 233 responses and four focus groups (two focused on vegetables and two on fruit) were conducted to get a snapshot of the industry and to help guide the strategic review for Horticulture New Zealand. Survey respondents were predominantly small and medium sized enterprises with most (89%) indicating they had 20 or less full time equivalent employees year round. 35% of survey respondents indicated that they employed more than 20 people in the peak season (some over 150). Annual turnover for 67% of the survey respondents was $1 million or less with 36% of survey respondents indicating they had a turnover of less than $250,000. 

The survey found that these issues were thought to have had the most impact on growers businesses over the past five years (in order of perceived impact)

  1. The price of inputs
  2. The cost of compliance
  3. Market access
  4. Food safety
  5. Health and safety

The survey found that the top five issues thought to be facing growers businesses in the next five years were (in order of perceived impact)

  1. Health and safety
  2. Biosecurity
  3. Market Access
  4. Cost of compliance
  5. Access to Water

Growers thought that the issues Horticulture New Zealand should be focussing on for growers were (in order of priority):

  1. Biosecurity
  2. The cost of compliance
  3. Health and safety
  4. Access to water
  5. Market access

However, the priorities changed with the availability of seasonal labour being elevated as a priority (along with employment and immigration law). A similar pattern occurred when the results were filtered for businesses that were fully vertically integrated, possibly indicating that more vertically integrated export businesses, those with a single desk marketing structure and fruit growing businesses are more concerned with seasonal labour shortages than other survey respondents. A comparison was made between businesses that grew 100% of produce for the domestic market and those that grew 100% for the export markets. The differences in priorities mirrored that of fruit and vegetable growers probably due to the export only group being predominantly fruit growers.

The survey indicated a growing concern about access to water moving from 48% to 71% (+23%) from the current situation to the future. Concern over the impacts of land fragmentation concern also rose from the current to the future scenario (+7%) as did the perceived impacts of land availability (+13%).
When asked about decision making priorities, the number one consideration growers had was financial sustainability with 144 (77%) rating this as their number one priority. Environmental sustainability was the most common second choice with 60 (or 31%), the third, fourth and fifth priorities varied between environmental sustainability, business reputation, worker welfare and lifestyle/family impacts; the most commonly ranked least important was ‘wider community impacts’ with 122 or 54%. This echoed other studies of this type which have indicated that financial sustainability was most important, but environmental sustainability was of growing significance.

Business aspirations were assessed, and the most common response was a plan to double yield (40%) followed by staying the same size (40%) and (more concerning) getting out of the business (20%). Businesses planning to triple, more than triple or shrink were 14%, 7% and 4% respectively. When filtered for age there was an increase in the percentage planning to exit the industry (from 20% – 34%) however, this was not found to be the single determining factor for those planning to exit the industry. When age range was compared for fruit and vegetable growers the data indicated a high percentage of growers in the over 65 age group for both groups but more fruit growers in the ‘over 65’ age bracket and more vegetable growers in the younger age brackets.

Although there were found to be key differences between the fruit and vegetable sectors’ priorities the main issues that growers felt Horticulture New Zealand should address included biosecurity, access to water, health and safety, land availability and reverse sensitivity issues, labour (seasonal and permanent) and career paths. They also felt there is a need for horticulture to ‘tell its story better’ to be recognised and understood at a government and community level, and for Horticulture New Zealand to promote what it was doing so that growers recognised its value.

Overall this study highlights the diversity of horticultural businesses in New Zealand and the different priorities of growers. The difficulty of an industry body representing these diverse growers at a national level moving into the future is discussed, and recommendations made including regular grower surveys, ongoing quantification and calculation of its value add to growers, promoting succession planning and careers in the industry and communicating the value of the sector to New Zealand.

Angela Halliday

The Hunger Winter And The Evolution Of Subsidies

By Simon Cook, 2018 Nuffield New Zealand Scholar

The theme of this year’s CSC in the Netherlands was very much about learning and understanding the history of Dutch agriculture and how and why they have got to where they are now. As a New Zealand farmer, we often hear about the long term subsidies paid to farmers in the EU, without ever understanding why these subsidies were introduced in the first place.

During our Nuffield conference in the Netherlands we had a number of speakers fill that gap in our knowledge with the story behind the introduction of subsidies.

After a day of beginning to meet each other and an afternoon farm visit, the second day of our CSC got off to an interesting start, with a presentation being given to the scholars while they sat in the pool in their togs – an introduction to business models.

Once back in the conference room we had some moving presentations focused around WW2 and the famine bought on as the war drew to a close. We had a presentation by Mr Jaques Von Trammel who was a young Jewish boy forced to grow up quickly as he lived in constant fear of being caught by German forces. We were then given the story of Leny Adelaar-Polak, a survivor of the medical experiments in Auschwitz. Leny was the only member of her extended family to survive the war.

We also had a presentation by Ingrid de Zwarte who completed a PhD thesis titled “The Hunger Winter” which focused on the famine that struck the Netherlands as WW2 drew to a close. In the winter of 1945 the population of the Netherlands were struck by food shortages.

Bought on by a shortage of local produce and failing supply lines from Germany, the population of Netherlands suffered a severe famine. During April 1945, the average daily calorie intake dropped below 500 kcal, less than a quarter of the daily average an adult consumes today.

This mass starvation and resulting deaths galvanised the population to ensure that farms completely de-stocked and devastated by the war would be given whatever support was needed to get back up and running, to ensure this situation would never happen again. Food security became the utmost priority in the Netherlands and across Europe.

It was interesting to reflect on the low status farming holds in countries like New Zealand and Australia, where there has never been a food shortage, and compare it to countries like the Netherlands and Japan who have known critical food shortages and truly understand the importance of agriculture as a necessity of life along with fresh water and clean air.

One of the major steps towards ensuring not only food security but also political stability in Europe came in 1958 with the formation of the EU. The initial trade agreements, signed up by the six founding nations, that were to form the basis of the EU, were designed to control the supply of steel and coal, the two raw ingredients required to manufacture canons and therefore wage war. By the late 70’s most European countries and the UK had also joined the EU.

Now that I have a better understanding of the environment and pressures that lead to the formation of the subsidies I have a more open mind towards their purpose and introduction.

The question is whether they are still valid in today’s society and it will be interesting to follow the outcome of Brexit which will remove the direct payment subsidies to farmers in the UK, and may also challenge the future of farming subsidies across Europe.

Community-Centric innovation and the regenerative farming frontier.

There is a new frontier of food and farming emerging. Its emergence is in part a response to the limitations and negative impacts of our current farm systems, and in part driven by a realisation that ‘regenerative farming’ is opening up a new world of possibility. Many of our current farming systems are being ‘squeezed’ by commodity market competition and volatility, rising costs, public scrutiny and regulation, plus potentially disruptive technologies that bring significant challenges to the ongoing viability of agricultural businesses – farming is becoming increasingly complex and the future less certain. Recent KPMG Agribusiness Agendas have identified these pressures and called for New Zealand agriculture to target high end consumers, focusing on product and environmental leadership and excellence. What is perhaps less emphasised is the scale of shifts required in our farm systems if we are to truly respond to our changing reality.

This report is a call for a new and additional ‘approach’ to agricultural development and innovation in New Zealand. As I travelled with Nuffield it became increasingly clear that regenerative farming not only full of opportunities, but shifting our farm systems and practises in this direction is both a positive and necessary response to our changing reality as farmers. Regenerative farming is a broadly defined system of principles and practises focused on biodiversity, soil health, ecosystem function, carbon sequestration, improving yields, climatic resilience and health and vitality for farming communities. A key feature of these farming systems is their high demand for knowledge and creativity in designing and managing the complex biological relationships that underpin their success, as opposed to conventional systems that are more dependent on inputs for control and management. This key distinction is where our current agricultural development and innovation system falls short in its potential to support regenerative farming. Our current system focuses on a “science-driven, linear, technology transfer-oriented approach to innovation” (Turner et al. 2015) that, while perhaps suited to more homogenous and input-oriented conventional farm systems, does not align well with the more holistic and high risk innovation demands of regenerative farming (that also offers less opportunities for agribusinesses).

The ‘approach’ to support the innovation of regenerative farming systems and practises needs to move beyond old dichotomies between ‘top-down’ and ‘bottom-up’ drivers of change, towards community-centric approaches guided by the knowledge, experience and creativity of farmers and rural communities, with the support of other actors (ie. government, policy, research, relevant businesses and organisations etc). Farmer and practitioner experiences of making or 3 supporting shifts towards regenerative farming, around the world, have formed the basis for the conclusions of this report. Community-centric approaches were observed to facilitate diverse participation and place equal value on local and external expertise, where everyone ‘meets as equals’ in a shared commitment to achieving community goals. In this manner, the diverse interests of communities and society can be acknowledged and incorporated into decision- making and action, with the potential to reconcile apparent conflicts within and between rural communities and wider society.

A community-centric approach to regenerative farming innovation is also a principle-led and prototyping approach. A principle-led approach is a shift way from ‘recipe’ farm systems that are often inappropriately applied, towards a focus on translating farming principles into the diverse contexts created by land, climate and farmer skills and aspirations. A prototyping approach tests possible solutions to complex settings with a fast-fail methodology, representing a new approach to learning that focuses on diverse teams, innovation and agile testing, guided by practitioners such as Otto Scharmer and Zaid Hassan. A community-centric approach engages actors from across the system on challenges at a range of scales, such as water quality management in a catchment or rural employment/livelihoods, to challenges on individual farms (ie. what trees to plant where) that may or may not be shared by other farmers. It recognises the inherent connectedness between individual and collection actions, utilising diverse participation and commitment to understand complex settings and develop solutions that are beyond the capacity of any individual.

Mangarara Station, where I now live and work, is committed to a regenerative farming vision and is confronted every day with the challenge (and excitement) of working towards it. We hope to build mutually beneficial relationships with many different people, from local farmers and community members, organisations, to regional and national policymakers, researchers, sector organisations and NGOs, entrepreneurs and businesses, software developers and generally any creative person who sees opportunities here to support what we are trying to achieve. There is a huge amount that we don’t know, and therefore we must experiment based on existing knowledge, intuition and creative thought about what might be possible. It is essential that regenerative farming innovation is supported by the institutions and organisations whose mandates align with the potential value regenerative farming can generate. The opportunity for New Zealand (and other countries) is to collectively build more diverse, integrated and resilient landscapes, economies and communities that contribute positively to the future we want to create.

Keywords for Search: Sam Lang

China Dairy: the growth of an industry.

China is currently the most important market to the New Zealand Dairy Industry.

I first visited in 2014 and soon realised there were some large differences to the information New Zealand Dairy Farmers believed to what was actually happening on the ground in China.

Rapid development was occurring in the Chinese Dairy Industry and the potential for a significant increase in production through minimal improvements was apparent.

Knowing the Chinese people had the ability to modernise industry rapidly, I felt there was a potential threat to the New Zealand Dairy Industry; my livelihood.

On reflection, China will struggle to meet growing demand internally due to factors such as poor management, substandard feed quality and increasing environmental pressures.

Barriers to rectifying these problems will be faced by the Chinese Dairy Farmer through Chinese consumer pressure for sustainable on-farm practices such as reducing the environmental impacts of housed dairy operations.

New Zealand can capitalise on this by increasing the amount of due diligence on the analysis of risk in China.

New Zealand needs to beware that the threat to export markets is not only from internal Chinese production, but also from that of their European counterparts. New Zealand needs to clearly differentiate their products by becoming Genetic Engineering (GE) Free.

New Zealand must invest in relationship building with a long-term view to match that of Chinese relationship ideals.

The New Zealand Dairy Industry needs to change how it participates in the evolving Chinese consumer market to, maximise returns to it’s farmers.

Keywords for Search: Bede O’Connor

Will it have legs: An investigation into synthetic food and the implications for NZ agriculture.

Synthetic food (SF) is being touted as a revolution in food production that could replace animal products. While the industry is more bark than bite at the moment, it’s rapidly gaining awareness and attracting significant funding by being portrayed as a solution to many of the global problems associated with conventional agriculture. As the pressure intensifies on humanity to curb climate change, all options are being considered and, with a carbon footprint larger than the global transport sector, agriculture is well and truly in the spotlight. Agriculture has held relative impunity from climate mitigation strategies up until now but SF is bringing that into question by providing a potential alternative method of food production.

The environment is one of the key drivers behind SF but there are others as well. The drivers are being used as a platform to promote SF as the way of the future and leveraging off the growing disconnect between consumers and the farms that currently produce their food. It’s too early to know if SF will actually compete at scale on a cost and quality basis but nevertheless, the messaging around SF is already having a negative impact on the perception of agriculture. Countries like NZ who rely heavily on agricultural exports are at risk of losing market share to SF as well as being tarred with the same ‘industrial agriculture’ brush as other countries and becoming what one journalist has described as the “Detroit of agriculture”.

As with many emerging technologies though, things don’t happen overnight and the devil is often in the detail. The NZ primary sector needs to resist the urge to take a stance against SF based on weak journalism and instead be part of an informed conversation. The first response from people a year ago, when discussing SF, was was ‘yuk, it will never take off because people want natural food’. Thankfully, the conversation is now shifting to ‘what could happen if SF did take off and how do we approach this potentially disruptive technology?’. SF needs to be approached with an open mind and lots of questions rather than building a wall to defend our patch.

NZ Ag needs to get a better handle on how conventional food measures up against SF based on the ruler that tomorrow’s consumer will use. Carbon emissions, soil conservation and animal welfare are some of the attributes that consumers will look for and this needs to become part of our marketing approach in the future.

In reality, conventional agriculture is more of a threat to the SF industry at the moment, not the other way around. SF consists of startup companies with products in the development phase and markets that are built on promises. This isn’t a reason for us to rest on our laurels but instead a window of opportunity to get involved and have a say in how the SF industry evolves. We can choose to be disrupted or help shape the future of food production by understanding the drivers behind SF and being part of the solution, not part of the problem.

 

Keywords for Search:  Richard Fowler

Defining our Kaupapa: New Zealand’s role in the future of global agriculture.

Our economy is founded on excellence in primary production and exporting this produce around the world. Given our isolation and abundance of agricultural production, New Zealand has responded to the challenge of distance between the production base and markets through a focus on operational excellence. Continual improvement in productivity and efficiencies along the supply chain from perfecting a pastoral based farming system has enabled New Zealand to compete internationally regardless of distance.

Historically the United Kingdom and Europe were our main markets, with counter-seasonal demand. Therefore, the main goal was to produce more volume at a cost competitive price. Over the years New Zealand has diversified away from the traditional markets towards more emerging markets of Asia, particularly China. This pivot has been enabled through Free Trade Agreements that have allowed New Zealand product preferential access.

New Zealand will face new challenges as the global trading environment moves on from a period of liberalization. This presents significant challenge for New Zealand and a cause to reconsider how we could overcome the market production dislocation challenge. The New Zealand agriculture sector have strategies associated with greater internationalisation and market orientation, however there is limited evidence of implementation. The paradox between market orientation, greater internationalisation and a continued focus on operational excellence needs to be recognised.

If New Zealand wants to overcome the market production dislocation in a new way, it is useful to draw on the lessons of other small economies. This report investigates the market production dislocation of five other countries, and the ways by which each country has developed an eco-system to overcome this challenge. A framework is presented that sets out the importance of recognising the why, the how and the what of an eco-system to overcome the market production dislocation. Understanding the why, clarity of purpose, or in New Zealand’s case our kaupapa is critically important to establish to overcome the market production dislocation. Kaupapa can be defined as the principles and ideas which act as a base or foundation for action. Each country was found to have a burning platform that either forced change, or presented an opportunity to change. The inherent culture of each country combined with the burning platform challenge led to the purpose, or why, for change. Once the why is understood, the systems and leadership, and nature of value creation and realisation can be developed. These are secondary concepts, and can only be developed once a clear why is expressed.

New Zealand agriculture lacks a clearly defined kaupapa and this makes it impossible to create change within the industry. Without a guiding star, there is no chance to make difficult decisions or trade-offs. The paradox of market orientation and operational efficiency will continue to create conflicts within the agriculture sector and wider economy. Leadership for change needs to come from the creation of a united industry body that represents all sectors of the agriculture industry. The critical mass generated from such an organisation will be powerful when speaking on behalf of all New Zealand growers and farmers.

New Zealand can use this moment in history as a chance to redefine our kaupapa, and come together through collaboration. Success will come when New Zealand speaks with one voice when asked what the agriculture sector stands for. The paradigm of globalisation is shaky, and the opportunities for innovative business models due to global connectivity are higher than ever before. Now is the time for action.

Keywords for Search: Jessica Bensemann, Bensaman

Agribusiness governance: Finding the green zone.

Executive Summary

  1. Corporate governance has grown in prominence in recent decades to the point that it is promoted as a default business practice. This has more recently translated to a belief that all businesses should embrace good governance. In other words, corporate failure is often closely associated with poor governance, resulting in the widespread assumption that good governance is therefore a pre-requisite of corporate success.
  2. Traditional corporate governance represents an ecosystem of rules, tools, influences and activities that collectively operate to direct and control an organisation.
  3. While the re is no single accepted theoretical base for corporate governance, one – Agency Theory – which seeks to address the risks arising from a separation of ownership and management – overwhelmingly dominates practice and education. However, the governance needs of the bulk of our SME agribusinesses are not satisfied by an Agency Theory approach:
    1. Governance as a means of Control : Strike one! SME – Agribusinesses are generally owned and operated by the same people or group, often a family, where Agency theory adds little or no real value, resulting in “management processes on steroids masquerading as governance.”
    2. Governance as a d river of Strategy : Strike two! “Culture eats Strategy for breakfast.”
  4. Green – Zone Governance – the role of Service: An opportunity to re-calibrate the approach to Agri-SME governance based on Resource Theory, which seeks to bolster the capability, networks, outlook and expertise of the business and business owner as a whole.
  5. In a family business, genuinely fair outcomes are realistically few and far between – which is why a commitment to a fair process is so important, and why Service-focussed governance can help.
  6. Green Zone governance assumes you already have control over your own organisation, and that you have the culture you need to win. If you have neither, introducing a formal system of governance is the least of your problems. But project governance might help get you on track.

 Agribusiness Governance: Finding the Green Zone – Tom Skerman

How has New Zealand dairy employment trends changed in New Zealand since 2000.

Executive summary

For the last 15 years I have been involved with the dairy industry in the capacity of a rural bank manager . Prior to this I worked as an accountant, property valuer and seasonal farm worker.

Ironically I started with another topic in mind “key factors to staff retention in Northland dairy farms”, however after numerous discussions with clients the topic evolved into the change in employment trends in the New Zealand dairy industry. The rational for the selection of topic was fundamentally due to the banking relationships held with clients with a large percentage complaining about the difficulty in attracting and retaining staff. 

I believe that there is an economic cost to many Northland dairy farmers in regards to staff turnover and retention which inhibits many farms and farmers from reaching their potential. I also believe that via better staff retention communities will be less nomadic and with a stable environment there is the ability to establish roots to aid and add to the community dynamic.

During my tenure as a rural manager there has been significant change in the dairy industry and the purpose of my research is to understand how this has impacted employment in the dairy sector.

I reviewed historic research conducted in a similar vein with a view to identify themes behind their work to enable me to establish my own hypothesis. Common threads were collated from this research work in to a survey to complete comprising questions around these threads from both an employer and an employee perspective.

Michael Skudder