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kellogg

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

Communicating with our growers.

Executive summary

This report was written with the aim of finding out how we can communicate more effectively with our suppliers. By ‘we’ I mean Trevelyan’s Pack and Cool Ltd, a kiwifruit and avocado post harvest company based in Te Puke, with approximately 330 suppliers. The research methods included
  1. a literature review
  2. an interview of four other primary industry based operations
  3. an online survey of our existing suppliers
  4. an interview of four existing suppliers
Key findings included
  • A need for our company to revamp our website offering to growers
  • A need to be concise with the information we provide
  • High performing companies have a focus on reporting and payment of quality of product supplied, not only quantity of product supplied.
This report was compiled with the help of many different people from throughout primary industries within New Zealand.

Daniel Birnie

Spray Use In The Kiwi Fruit Industry: How are we communicating with our community here in the bay of plenty

Executive summary

This report provides a review of how we are communicating with our communities (grower communities and wider public) within the context of the Bay of Plenty kiwifruit industry, as a way of starting to answer the question of whether we are adequately communicating, and if there are areas we need to focus on for improvement. 

Sources reviewed included material made available by the Bay of Plenty Regional Council, Zespri, New Zealand Kiwifruit Growers Incorporated, traditional news media, alternative news media, and social media. There were also conversations held with several orchardists. The goal was to find information that would come up when a member of the public searches, and this meant that not
all sources were the newest available.

The first sources that came up in most searches were from the regional council, followed by news media and social media. Material from the kiwifruit industry tended to be further down the list unless the search terms were modified with terms related to these (such as adding “Zespri” or “NZKGI” to the search). While most sources were quite balanced, alternative media had a tendency to publish more opinion pieces which were often negatively pointed towards spraying, and social media was all negative with one or two exceptions.

How should we communicate with our communities going forward?

  • Grower education – Make sure growers understand what their responsibilities are, and what their neighbours’; expectations are. Ensure that they know how to use their products correctly.
  • Community education – Help the community understand what their rights are, so that they understand there are laws to help protect them. Inform them as to what types of products we are using, why we’re using them, how those products compare to their alternatives, and what steps we have taken as an industry to reduce the impact we have on our neighbours through spraying.

The report finds that the kiwifruit industry is in the process of developing a strong communication programme regarding orchard spraying, but that the information we want to get in front of the public isn’t necessarily being shared with them right now. The industry has made great improvements to our spray practices in the last few years, and we need to make sure we promote this to the community prior to any major spray application periods via newspapers, mailbox drops, and community meetings, to counter the negativity before it becomes a major issue.

A time limitation while working on this report has led to detailed interviews with orchardists and the public not being conducted. Some additional work needed is suggested in the “Next Steps” section for anyone wanting to go into more depth on the issue of communication regarding spraying and agrichemicals.

Craig Ward

Technology use by sheep and beef farmers.

Executive Summary

Farming is increasing in complexity. As such technology is becoming more important in businesses to understand impacts on both financial and physical performance. Top farmers typically lead effective technology adoption. However, this is not always the case. Five Wairarapa farmers along with one Central North Island Farmer were interviewed to determine how and why technology is used in farm businesses, to be a top farmer.

Past research in this area has been minimal, particularly in the sheep and beef sector. The majority of the research has been conducted with dairy industry funding. As such, little is really known about how and why top sheep and beef farmers use technology.

Budgeting technology was a key part of each farm business, and the only technology used by all six farmers. Farmax and Farm IQ were the two other technologies that were utilised in four of these farm businesses and were a key to their success.

Three important findings have emerged from this research. Firstly, top farmers are intrinsically successful. Technology just assists them in knowing their position to make informed decisions. Secondly, ground-truthing the results from technology with the farmers gut-feel and observations in the paddock is critical to effective decision making. Finally, technology provides some level of ‘insurance’ against events that may render the key decision maker unable to perform their duties for an extended period.

Technology use is unique to individuals, but some themes emerge time after time. Therefore, a greater understanding of these will lead to a more successful and resilient sheep and beef industry.

It is hoped this report will stimulate further discussion and investigation into technology-use on farms by farmers and industry professionals alike.

Industry crossroads.

Executive Summary

The dairy industry in New Zealand today is as important to the future of the dairy farmer as it is to the future of the New Zealand economy.

But as the industry stands, dairy is at a crossroads.

New Zealand was identified early in its colonisation as being blessed with the ideal climate and wide open spaces, ideal for pastoral farming and growing healthy livestock perfect for the production of milk. Chief Dairy Economist to the Government in 1884, William Bowron noted “The untold wealth of New Zealand lies upon the surface and the cow is the first factor in the way of securing it…..”.

In recent years, dairy in New Zealand has experienced unprecedented growth, driven by the availability of efficient irrigation to areas that traditionally saw other land use. This growth is based on the returns from other sectors not meeting the needs in many cases to make that irrigation viable. Market signals and the reputation of our milk in emerging markets, notably China has resulted in a change, not only the supply and demand paradigm but also in the interest international corporations and governments have in New Zealand Inc and more importantly New Zealand dairy. This is seen in the purchasing of land for conversion to dairy or established dairy farms, and the building of milk processing plants by these overseas players.

Multinational companies continue to set up in New Zealand thereby increasing competition, but further fragmenting the industry. The increase in optionality for farmers and the attraction of growth through release of share capital has proved to be too tempting for many. Fonterra is still the majority co-operative but it’s market share of the New Zealand milk pool has declined in recent times.

The Dairy Industry Restructuring Act (DIRA) introduced at the inception of Fonterra, has played a key role through the past 15 years in the sectors growth and development. It also encouraged greater competition within the industry. Although this act is being reviewed and changes are to go to the select committee, there is a further need for its relevance in the current climate. It needs to be reviewed as to whether parts, if not all of it is necessary at all.

In order to protect the future of the dairy industry, we have to look to the long term. With talk of competition coming at us from less traditional means in the form of synthetic milk we need to work collaboratively in order to ensure our future prosperity as an industry and a country.