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Just for the Health of it – enhancing the wellbeing of employees in the post harvest-kiwifruit Industry.

Executive Summary

This report explores ways that well-being can be enhanced in the post-harvest kiwifruit sector. The kiwifruit industry has expanded substantially over the last few years and is expected to continue with exponential growth. It is more important than ever to focus on the wellbeing of employees to ensure that the industry can fulfil its potential.

Wellbeing is linked to many positive business aspects, including engaged staff, reduced absenteeism, and higher productivity. Employees are faced with the reality of various job and life demands daily. Additionally, the kiwifruit harvest season from March to June each year see these demands escalated with increased workloads and longer work hours. Employees may experience compromised wellbeing, becoming burnout risks if these demands aren’t balanced out with job resources and personal resources.

The main findings include:

  • Leaders of the industry interviewed believed that the seasonal demands were the biggest barrier to enhancing wellbeing, resulting in significant impacts to work- life balance.
  • The conceptual framework called The Job Demands – Resources Model can be used to predict and enhance wellbeing. It considers the balance between energy in and out energy out for an employee to have optimised wellbeing. If it is unbalanced a health impairment process can be expected.
  • The culture of the organisation is what drives the wellbeing of the staff.
  • Using a transformational leadership style is the most conducive style for wellbeing. More training and development of leaders and managers is required amongst the industry.
  • Succession planning is important for keeping job descriptions within a reasonable scope for individuals. Along with future proofing the business, it also fosters engagement and development opportunities for employees.
  • Utilizing flexible work options helps to create better work-life balance and is linked to happier and healthier staff.
  • Quarterly engagement surveys help to inform management about employee wellbeing. This could be of help for the kiwifruit industry where work demands vary throughout the year.
  • Wellbeing programmes can be used to educate employees around wellbeing and lifestyle habits; however staff must first be engaged for this to be of use.

Read the full report:

Atkinson, Donna -Just for the Health of it

Donna Atkinson Kellogg Course 42, 2021

From the Back Paddock to the Board Room: Dairy Women’s Network and Pathways to Gender Diversity in Governance

Executive Summary

“Diversity may be the hardest thing for a society to live with, and perhaps the most dangerous thing for a society to be without.”
~ William Sloane Coffin Jr.

Dairy farming in New Zealand has advanced so much in the last decade. The transferable skills and strategic mindset that women develop from farming could qualify them for roles in banking, trades, accounting, animal health, HR and psychology, just to name a few.

I explored the ways that we can get dairy farming women into New Zealand boardrooms to see better outcomes for our businesses and economy. This is not about men versus women or disregarding the importance of experience, it is about what we need to do to be closing the gender gap on boards, having diversity of thought around the boardroom and avoiding ‘group think’. It is about the individual having the confidence to bring their true self to the table and express their views.

For this study I conducted semi-structured interviews with 9 amazing women who have had an affiliation with Dairy Women’s Network (DWN) in some capacity, whether it has been since the beginning of the network, on the trust board, as Regional Leaders, or winning Dairy Woman of the Year and other awards offered through DWN. They are all based in New Zealand and represent gender diversity in the boardroom. I asked them about their journey to commercial governance and how they achieved it. I also spoke to 10 women and men represented on other agri-business boards in New Zealand to get their opinions.

The women I have spoken to have a great drive, determination and commitment for change. For the women who won Fonterra Dairy Woman of the Year and other awards offered through DWN, it has given them the profile and funding to further educate themselves and gain confidence and visibility, which has contributed to their further successes.

Please note that I have formed my conclusions from a small pool of women whom I interviewed between September 2020 to February 2021, the outcomes could change with a bigger group. I interviewed women who in some cases were appointed, and other cases that were in farmer elected directorships. I decided not to delve into the percentage of women going for appointed versus elected roles as I believe it is another report.

I have also done a literature review to gain an understanding of the importance of having more women on boards for diversity of thought which results in an increase of companies performance. More representation of women on boards creates the change that needs to be implemented at a high level. I explored the need to see more women on boards and the current shortage of female representation in the boardroom. One of the reasons for fewer women on boards appears to be a lack of confidence or imposter syndrome.

Imposter syndrome is the voice inside our head, experienced by both men and women. It most often comes to the forefront of our mind when we are challenging ourselves and pushing ourselves out of our comfort zone. It is the feeling of being a fraud and that someone will catch us out, because we don’t feel qualified enough for the job we are expected to perform. In my research I found it affects women more often than men and stops us from taking that next step into the unknown.

Vulnerability, resilience, and the power of the mind can affect our behaviours and hinder future opportunities. As women we need to learn to manage the ‘coach’ and the ‘critic’ to create better outcomes for ourselves.

Following are some of the main recommendations that have come out of my findings to see an increase of women in the boardroom:

• Let people know you are looking for a board role.
• Women need to support each other and utilise networks for visibility.
• Women should constantly be learning and upskilling.
• Have a strong governance CV and have it ready.
• Be prepared to be yourself and use your USP: unique selling proposition.
It is important to recognise the role of networks like DWN in helping women to build confidence, and in providing support for when they move outside of their comfort zones. The network plays a major part in the increasing representation of women on boards.

Read the full report:

Smith, Chelsea_From the Back Paddock to the Board Room

Chelsea Y Smith Kellogg Course 42, 2021

Clean and Green NZ? Genetic technology and its future in New Zealand’s Pastoral Industry.

Executive Summary

Pastoral farming is the most dominant and natural land use in New Zealand today and is one of the main contributors to New Zealand’s ‘Clean green’ image. The pastoral industry is under increasing domestic, social, and political pressure to reduce its environmental footprint whilst maintaining New Zealand’s pasture feed products in the market and ensuring prosperous farming communities.

New Zealand’s pastoral industry is not the only one facing these issues but many countries worldwide including Europe, USA, and Australia. Some of these countries however have relieved some of the pressures surrounding environmental footprint of pastoral farming through new genetic technologies being integrated into plant breeding cycles causing lesser reliance on water, herbicides, and insecticides to name a few.

New Zealand pastoral industry is underpinned by plant breeders and the modern ryegrass plant. On average it takes 12-15 years to test, multiply and commercialise a new ryegrass meaning a large breeding programme with multiple scenarios predicted ensures there will be a cultivar for future situations. The purpose of this report is therefore to understand the current plant breeding technologies and compare them to the controversial genetic technologies which have recently become available to New Zealand.

My research details past, current, and future plant breeding methods, from cross and hybrid breeding, chemical and radiation breeding to new breeding technologies such as Genomic selection, Marker-assisted selection, Genetic modification, and Gene editing.

The Genetic technologies available to plant breeders allow multiple forms of enhancement and a ryegrasses ability to withstand, herbicides, insects, and extreme weather events, whilst increasing the rate of genetic gain. Of these technologies available worldwide but not in New Zealand is Genetic editing (GE) or genetic modification (GM). GM has been a controversial topic in New Zealand for over 20 years which has been heavily debated especially around its use in the agricultural industry and the possibility of it single handily able to tarnish our ‘clean green image’.

The methodology used in this report was literature reviews which was used to quantify themes which were gathered through a series of informal interviews from leading industry professionals in New Zealand’s pastoral industry.

The misconception and lack of understanding around past and present technologies associated with ryegrass breeding are significant worldwide. This is linked back to several factors like the growing presence of social media, lack of engagement from the science community around consistent relevant information to the public, but also higher up, in governments and regulatory paperwork worldwide. From the Cartagena Protocol to the Food Standards Australia and New Zealand (FSANZ), each country has their own stance and even definition of what GMO or GE stands for.

Ethical and social considerations were one of the most prominent themes to come out of my research. The lack of monetary value on morals and cultural beliefs makes genetic technologies statistically hard to quantify its effects. Excluding such values has led to a lack of trust in both scientists and politicians. However, the true misconception lies around indigenous cultural values which underpins New Zealand. Literature suggests Māori are not against biotechnology but were more concerned about how it affected whakapapa (genealogy), mana, mauri (life essence), and kaitiakitanga (guardianship) and what forms of biotechnology could be a positive addition to their communities not to just those who can afford it.

Therefore, the recommendations from the research undertaken are:

Collaboration of industry bodies within the pastoral sector to:
– re define the pathway of the pastoral sector and how it could look with and without new biotechnologies such a Genetic editing or Genetic modification. The stance of the collaborative response will be communicated to the wider industry followed by consultation then to the wider public.
– re define what ‘clean green’ image means to New Zealand. How do we link our cultural aspirations with the reality of economics in the pastoral sector? ‘
Commitment to Engage with New Zealanders about genetic technologies through the re-establishment of a bioethics committee. The non-political committee will have a multitude of respected and knowledgeable professionals from agricultural, biotech, science, communication, environment as well as social and cultural organisations.
This groups main responsibility will be to engage with their wider communities about their opinions, thoughts, and concerns. This will be at the forefront of the committee’s priorities.
Approving specific acronyms and definitions for the biotechnology sector worldwide. Scientists use many technical and non-technical acronyms throughout their work however the use of these outside of the industry is contributing to the fragmentation of trust in science. An approved list of acronyms with their responding definitions to be implemented under a protocol such as the Cartagena protocol to ensure correct depiction and understanding of biotechnologies by the public.
The approved language is then to be enforced by individual governments across industries to ensure miscommunication is minimised.
Regulating a technology not by the final product or outcome. Define the technologies by assessing the risk the outcome or product has to the pastoral industry across all areas.

Read the full report:

Reith, Rebecca_Clean Green NZ – Gene technologies future in New Zealands pastoral industry

Rebecca Reith Kellogg Course 42, 2021

Science communication – Responsibility and integrity in New Zealand’s primary sector

Executive Summary

High quality agricultural science underpins New Zealand’s primary sector, economy, rural communities, and wider society. The science capability of New Zealand’s agricultural sector is largely responsible for our competitive advantage in the global food market. The ability to produce safe, healthy food is highly dependent on robust science, technology, and innovation. NZ agricultural scientists do an outstanding job of translating their research to farmers. This can be measured through the productivity gains we have seen over the past few decades in pastoral farming systems.

There is a disconnection of the public’s understanding of what happens to our food and fibre, through the supply chain, from pasture to plate. The objective of this research was to understand how New Zealand’s primary industry can communicate the importance of agricultural science more effectively to the New Zealand public, and who should be responsible for doing this. Understanding how the rural community views current government support for agricultural science and science funding is also important. The aim here is to determine how best to ensure that there is a better appreciation of the value of agricultural science to New Zealand’s bioeconomy.

Fifteen semi-formal interviews were undertaken with farmers, industry personnel and scientists who work, or have worked, in the public and/or private sectors. Key themes were identified for discussion through thematic analysis. Qualitative data was labelled, collated, and reviewed to identify patterns with a shared meaning.

There were several key findings from this research. Firstly, the research suggests that our primary industry does not communicate our agricultural science effectively to the New Zealand public. The link between the science community and the public need improving to ensure science messages are understood by the urban community.

The primary sector needs to communicate simple, consistent messages, which are objective, fact based, and are packaged to resonate with the public and support strong story telling. To find some common ground with our urban counterparts, we need to outline the health, social and environmental impacts of our products, and align this to their values and beliefs. As well as providing information to help people understand the ‘why’ about our different farming practises.

Respondents’ views were divided over who is responsible for agricultural science communication. Some thought scientists, industry, and farmers should individually be responsible – but a collective co-ordinated effort is required. It was evident the primary industry would benefit from having more Honest Brokers (Pielke Jr, 2007) to communicate our messages to society. Honest Brokers are trusted scientists who engage with the public and can provide a wide scope of information to help the receiver make a well-informed evidence-based decision.

A pattern emerged that agricultural science needs political leadership, without politicising the science content. Policy makers need better connection with farmers to understand how farm systems operate. Respondents were of the opinion that central government does not support the primary sector enough through science investment and that the current funding model is not working. Given the importance of agricultural science and innovation to the New Zealand economy and society, this should be a central focus for our government to address.

There is an opportunity for a national conversation about targeted science communication. Several recommendations were drawn from this research. Given the link is missing for scientists to communicate agricultural science to the public, a strategy needs to be built to get agricultural science into mainstream media. This requires a collective working group with individuals from different areas of the industry supply chain, scientists, media, as well as central government. MPI and CRI’s could also develop specialist communication units to transfer science messages to the wider public, not just to farmers, academics, and stakeholders.

A further proposal was that the primary industry needs more government support, through funding for agricultural science and a revamp of the current funding system.

The recommendations could start with The Royal Society or the New Zealand Institute of Agricultural and Horticultural Science (NZIAHS), working in conjunction with selected Honest Brokers and the primary industry to have a national conversation on effective science communication. Central government’s influence, with a top-down approach, can also have a positive flow on effect, where society sees the value of our industry and especially our agricultural science capability.

Read the full report:

Morris, Nicole_Science Communication

THE BOTTOM LINE! ARE FARMERS/GROWERS BEING RECOGNISED FOR MAKING CHANGE?

Executive Summary

In the Farmer/Grower Survey (2021) a grower argued that the reason for any change is to make sure their business can remain sustainable. Change needs to be motivated by a sustainable business model, which means resilience and being able to adapt to a changing environment (Viticulture A, F/G Survey, January 29, 2021). This changing environment is occurring fast, how we respond to topical issues will be the driver of change in the discerning consumer market. The “Fit for a Better World” document describes the way we respond to climate, freshwater and biodiversity will define us as a sector and as a generation. Consumers and customers will judge us by it, and so too will our grandchildren (Primary Sector Council, 2020).
There is a rising consumer awareness on how and where their food is produced. What effect has this food had on the environment? What conditions are those producing the food and fibre working in? These questions continue to evolve, meaning we as food and fibre producers need to be able to adapt and prove our credentials. This raised awareness affects market access requirements, documentation and the changes we need to implement if we wish to be a premium product producer.
This movement from volume to value is an acceptable concept and one New Zealand is in a prime position to take advantage of. The ‘triple bottom line’ presents the idea for sustainability to be achieved by a combination of three groups: people, planet, and profit. Are New Zealand’s primary industries asking our farmers and growers for too much focus on the pillars of people and planet? The risk to having a lopsided focus on people and planet issues is that those actions may outweigh the third pillar of profit, thus sustainability being compromised. The importance of a sustainable and resilient business model is key to our success in capturing the value opportunity.
This report aims to raise awareness of the importance of having a balanced and supportive approach to change. Making change can be separated into three buckets: imposed, collaborative, and change by choice. The clear difference in the change buckets comes through the perception of having control. Being in complete control is found in the change by choice bucket. Collaborative change retains a semblance of control (even if it’s not the farmer/grower’s choice), making it easier to navigate. The toughest version of change is imposed change, where the farmer/grower has little control nor collaboration. The perception of increased imposed change for NZ farmers/growers is something the primary industries need to be wary of, given the effect this change type has on mindset and profitability.
Sustainability is across all things – whether it relates to people, the environment or economics. I wanted to understand the points of view of our farmers and growers to see why/how they are currently making changes in their business and if they are ready for the continuation of change. To be truly sustainable, primary businesses need to create a model that provides a level of profit that can be reinvested back into their business.
This is an important study for the primary sector to understand how it can be best promote change within industries. If the change comes at a cost to work such as infrastructure upgrades, yield loss through the change of inputs or staff wage increases, when is it the right time to implement change? Have different regional variances, farm types, planning, and work that has already been started but may not be written down, been considered? We need our changes captured so we can realise the value opportunity.
This report included both a literature review and a qualitative approach through a series of semi-structured interviews. I have analysed the themes, common messages from both the interviews and the literature to provoke further insight and discussion.
The incentives for farmers and growers are recognised as three different buckets, which can be generalised as a commodity producer, a niche/premium market, and someone seeking a premium through trading on their ethically produced products. The New Zealand primary industries have producers in each of these buckets. Considered change is needed for each incentive bucket, so the farmer and grower are being recognised for the change required.
An area I have seen as being overlooked is that change is a human problem! From one farmer to another, the way they would cope with change is different. Kubler-Ross change curve model (Elizabeth Kubler-Ross Foundation, n.d.) is very useful to identify and understand how people deal with change. The emotions linked to the seven stages can be a useful tool to identify where an individual may be with the state of change and how to transition through to the integration of change intended.
Change that is sought by the consumer, the market, government, or the individual farmer and grower, means an understanding of the producer’s readiness and support for change. In this study, I explored examples from the survey participants of actions that were imposed change, change by choice, and change by collaboration. What was evident was that the farmers and growers are already engaged with change and they believe in constant improvement with their operations.
I found that farmers/growers feel they are mostly ready for making change and more ready than their neighbours’, and those sectors they are participating in, also more ready than the New Zealand primary industries as a whole. The areas of opportunity and challenge discussed by the survey group also had an alignment to that of the priority actions captured in the KPMG Agribusiness Agenda. As I discovered during this study, the shift to a general understanding from New Zealand farmers/growers is that they need to better represent themselves to the concerning consumer. The challenge is not the why? But to articulate and prove our credentials to those consumers.
With a common problem across all primary industries, the need for strong and clear leadership is evident. A shift in power from being government lead to a more collaborative approach is needed to achieve better outcomes for the primary sector. Sharing a joint vision of Te Taiao (English translation: the natural world, environment) means we can have more responsibility being held in the hands of those best positioned to engage, enable, develop and implement the change needed.
My recommendations are:
• To achieve the vision and strategy of “Fit for a Better World”, we need leadership to not only verbally accept the document. Leadership needs to be visible by having a Primary Sector Council structure and governance that has both the sector and government working together.
• Our farmers and growers will need further support with Farm Environment Plans so that the entire primary sector can benefit from raising the standard of reporting. The government needs to see this as a necessary investment in making the shift towards achieving price premiums. Engaged farmers and growers should be backed by a trusted Farm Assurance Programme to brand New Zealand premium products to the export markets.
• Change is a human problem, so messaging and support is critically important to those both implementing and being affected by change. Seeing farmers/growers are already contributing so much towards change. I believe those that have an increased capacity to better support are both media and the government. The role they have to play in changing the narrative and funding the support services to the rural sector.

Read the full report:

Milne, Bryan_The Bottom Line – Are farmers growers being recognised for making change

Bryan Milne, Kellogg Course 42, 2021

 

What is the true cost of transience to the New Zealand dairy industry?

Executive Summary

This report investigates whether the dairy industry has an issue with labour transience and what it truly cost a business to lose and retrain a new employee. I needed to firstly find out If, when, where and how transience has become a problem in the dairy industry. Then what it truly cost a dairy farm to lose and replace an employee. Finally, I investigated the reasons people were leaving a job and was it preventable.

There were two parts to this research project 1) a literature review and 2) a survey of 23 dairy farmers to see what they thought about the cost of transience in the dairy industry.

The key findings of the literature review were:

  • New Zealand dairy farms have changed drastically throughout the last 29 years in size. They have increased in average area from 220ha to 372ha,herd size has over doubled from 170 cows to 440 cows, and production has increased from 250kgms/cow to 385kgms/cow. Resulting in more labour being required on farm.
  • The dairy industry has similar transience to all other industries in New Zealand. This means that transience is a big issue for the whole of New Zealand not just the dairy industry.
  • 1% of a dairy farms budget is from labour costs.
  • The average dairy business has quintupled its farm debt in the last 28 years.
  • Dairy farmers are working 11 hours/week longer on average than the country’s 2.7 million people work force.
  • It takes a lot of time and effort to replace an employee.
  • Inducting an employee is costly and time consuming. It takes up to 2 years to fully induct an employee to the same as where the previous person employed was, depending on the level of experience of the position. Costs involved are not only the cost of off farm training such as ITO, but also the cost of time taken from other employees/manager/owner’s day, to train/oversee the inductee until they are competent at the tasks at hand.
  • It varies on how much it costs to lose an employee depending on experience lost. 30% – 200%. There is big difference in losing an assistant position to losing a second in charge or manager. A more senior role can more easily fill in for an assistant role as they already know the job. But an assistant cannot help with 2ic role, because they have not learnt the knowledge of things like farm walks, feed budgeting etc.
  • Working on a baseline of the cost of transience. You are looking at least 30% of the persons annual salary cost to your business for one person’s turnover.
  • Not all the cost of transience is monetary. Working longer hours, the stress of filling the skill gap lost, loss of sleep worrying how to get through until a new team member can be found and trained. These do not cost the business directly monetarily, but they are very costly to the rest of a team, family and individual.
  • 7 out of 10 reasons people leaving a job could have been prevented. They are:
    • Career development – this has been the number one category for 10 straight years. Employees who are satisfied with their development are likely to stay.
    • Work-life balance – this was up 23% since 2013. Flexibility of the job, long shifts, and suitability of hours
    • Manager behaviour – General behaviour and communication have each increased (gotten worse) in the last year.
    • Job characteristics – this was the number one rising category of turnover, up 117% since 2013.
    • Well-being – to promote work-life balance consider flexitime and telecommuting, assistance with childcare/eldercare, financial counselling, and flexible leave options.
    • Compensation and benefits – many think compensation is the reason for turnover. Sometimes it is and sometimes it is not. Find out the real reasons for turnover in your organisation. 
    • Work environment – applicant selection assessments and interviewing must include person-environment and person-culture fit as company culture becomes increasingly important.
  • Preventable reasons for turnover equate to 78% of our transience if we could solve this it would change our turnover rates from 24.5% down to 5.5%. This would be an astonishing change to our businesses.

 The key findings from the survey were:

  • 96% of dairy farmers surveyed agree transience is a cost and there is a problem.
  • 70% surveyed believe it costs their business up to $20,000 to replace a staff member. Reasons stated were from loss of productivity, induction, and training costs to get the new employee up to the same level, advertising costs and the loss of time, selection and interviewing of potential candidates.
  • It takes a lot of time and effort to replace an employee.
  • That the respondents thought most of the costs for employing a new employee was in induction and training costs.
  • 5% of the respondents thought it takes at least a couple of months to induct a new employee.
  • There was no clear trend for transience from respondents.
  • 95% of the respondents indicated that they worked over 40 hours per week.
  • The reasons for people leaving a job were Lack of support, long hours, pay not good enough and management not treating them well.
  • There were three main themes for why people stayed on farm they were good culture, Good employer, progression, fair remuneration package.
  • The results from the survey did not vary to much from the position held. Be it owner, manager, share-milker, or employee.

The main conclusions of this research project were:

  • Transience has become worse because the dynamics of dairy farms have changed drastically throughout the years, with increased farm size, resulting in the need for more labour on the farm.
  • Dairy farm turnover rates on average are relativity the same as the national average.
  • That transience is costing a considerable amount both in the way of money and stress, fatigue and over work to a dairy farm business.
  • Three quarters of transience can be prevented. Which would result in considerable savings to a business turning over employees.

    Recommendations:

Turning over employees is costing dairy farming business and most of the reasons they are leaving are preventable. To capture the benefits of retention each farm needs to understand why people are leaving their farming business. Each farm needs to analyse the environment they provide for their people. Is the farm inclusive, asking their people what they want in the workplace and driving it from their needs and wants? 

Next steps for the dairy farm employer:

  • Become clear why your people are leaving – remember that on an exit interview they may not give you a clear explanation.
  • Become clear on why your people are staying – what are some strengths?
  • Identify what you are doing to prevent people from leaving your business – ask yourself would you like the same working environment?
  • Look at the history of employment on farm, is there a pattern? Could some turnovers have been prevented? Was this in your control to prevent?

Next steps for industry:

  • Identify good employers in industry who have a high retention rate and showcase these.
  • What are they actively doing to prevent turnover? Can strategies be created and adopted?
  • Focus on the intangible as well as tangible drivers – people are human beings not doings.
  • Commitment five is far reaching and will need engagement at all levels to become real. It will only be driven by those employers who see the benefit in looking deeper into their own behaviour and environment they provide on farm.

Read the full report:

The true cost of transience

 Brent Miller, Kellogg Course 42, 2021

 

Industry perceptions of the role of soil carbon in farm greenhouse gas emissions

Executive Summary

Internationally increasing soil carbon in agricultural soils has the potential to offset greenhouse gas emissions. This project evaluates the role of soil carbon in relation to farm greenhouse gas emissions in New Zealand. Agricultural soils in NZ have naturally higher levels of carbon than those overseas because they are typically younger and our practices include more restorative pasture and animal phases. Therefore we may not be able to increase soil carbon in the same way as international studies suggest.

The aim of this project was to examine the role of soil carbon in NZ and in relation to farm greenhouse gas emissions and policy. Key groups industry stakeholders were identified and interviewed. From the results themes were identified and analysed to answer the study questions.

The key learnings of this project were:

● It is unlikely that soil carbon will play a role in the offsetting of greenhouse gas emissions in New Zealand agriculture because levels on farms are already high.
● The complexity of including soil carbon in an emission scheme could be inaccurate and lead to unwarranted costs for farmers.
● It is more important that farmers focus on retaining and avoiding losses of soil carbon.
● Soil carbon contributes to soil health by improving soil physical properties such as water and nutrient holding capacities.
● More research is needed on soil carbon in NZ, where it is practical to increase it and how.
● Farms are businesses and need emissions reduction solutions that are going to be both practical and ensure that their businesses remain financially viable.

The recommendations from this project are that:

● More research be done on management practices that could increase soil carbon.
● Information be presented to farmers on the benefits of soil carbon.
● Tools be made available so that farmers can compare the effect of different practices on soil carbon.
● Farmers need help to better understand their greenhouse gas emissions and a range of solutions on how to reduce them.
● The industry and the broader society need to support farmers as they adapt their businesses to account for and reduce emissions.

Read the full report:
Industry Perceptions of the Role of Soil Carbon in Farm Greenhouse Gas Emissions

Nicole Mesman, Kellogg Course 42, 2021

 

How well farmers understand their finances? Looking at the implications of low levels of financial literacy

Executive Summary

Agriculture is a turbulent industry with many variables and challenges affecting different businesses throughout New Zealand. This is not new but more pressure is building to challenge one’s social license to farm, being added compliance through environmental management and climate change policies. A resilient business will overcome these challenges and be well positioned to drive direction and the strategy going forward. With current high commodity prices and low interest rates, many farmers will still struggle to be profitable, limiting their ability to access capital and restricting any opportunities for growth and the next generation. Financial literacy has a significant impact on one’s business and its profitability.

The purpose of this report is to understand the current level of financial literacy within farming agricultural sector, be it, horticulture, arable, dairy, sheep and beef sectors. It is important to measure the current level of financial acumen to understand what the barriers are impacting one’s ability to upskill, and what the implications are to farmers and their wider support networks. From understanding the barriers and implications we can then conclude with recommendations to where and how farmers, rural professionals, industry-good organisations, software providers and government bodies can help improve and upskill one’s financial literacy to create resilient businesses and a stronger economy.

In order to measure the current level of financial literacy there were two elements to the research, a survey questionnaire was undertaken interviewing farmers within four agricultural sectors along with rural professionals over similar industries. A review of historical research included industry reports and articles of relevance. The findings were compared and contrasted against the surveyed findings. Once the surveyed data was collected, a thematic analysis method was used to analyse the qualitative data. Themes that emerged became the barriers and implications within this report.

Financial literacy has shown to have only improved by 15% over the past 12 years in the sheep and beef sector. This against all measured sectors demonstrates that sheep and beef farmers continue to have the weakest financial acumen. Over all sectors, 40% of businesses are what I would call “flying blind”, with no insights regarding their current financial state or year-end 2021 performance. A further half of all businesses have no formal plan or strategy in place to direct/govern their business appropriately.

It was obvious very early within the survey that a lack of financial planning and forecasting was prevalent, the larger the variables, the weaker one’s financial literacy. For example, only 50% of sheep and beef farmers complete planning and forecasting, with many variables impacting their production and performance.

Discussion groups were however considered to add significant value to the business. Five barriers were identified to be restricting an improvement in financial literacy, these are: time, technology, education, training and rural professional support. Education is deemed the only uncontrollable factor and this has been identified by some survey respondents as being their “biggest concern”. Part of their concern is having no compulsory personal and financial management courses in the school curriculum, and their staff having weak financial acumen, such as “spending their pay cheque before they have earn ’t it’. A further concern identified is weak rural professional support with lack of honest feedback, a rural professional quoted “you can kill people with kindness”.

While these barriers restrict financial literacy and awareness, they not only impact the farmers but their supporting networks as well. Many implications were identified with profitability being the biggest impact to farmers, rural professionals, rural communities and New Zealand’s economy. Further implications include financial wellbeing; impacting health and the number of young farmers coming through into the industry. Constant rural professional changes and lack of capacity, impacts on the level of trust within the rural professional network and an organisation.

The key to creating high levels of financial literacy within a person and business is having trust; trust in themselves and trust in their network team. To gain trust people must be willing to learn and play the infinite game. “The infinite game, a game where players come and they go, there are no winners or losers, only being ahead and behind with no defined endpoint” (Simon Sinek 2019).

New Zealand farmers are known by their “do it yourself” mentality but now more than ever, farmers need to utilise or build their trusted team to create resilient businesses in times of increasing regulations and compliance. To enable this farmers must be willing to move out of their comfort zone and value their time using the $25-$100-$1,000 concept. This concept helps identify that being on farm completing day to day jobs is replaceable by staff at $25/hr. Management decisions are valued at $100/hr, whereas being prepared to strategize and plan the business direction is worth $1,000/hr. At $1,000/hr, million dollar decisions can and will be made.

Working on their business rather than in it, and seeking a second opinion will result in further insights, which ultimately impact decisions and outcomes. Farmers must also look after themselves and their financial wellbeing along with supporting the next generation with their financial skills and involve them in strategic decisions. “Empowering individuals with the knowledge of financial literacy will have a dramatic impact on societies and entire nations.

The impact of financial literacy can no longer be ignored. It is up to policy makers, educators and people with sufficient private equity, to make financial literacy a priority in our society. As awareness spreads and people make their voices heard, the impact of this skill set will no longer be overlooked. Education in financial literacy will become ubiquitous and these critical life skills will become the norm. The positive impact of financial literacy is undeniable and the sooner this movement spreads, the better off everyone will be” (financial educators council).

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McHutchon, Michael_Understanding your business

Michael McHutchon,  Kellogg Course 42, 2021

A business case for integrating a hazelnut orchard into an existing arable farm

Executive Summary

The New Zealand arable farming industry faces a number of issues as it attempts to remain profitable in a world of increasing public scrutiny and environmental regulation.

This report investigates whether the integration of a hazelnut orchard into an existing Canterbury arable farm could provide:

• A profitable alternative to other common arable crops;
• A lower nitrate-N leaching profile than other common arable crops thereby bringing down the overall
leaching profile of a farm; and,
• An opportunity to sequester carbon on-farm in order to offset the charges associated with agricultural greenhouse gas emissions that will be in place from 2025 onwards.

The New Zealand hazelnut industry is small but has an enthusiastic grower base. Approximately 400ha of hazelnuts are planted across New Zealand. Production and profitability from these orchards has been low when compared to international production and when compared to New Zealand trial data. Low production and profitability are likely due to the choice of the high quality but low yielding cultivar ‘Whiteheart’ in the majority of New Zealand hazelnut orchards.

Internationally, gross margin returns from well-managed hazelnut orchards can be in excess of $5,000/ha. New cultivars that have been bred internationally such as ‘Jefferson’ show significant promise in terms of high yield and nut quality. If international production can be replicated in New Zealand then hazelnuts offer a significantly higher gross margin than most common arable crops. Modelling has shown that income from a hazelnut orchard is highly sensitive to both price and yields, however a gross margin of $4,375/ha can be achieved after 12 years. The NPV and IRR of a hazelnut orchard are calculated to be $10,987/ha and 10% respectively.

There is a widely held view by the public and Central Government that excessive nitrate-N leaching and the subsequent pollution of freshwater are no longer acceptable. Hazelnuts use low quantities of nitrogen fertiliser when compared to most common arable crops. The average Canterbury arable farm leaches approximately 50kgN/ha/yr. Modelling in Overseer shows a hazelnut orchard may leach approximately 7kgN/ha/yr. This makes hazelnuts an appealing option especially in catchments where nitrate-N leaching is capped or where reductions have been mandated by regional councils.

The He Waka Eke Noa climate agreement which was established in 2019 will introduce a pricing mechanism for agricultural greenhouse gas emissions by 2025. This mechanism will likely allow for emissions to be offset by on-farm carbon sequestration and planting of orchards may be an allowable component of this agreement.

Using ETS pricing as a proxy tool, this report calculated the approximate income (in the form of a cost offset) that a hazelnut orchard could provide to an arable farmer. The result being that the carbon income from a hazelnut orchard would be negligible ($5-$50/ha/yr) and therefore the offsetting of greenhouse gas emissions would not be a reason for planting a hazelnut orchard.

Planting an orchard is a significant commitment, particularly in terms of opportunity cost, as the success of the orchard will not be able to be determined until at least 10 years after establishment. For this reason, farmers need robust data to ensure they are making a well-informed decision. Therefore, it is recommended that further research is conducted in the following areas:

• Optimum fertiliser quantities and timings;
• Actual yields that are currently being achieved in New Zealand; and,
• How higher yielding international varieties perform at scale in New Zealand soils and in the New
Zealand climate.

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Lilley, George_A Business Case for Integrating a Hazelnut Orchard…

George Lilley,  Kellogg Course 42, 2021

 

Untapped potential: Opportunities and challenges for water storage in New Zealand.

Executive Summary

Water is set to become the defining issue of the twenty-first century. As global populations continue to rise and the impacts of climate change become more acute, our freshwater resources will increasingly come under pressure.

As demand begins to exceed supply access to water, or a lack thereof, will likely lead to increased social and political instability and tensions between neighbouring countries – particularly when there is a shared water resource involved.

Although New Zealand is unlikely to face some of the more extreme challenges that will arise globally, we will still have our own unique issues to overcome as a country. Already we are beginning to feel the impacts of a changing climate with more extreme weather patterns.

In 2020 much of the country experienced what many described as the worst drought on record. The issue is, this drought was not the only catastrophic drought in living memory – in fact, it wasn’t even the only catastrophic drought to hit New Zealand in the past decade. Only seven years earlier we had experienced similar scenes across much of the country.

At face value it may seem like New Zealand is running out of water, but to say water is running out of New Zealand would be closer to the truth. We have more than enough freshwater resources to meet all of our needs, we just fail to capture them for efficient, sustainable, strategic, and productive use.

We are fortunate to live in one of the most water abundant countries in the world by almost any measure: precipitation per year (43rd), water per square kilometre of land (18th), or water per head of population (7th). New Zealand has approximately 440,000 million cubic metres available for our use each year. The problem is we only capture around 3% of it for productive use. The rest makes its way down our network of rivers and flows out to sea.

As a country we receive more than our ‘fair share’ from the global endowment of freshwater and I would argue that that brings with it an obligation to use that water efficiently not only for our own benefit, but for the benefit of others on the planet.

The impacts of climate change are only going to continue to get worse with higher temperatures, longer droughts, and more extreme rainfall. We won’t get enough water when we need it, and we will get too much when we don’t. This only strengthens the case for capturing the water while we can and storing it for when we need it.

Increased water storage will bring with it other benefits like increased hydro capacity. While some of our larger hydro damns have considerable storage capacity e.g., Benmore, Clyde, and Manapouri, we actually have a relatively small storage capacity of 4TWh vs annual inflows of 24TWh.

It will also open up the possibility of increased land use flexibility that may reduce some of our current environmental pressure like methane and nitrates and allow some landowners to transition to a land use that will give them greater returns per hectare. This is particularly true in Northland where we have an opportunity to ease economic deprivation by harnessing their existing soils and climate.

The opportunities are significant but before we can unlock our untapped potential, we do have some challenges that we will need to collectively overcome: a lack of an overarching national water storage strategy, political uncertainty, financial barriers, an unfounded fear of dairy intensification, and the ever-present question of Māori rights and interests in water.

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Letcher, Aaron_Untapped Potential

Aaron Letcher,  Kellogg Course 42, 2021