Monday, 11 March 2013

Droughts cause pain for farmers and government

Post written by R. Cretney.

While it is now raining in some parts of the country - widespread declaration of drought has been one of the top news stories last week. The regions of Northland, South Auckland, Waikato, Bay of Plenty, Coromandel and Hawke's Bay were first to be announced as drought zones. The government soon followed by declaring the whole North Island a drought zone this week. 

Some media stories are even declaring this the worst drought to ever strike New Zealand. This drought follows similar events in 2007, 2008 and 2010 indicating support for NIWA's prediction of more frequent and severe droughts in the next 30 years.

This image shows the soil moisture deficit as of 6th March 2013 compared to the same time in 2012 and the historical average deficit.

These events have severe impacts on farmers leading to reduced milk production, increased requirement for supplementary feed leading to increased expenses and financial losses.

Such an event also shows the potential effect of climate change on rural livelihoods and the national economy. Bill English recently said that farmers need to adapt to these changes as it is not sustainable for the government to continue provide financial assistance to farmers.

Such pressure from the weather and government may influence farmers to change their practices leading to changes in land-use patterns. This will be explored in a new research programme led by NIWA and Landcare Research

However, the long-term forecast is not necessarily bad for farmers, as one Motu paper by Stroombergen covered. This paper explores the potential effects of long-term climatic influence on NZ agriculture - including the impacts on the value of commodities we sell and the chance that increased CO2 will lead to higher production of some crops. Overall he assesses that the overall economic benefits may outweigh the losses from changes in average temperature and precipitation; he is however unable to assess the impact of extreme events such as droughts which may be where the real climate costs for agriculture bite.

Post written by R. Cretney.

Behind the Brands

Post written by R. Cretney.

Oxfam has just released several pieces of interesting research into food and agriculture. One is a report on sustainable development in the Pacific which highlights the important role of agricultural projects - including providing access to high value international markets (Report available here). The other piece of research has resulted in an in-depth campaign aimed at getting us to think more about where our food comes from and how it's produced.

Consumers are increasingly voting with their wallets and choosing to buy products that align with their values. A recent study on organic agriculture found that the industry showed significant growth and is now considered "mainstream" in some centers, despite overall higher prices than conventionally grown food.

What does this mean for New Zealand agriculture?

Well, it provides an opportunity and a threat. Some consumers are willing to pay more for higher quality and more ethical produce. Domestically and internationally this could prove a growing selling point for New Zealand products.

The Oxfam campaign shows a growing move to highlight weaknesses or issues with some companies. This begs the question, how would our own companies stand up to such assessment?

Oxfam uses the criteria of 

  1. Transparency at a corporate level
  1. Women farm workers and small-scale producers in the supply chain
  1. Workers on farms in the supply chain
  1. Farmers (small scale) growing the commodities
  1. Land, both rights and access to land and sustainable use of it
  1. Water, both rights and access to water resources and sustainable use of it
  1. Climate, both relating to reducing greenhouse gas emissions and helping farmers adapt to climate change.

We might score very well on some of these counts - but others may need further work. One way that this debate is being played out in relation to New Zealand is through the current criticism of Tourism NZ’s 100% pure brand. One man is even taking the country’s advertising slogan to the Advertising Standards Authority to protest at the inaccuracy of the statement.

Recent research, by Woods and Coleman, could not find statistical evidence that New Zealand producers can influence their market power or move towards higher value markets in response to changing commodity prices. However, some NZ producers may be receiving a premium locally for niche sustainability products. Mike Barton from Taupo Beef who participated in AgDialogue has benefited from marketing his beef products as sustainably reared on the shores of Lake Taupo. Such a scheme is similar to the Irish "Origin Green" label mentioned in a previous post here. Farmers engaged in these practices show real potential for protecting and strengthening "Brand NZ". 

Proactive banking

Post written by R. Cretney.

Some positive news this week from ASB Bank. ASB has just released its first proactive banking scheme that aims to achieve the right balance between productivity and sustainability.

Proactive banking was one of the prototype ideas that arose from Agdialogue. The concept is targeted at farmers who want to invest in reducing their environmental footprint and increasing their sustainability. This is achieved in the ASB scheme by providing a low cost loan that is competitively priced at ASB's cost of funding with no extra customer margins applied.

Mark Heer, ASB General Manager Rural says in the article that "farmers consistently tell us that they are doing their best to ensure that their farms are operating to the highest environmental standards...In offering this new loan, ASB wants to be part of the solution by providing farmers with a low cost funding option to get their farm to where it needs to be".

This is great news for farmers and the environment!

The ASB article can be found here.