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kellogg 2017

Are rural co-operatives still relevant in New Zealand.

Executive summary

This report was aimed at discussing and presenting the ideas surrounding the future of the co-operative business structure in rural New Zealand. This was achieved through a review of relevant literature and surveying key co-operative members and employees to gather their opinions on how they saw the co-operative structures relevance today and in the future. 

A brief summation of four key rural co-operatives was expanded upon throughout to build a picture of why these entities operated the way they do. The author found that all co-operatives researched had very clear business values and a simple vision. All surveyed were of the opinion that these values and visions were critical in the discussion of relevance both today and in the future and that any move away from these could lead to the demise of the business structure.

The grassroots and highly visible nature of the New Zealand farmer lends itself to the co- operative structure nicely. Farmers in New Zealand make up a very small percentage of the population but are responsible for the delivery of a large proportion of export revenues. The collaborative approach of co-operatives enables the New Zealand farmer to be represented to the wider public without fear of standing alone. As such it is the opinion of the author that the co- operative business structure in rural New Zealand remains as relevant today as it was when the first rural NZ co-operatives formed in the 1800s.

Alex Murray

Viability of establishing a sheep dairy platform on North Canterbury dry land.

Executive summary

Is now the time for bovine dominance in the milk market to be challenged? There are variable and questionable milk alternatives more readily available both locally and abroad and our New Zealand sheep dairy history would suggest the current spike in popularity will be short-lived. I disagree. In my opinion New Zealand is the ideal location to develop this budding industry. We have the operational know-how, the geography and access to reliable water sources, a tourism market that opens our primary sector to the world, a developing pool of ovine milking genetics suitable to the New Zealand environment, capacity for diversification as we investigate change in land use opportunities and a hunger to pursue an alternative farming vision with learned failures of other ventures a source of inspiration. 

“We believe that strong science, a supportive Government and industry solidarity are essential for the future success of sheep dairying in New Zealand” (Blue River Dairy)

Sheep Dairy is an industry that has experienced two substantial ‘false starts’, in both the 1970’s and 1990’s. One overarching factor was market fragility which proved too challenging and the detriment of the industry at the time. What can we learn from our chequered history? To determine a sound market before we establish supply, mitigate financial risk with comprehensive process of due diligence, a slow and steady approach to ensure long term viability and fundamental is collaboration within the sheep dairy community.

The aim of this project was to investigate viability of establishing a sheep dairy platform on North Canterbury dry land as a profitable land use alternative.

Key findings as a result of this research are that alignment of the sheep dairy community is critical to our success long term, honesty with information is vital and that although dry land sheep dairy in North Canterbury may be ambitious – nothing is impossible!

Kate Boyd

Exploring the opportunity of a holistic on-farm quality assurance program for the beef industry.

Executive summary

My project has investigated some of the current beef industry quality assurance (QA) programs which provide evidence based marketing tools to the livestock industry. The case studies have allowed me to identify key aspects of these programs which would be useful to utilize when designing a holistic QA program for the beef industry. 

The key recommendations arising from the case studies include: 

  1. The evaluate whether of how the industry could simplify the QA systems in the future using an online portal
  2. Key aspects which should be added to the industries program
  3. The benefits of having voluntary modules available to producers and processes that can be utilized as demand emerges
  4. The need to producer input in the development of new modules to ensure they are relevant and region specific
  5. The benefits of using a ‘goal setting’ component to QA systems
  6. The ability for QA systems to provide a communication tool to encourage research adoption outcomes to the industry.

I have also explored areas that may need to be added to the current industry systems to take full advantage of the marketing and educational opportunities a holist QA system can provide.

Amanda Giles

What Value do commercial farmers place on their animal genetics.

Executive summary

New Zealand’s animal genetics industry started when two sheep were imported, and they both died within four days, (NZ Rural Press Ltd, 2007). Since then, with the expertise of passionate breeders, scientists, farmers and advisers it is has significantly expanded and will continue to do so. By 2021, animal genetics is expected to be a USA$5.50 billion dollar industry, (PRNewswire, 2016). International markets especially, are taking advantages of the incredible advances in genetic technologies that enable increased efficiency in breeding genetically superior animals. In New Zealand, we must take advantage of the genetically superior stud stock that have been especially bred for our environment to allow farmers and the industry as a whole, to reach our production targets but do so in a sustainable way and with ‘value add’. To do this, we must insure that the ‘value’ of genetics is recognised by our New Zealand farmers as a significant player in the agricultural system. 

The question was asked “is there a gap in the understanding of farmers, when it comes to their animal genetics?” and the answer was yes. This research attempts to understand why there is this gap by interviewing farmers, industry professionals and advisers. Farmer behaviour has been aligned with answers to the interviews and both the livestock in New Zealand, and New Zealand farmers have been described under the concept that their performance is a function of their genotype, or their goals and objectives, and the environment that they live in.

There is a range of performance of New Zealand farmers in their farm systems overall, but also in their understanding when it comes to genetics. Some reasons for this are more obvious, like the fact that you can’t “see” genetics, which makes it difficult to comprehend, or the fact that there is actually no pipeline for delivering simple and aligned genetic information out to the commercial sector. The not so obvious reasons can be understood by further analysing the goals and objectives of farmers, but also the social pressures that they face when striving to be a ‘good’ farmer. An animal is more likely to be judged by the way it looks, compared to its genetic potential, which will be a direct indication of how good of a farmer the owner is.

Recommendations have been made to the industry, to the advisers and to the farmers. There needs to be collaboration across the genetics “players” to provide breeders and commercial farmers with quality information that is transparent and has integrity. Farmer objectives need to be better understood, so solutions can be tailored and aligned. Both farmers and their advisers need to be more critically aware about animal genetics, in terms of what they are buying and where they are buying it from. The story of animal genetics needs to be told and it is performance that needs to be made trendy.

In order to understand, and appreciate the value of their livestock genetics, commercial farmers need to be individually understood, and they need to be empowered with the information to make a decision, which fits their individual objective.

Johanna Scott

NZ Wagyu Inc. : Where to from here.

Executive summary

Throughout its short history, the New Zealand Wagyu Industry (NZWI) which was established in the early 1990’s with the introduction of cattle from Australia and the United States (US) via original parents in Japan has been struggling to grow. 

This is partly due but is not limited to the long time frames required to breed up stock, lack of knowledge of animals, perceived lack of appropriate farming systems (feed lot) through to an unwillingness for capital investment in the industry due to some early adopters being burned by a small few fly-by-nighters who vanished owing large sums of money.

Although it has come a long way in a small country at the bottom of the South Pacific the industry still has some way to go; the need for scale, the ever-changing consumer landscape and so on, importantly what is no longer solely important is food safety and price.

We have seen food miles and carbon foot prints come and to a certain extent go or are rebranded, the global consumer drive for clean, green “sustainable” production is still being echoed loud and clear in all industries in particular that of agriculture which according to the United States is the second largest emitter of greenhouse gases globally (IPCC, 2014).

The aim of this study was to ascertain what the shape of the industry is currently, where it is headed in terms of opportunities and threats and what it may take to be successful in the future. To answer these questions I split the research into two parts;

  1. Industry contact – Made contact with a number of industry participants, arranging interviews and sent out a survey to those involved in the wider industry
  2. Research based – Review of relevant literature, performed an industry analysis with Porters Five Forces and a SWOT analysis

As a result of the research there are four recommendations in order to answer the question where to from here for the NZWI:

  1. Collaboration – The industry needs to pull together and form a strong breed association which can be used as a base for planning future change from.
  2. Disruption – Create a story and brand behind the product and look to develop new products and markets to challenge the status quo of the wider industry, in particular this should be focused on the strengths of the NZ industry (low cost, grass based, sustainable farming).
  3. Genetics – The industry should partner with the Australian Wagyu Breeders Association (AWA), as they are similarly doing with the American Wagyu Breeders Association (AWBA) and utilise more of the already strong gene pool and prior research.
  4. Market place – The establishment of an online trading platform in order for producers to buy and sell cattle and bring some cohesion to the industry.

Michael McGehan

Nitrogen use on central otago sheep and beef farms.

Executive summary

Central Otago is a region where farming is predominantly sheep and beef. The profitability of these farms varies, and in the last few years lamb prices have not helped this. Nitrogen use has the potential to help farmers improve production and profitability, but the use of it also varies a lot from farm to farm in the area. 

The aim of this report is to explore the use of nitrogen on Central Otago sheep and beef farms in order to get an understanding of how farmers are using it, and how it could be used better. While using nitrogen can significantly boost productivity, it is important that this drives profitability as well.
Six Central Otago sheep and beef farmers were interviewed to get a good understanding of their systems, their use of nitrogen, and their profitability. These businesses have been compared and contrasted to build a picture of what good use of nitrogen in the future might look like for the area.
There were some similarities and differences between systems, but some major consistencies:

  • All ran breeding ewes.
  • All ran cattle but there was variation between what the cattle element was made up of for some it was cows for some trade stock or grazing stock.
  • All finished some or all of their own stock.
  • All had an area of Lucerne within their system.
  • All grew winter crops.
  • All tried to cut all their own supplement for winter feed.

Farmers were also questioned around benchmarking, feed budgeting, and environmental regulation to build a picture of their motivation and execution of their goals.

From this, several recommendations have been made both for farmers and rural professionals:

  1. Those in support roles (company reps, industry good organisations) need to identify ‘triggers’ for nitrogen use and be more proactive in their discussions around nitrogen to ensure that when farmers do decide to use it, that they have a good experience.
  2. That current application rates for strategic use continue to be followed – the author is not suggesting that rates of nitrogen use should dramatically increase, but that farmers should be more prepared to utilise light to medium rates of nitrogen to help maximise their pasture production.
  3. Rural Professionals need to help farmers in a more structured manner to execute plans to use nitrogen. This should allow them to more easily link their action (nitrogen application) with results, be it increased pasture growth or better ewe body condition score at weaning. This might be as simple as a straight forward pasture measurement exercise.
  4. Farmers need to examine their systems more closely to ensure they are building resilience to adverse effects. For example, many could possibly benefit from building a higher trading or finishing component into their system rather than re-building ewe numbers – they need sound advice from Rural Professionals to do this given their tendency not to use formal feed budgeting.
  5. In turn, advisors need to be more careful to explain and help farmers to understand the figures around their farming systems – be it pasture production or financial figures. As soon as they don’t understand what they are looking at, the benefit of the exercise is lost (for example when benchmarking).
  6. Farmers need to work at increasing the amount of measuring, monitoring and benchmarking that happens in their businesses. They are surely missing out on key triggers to make changes by not monitoring financial performance and pasture production closely.
  7. Finally, farmers need to share what they do well. In particular, the farmers interviewed were all doing a great job of looking after the environment that they farm in. They need to be spreading the word, especially as they are largely doing this due to their own motivation, rather than due to regulation.

The farmers in this area face a set of challenging conditions. In order for their businesses to be future-proofed for future generations, they need to build businesses resilient to the many environmental and economic challenges they face. Using tools such as nitrogen is just one part of the puzzle, but one which the industry can provide significant help with in order to improve profitability.

Victoria Magazinovic

Succession planning in the post harvest kiwifruit industry.

Executive summary

The New Zealand Kiwifruit industry has a unique background and history; from 1928 when Hayward Wright developed the “Hayward” variety, to our first exports to England in 1952.
Rapid expansion in the 1970’s, followed a crisis in the mid to late 1980’s as a result of large crop volumes beyond market demand. In 1997, Zespri International Limited was formed as a global marketer of New Zealand Kiwifruit. 

Since then the industry has gone from strength to strength. However, in November 2010 the industry was hit by the bacteria PSA which wiped out the gold cultivar Hort 16A and threatened the future of the kiwifruit industry. The industry faced major challenges to overcome PSA, but a united approach has seen PSA overcome and confidence return.

In the same manner that succession planning is discussed on orchard, succession planning in the post-harvest industry is an area that needs to be looked at further. Not only is the age demographic of orchard ownership increasing, but also in the post-harvest sector.

The rationale behind my report is to examine succession planning in the post-harvest sector. This report looks at the importance of succession planning in the post-harvest kiwifruit sector. As we go from “survival to succession” how we attract, retain and grow people becomes a critical success factor.
My aim is to look specifically at the Post-Harvest sector and examine succession planning, compare this against current literature and provide a list of recommendations that the sector can use to implement, or fine tune their current succession planning strategies.

In order to obtain data and information for the report, I interviewed senior managers from eight post-harvest facilities representing 95% of the kiwifruit packing and cool store capacity in New Zealand. I then undertook analysis of their responses to generate key themes around succession planning.

Several outcomes came from the interviews. First and foremost was around people and the importance of attracting, retaining and growing them. Second was that each organisation had some form of succession planning in place. This varied from informal and ad-hoc to formalised planning that is discussed regularly and executive level. Third was that many people are involved in succession planning from the CEO, Human Resources general manager and the individual team member.

I recommend that succession planning encompass the entire organisation, that some form of formal succession planning strategy and structure is in place and that organisations in the post-harvest sector need to be clear on “why” people should seek a career in their industry; specifically the millennials must be convinced of a career within the industry.

I am a fourth generation kiwifruit orchardist in the Bay of Plenty and have owned my own orchard since 2004. I also work in the post-harvest kiwifruit sector and have great confidence in the industry. However, I am aware of the issues the industry faces around attracting and retaining the best people available.

Cameron Hill

Is it possible to enhance environmental protection on a farm without sacrificing all your farm profits.

Executive summary

Environment protection to some degree is something that every sheep and beef farmer in the country is going to have to either deal with currently, or sometime in the near future. The degree of environmental protection will depend on the regions location and also the issues relevant to every individual farm, but it would be naive for anyone do think that doing nothing is an option. 

The purpose of this project is to try and quantify some of the costs associated with environmental protection to an individual farmer and their farm. It is also about investigating whether farm policy changes or changes in management practices could generate increased income to cover the costs of environmental protection. Any changes to the farming system had to be sustainable though, and not have an increased environmental footprint.

The project focused on a case study 420 effective hectare sheep, beef, and dairy support farm in the King Country. The main costs associated with enhancing environmental protection included riparian fencing and planting, stock exclusion from native bush and wetlands, poplar pole plantings, and reticulated water system upgrades. The total cost for the farm is calculated to be $124,920, or $297/eff ha.

Scenario analysis was then conducted and different stock class policies were analysed, giving a lift in annual farm profit from current farm profits, ranging from $41,442 to $138,587. All of these scenarios required additional capital funds for capital stock purchases, ranging from $80,530 to $378,921.
All of the scenarios analysed were also modelled through computer nutrient budgeting software programme Overseer, and all scenarios either held or decreased nutrient outputs lost to water.

After comparing and contrasting all the scenarios, it was decided to implement a scenario that did not generate the highest lift in profit, but one which was relatively risk averse, and had the best fit with the vision and long term goals of the farm and farm shareholders.

In this case, it was possible to demonstrate that it was possible to enhance the level of environmental protection on a sheep and beef farm without sacrificing farm profits, however it did require stock class and policy change in order to fund this. Farms where stock class and policy change is not an option would have to look at increasing the performance of their current stock classes in order to achieve the same outcome.

Dwayne Cowin

What does good governance look like for irrigation schemes to be perceived as successful.

Executive summary

Water for New Zealand has been described as a ‘Wicked Problem’. 

This is a term that has been used to relate the degree of social and ecological complexity involved. It also describes how different world views on such problems can shape both the definition and the solution. This is not always positive or balanced.

For New Zealanders water is a passion, an integral part of our lives and our environment. It is also an important resource for agriculture and economic development. Our need to balance expectations to achieve optimal outcomes for all New Zealand is paramount.

There are many layers of water governance in New Zealand. For irrigators and irrigation schemes the many elements at play and competing voices are creating an increasingly complex environment for them to work in.

The aim of this project is to clarify for Irrigation schemes the breadth of elements at play in water governance in New Zealand. Through conversations with stakeholders, it is also to provide some direction for schemes as to what is going to be required of their own governance structures. This will enable them to be perceived as successful, legitimate and trusted users of water, our public resource.
For the wider public in New Zealand water quality has consistently been seen as a pressing environmental issue. The scrutiny of governance and management of water has never been greater than now. Competing needs have come to the fore and the environmental impact of land and water use has become better understood. As the degradation of our water ways has become more evident environmental groups and the media have been increasingly effective in highlighting any issues through campaigns and negative commentary. This has done an enormous amount of damage to the confidence and trust placed not only in irrigators and irrigation schemes as water users, but also ‘brand Agriculture’.

Understanding how the layers of water governance in New Zealand work is critical to understanding how we got to this place. There is no doubt that water governance in New Zealand is complex. It is not well integrated. There is responsibility for, or a connection to, water in almost every government department.

New Zealand’s primary legislation for the sustainable management of its natural and physical resources – the Resource Management Act (RMA) was passed in 1991. The councils charged with implementing this piece of legislation were often poorly resourced.

The slow response to environmental expectations politically, regionally and by the primary sector led to the growing influence of less formal but significant voices being heard. The accumulative effect of these voices and government policy development, including environmental bottom lines has led to the unprecedented scope and pace of change now being experienced on the ground by irrigators and irrigation schemes.

This scope and pace of change is an enormous challenge. Not only logistically for implementation but also the expectation for environmental results. This is impacting on irrigation schemes and their role.
Once conveyors of water to the farm gate, irrigation schemes are now finding themselves in a far more complex situation. Their role is now one of resource management – that is management of water and nutrients with responsibility and liabilities for meeting consent obligations. They are being ambitious, and investing significantly in supporting their shareholders in implementing change but this is unchartered territory and not all benefits or pitfalls can be anticipated. Maintaining relationships, with both shareholders and councils as the granters of the consent, are of primary concern and this is going to be critical to their success.

This project has exposed deep challenges around trust and confidence at all levels of water governance in New Zealand. There is no silver bullet to deliver an immediate change to water quality to fix this. The interviews show a clear commitment by the schemes to work through implementing change and ensuring they work with those stakeholders directly connected to best effect.
This research however has highlighted a new opportunity to effect real change. This is the opportunity to change perceptions so that irrigators and irrigation schemes be acknowledged as effective, legitimate and trusted users of water for the benefit of New Zealand.

This will mean irrigation schemes need to be willing to embrace a more diverse and outward looking board. They need to bring people in that will challenge their thinking and hold them to account. Building diverse boards that look outwards and have societal values will go a long way to building external confidence. As one interviewee pointed out “There has been some tinkering around the edges – mainly with lawyers and accountants and while they can be valuable additions the question needs to be ‘what is the skill we need?’ and ‘what is the issue we are dealing with?’ Not who do we know that we can work with… and definitely not representing where you come from (leave your hat at the door!)”
Such an approach will be confronting but it will provide a transparency and an openness to start discussion. It will also provide an opportunity to have realistic conversations and find reference points for communities to collaborate. It will negate negative commentary because the wider community along with irrigation scheme boards will own the outcomes.

This is a first and critical step for irrigation schemes to ‘break the ice’ and become trusted users of water, our public resource.

Chris Couglan

Canterbury water management strategy.

Executive summary

Water and water management in New Zealand, and specifically Canterbury, has been described as a ‘wicked problem’ (‘Old Problems New Solutions’, 2011). Increased demand for water abstraction, along with issues of water quality, water storage and decision making processes that recognise cultural and social values, have resulted in ongoing debates between stakeholders and interested parties. Over time several interventions have been introduced, including resource management legislation and the formation of regional councils. With the Ministry of Primary Industries setting a goal of doubling agricultural export production by 2025, the ‘wicked problem’ will continue to challenge our communities into the future. In addition, global markets and their consumers increasingly want to know their purchased food items have been sustainably harvested and managed. To achieve these goals, we will need to learn from the past, think and operate in new ways and continue to be innovative in good management practices (Ministry of Primary Industries, 2016). 

Regions, industry, and politicians are collectively working out solutions at a national, regional, and local level to be able to achieve sustainable growth objectives and implement agreed good management practices. A new range of regionally specific implementation tools will be required to achieve these objectives and outcomes. Since the late 1990s the Canterbury Water Management Strategy (CWMS) has been a primary tool used in this region to engage and involve community, special interest groups, industry and agricultural, in the development of enduring water management policies, practices, and outcomes.

Since November 2009, the CWMS has stimulated a significant amount of community and stakeholder engagement and commitment. By resourcing dedicated positions and integrating community members alongside the Regional Council staff, this approach has led to innovative and collective solutions to water management issues. The CWMS engagement process was the centre focus to the development of a statutory regional land and water plan, now into the implementation phase. This region wide plan provided the framework to develop catchment based sub-regional plans, which CWMS was vital in delivering, as well as the identification of catchment specific non-statutory tools.

The author is a Programme Manager for CWMS (and Biodiversity and Biosecurity), and sought to understand, after seven years of implementation of the CWMS, “How do you keep community members/organisations and stakeholders actively engaged and participating in an established collaborative governance process, on regional water management?”

Collaborative community driven water management policies are not unique to Canterbury or New Zealand. An international literature review of differing collaborative community based programmes was conducted to understand the motivators for sustained community involvement. Three catchment based water management models (Murray-Darling Basin, Australia, the Fraser River Basin, Canada and the Lower Saxony, Germany), were looked at in more detail to provide a comparison to local findings from participants in the CWMS.
The required commitment to an integrated water resource management process is ongoing with no likely end point. It continually develops as do the organisations that are charged with supporting or collaborating in the process. The commitment of the region’s political leaders to the participatory process as it moves from centralised to decentralised governance, is essential. The motivators for maintaining community engagement include, wider understanding of the issues, building new networks, strengthening existing networks, and developing collaborative solutions.

The main findings from this study are:

  • Adoption of a collaborative community process requires significant commitment from the community and governance institutions. Most models allow for an iterative approach of development, implementation and review meaning these processes often have no end point.
  • Collaborative community participatory processes enables a shift from centralised decision making to decentralised governance.
  • Benefit of community driven processes includes ownership of issues and solutions, growth of community knowledge, stronger networks, wider understanding of issues and viewpoints and a greater sense of community.
  • Critical requirement that local or regional authorities fully support and implement the community derived solutions. This requires authorities to adopt solutions without modification and with sufficient dedicated resources.

Don Chittock