Chair's address to Dairy Farmers of New Zealand annual conference
Tuesday 17 July 2007, 11:49AM
By Federated Farmers of New Zealand
528 views
The following speech will be delivered this morning to the Dairy Farmers of New Zealand’s annual conference in Auckland. The DFNZ council meets twice a year, and includes dairy farmer representatives from throughout New Zealand. DFNZ is an industry group of Federated Farmers of New Zealand.
Frank Brenmuhl
Chair of Dairy Farmers of New Zealand
Address to Dairy Farmers of New Zealand Conference/AGM
Langham Hotel, Auckland
Embargoed to 10.30am, 17 July 2007
Welcome to your conference and annual general meeting of Federated Farmers’ dairy industry section, Dairy Farmers of New Zealand.
It has been another busy year for those involved in the dairy industry. We have been in the media a lot as both saviour and sinner depending on your particular view.
My speech today will cover three main points: the economy and dairy’s role in it, the environment including the Kyoto Protocol, and the outlook for our industry.
Economic performance
The dairy industry contributes an enormous amount to the economic health of New Zealand. It brings in billions of dollars a year in foreign exchange earnings. For many commentators, dairy farming is seen as the brightest light on the horizon.
While dairying is doing well at present – and I stress at present – other export sectors of the economy certainly are not. As such it is of real concern that many of the underlying problems facing the New Zealand economy are not being addressed.
Right now we have a high dollar, tight monetary policy, an unsustainable current account deficit, low productivity, an overvalued housing market, and inflation at an uncomfortable level. These have resulted in the highest interest rates seen in this country since the late eighties.
These symptoms were all apparent during the bad old days of the 1970s and 1980s and more recently during recessions in 1991 and 1998. But there is more to add to the mix: high oil prices, a tight labour market, runaway government spending and creeping growth in regulation resulting in the highest level of compliance costs that we have ever known.
Yes, the future outlook for this country is far from certain.
It is vital for New Zealand to address the balance of payments deficit. For that to happen it is necessary for the private sector and the export sector in particular to flourish.
The continual drive by government to regulate, and add cost to business without recognizing the cumulative effects of such regulation, are to blame for many of the symptoms I have listed. These cannot be continually ignored.
If New Zealand is to prosper, government spending has to be reined in, and it has to refocus on core issues so that New Zealanders can be assured of a future standard of living that is comparable to other first world nations.
The dairy industry has a part to play in this. We are the best chance to grow the New Zealand economy. We know that we have to be responsible and to do all that we can to minimise our environmental footprint. But, we expect that all other sectors will take up the challenge to do likewise.
Environmental footprint
Turning to the environment, the old saying “people in glass houses should not throw stones†comes to mind. There is no activity that does not have some affect on the environment. Terms like natural or organic do not mean that there are no effects.
The issue here is that these words are bandied around as if these types of production systems will save the world. They will not. In many cases the environmental effects of these systems are similar to “conventional†systems. The problem is that much of this is unspoken.
The dairy industry has made a commitment with the Dairy Industry Strategy for Sustainable Environmental Management to reduce our impact on the environment. We are meeting our targets.
The dairy industry has been working with fertiliser companies and their representatives to ensure that all dairy farmers who have done fertiliser soil tests have also done nutrient budgets. This has, in many cases, meant a reduction in fertiliser applied, as more detailed information has allowed a better, more targeted approach to fertiliser use.
Most dairy farmers have now fenced off waterways and are much more conscious of the need to manage farm effluent correctly. Regional councils have taken some time to come to grips with their role in monitoring and achieving good compliance with regard to effluent management.
The Kyoto Protocol
The third issue I want to talk about is the Kyoto Protocol.
How the dairy industry is going to help New Zealand meet its commitments to the Kyoto Protocol has been a subject of discussion in the news lately, with many single issue advocates arguing for the full cost of our emissions should be met out of expected increases in returns from milk. Many of those advocating solutions are also playing politics with the issues, while showing remarkable ignorance of the facts. Politicians deciding who is guilty in a debate that scientists haven’t even figured out, is highly dangerous. I believe that all of those that benefit from the returns from agriculture should contribute to the cost of the liability under the Kyoto Protocol.
Currently agriculture is being blamed for 49 percent of New Zealand’s greenhouse gas emissions. This fails to reflect the offset from soil carbon stored under farm pasture and in tree plantings.
Farmers will not only suffer pressure to reduce animal and soil emissions. We will also have to bear the same liabilities as all other New Zealand taxpayers for the fuel, transport and energy we use on-farm.
Despite all this, the government is still developing policy it believes will help New Zealand best meet its obligations under the Kyoto Protocol. At the same time we are seeing blame and derision towards a sector that is undeniably important to the wellbeing of our nation. This blame and derision is coming from politicians seeking popular support from their electorate.
Given the tools that farmers have to work with, there is little opportunity for mitigation in the short term. Reducing stocking rates will hurt New Zealanders and New Zealand. I ask that people wait for the scientists to discover solutions which are good for the environment without hurting the economy.
The world food scene
On the grand scale of world demand, feeding the world’s growing population will become more difficult as land that has been used for food production, is taken up with growing biofuels.
The cost of food in some markets has risen to the point that it is becoming unaffordable. Large stocks of grain and dairy products that used to be measured in supply terms of up to 365 days are no longer there. This has been one of the drivers that has caused dairy product prices to double.
Add to this the increased demand for dairy products world wide as the standard of living of 15 to 20 million people per year in China, India and South East Asia lifts to become middle class with middle class incomes. The drivers for improved nutrition become paramount.
Currently about 90 percent of world meat and dairy production is produced in feedlot type systems. This requires large stocks of grain and other fodder to be available for stock feed.
The current drive to produce biofuels is putting huge upward pressure on the cost of stock feed and driving up the cost of production for these systems. It is expected that those of us who use grass feeding systems will benefit. The New Zealand economy will benefit from the lift in export income but the level of the New Zealand dollar is reducing those benefits.
Looking ahead
For next season the payout for dairy products is much improved but the expected cost increases are already starting to occur even before the cheques start coming. Increases in fertiliser costs of between nine to 24 percent will mean that farmers will need to be careful before changing to higher input production systems, as we may well need all the gains in revenue to meet the inevitable rise in costs.
The future in dairy farming holds out huge potential for New Zealand to lift its economic performance and with it our ranking in the order of OECD countries. We must however rely on the politicians to see that it happens.
Frank Brenmuhl
Chair of Dairy Farmers of New Zealand
Address to Dairy Farmers of New Zealand Conference/AGM
Langham Hotel, Auckland
Embargoed to 10.30am, 17 July 2007
Welcome to your conference and annual general meeting of Federated Farmers’ dairy industry section, Dairy Farmers of New Zealand.
It has been another busy year for those involved in the dairy industry. We have been in the media a lot as both saviour and sinner depending on your particular view.
My speech today will cover three main points: the economy and dairy’s role in it, the environment including the Kyoto Protocol, and the outlook for our industry.
Economic performance
The dairy industry contributes an enormous amount to the economic health of New Zealand. It brings in billions of dollars a year in foreign exchange earnings. For many commentators, dairy farming is seen as the brightest light on the horizon.
While dairying is doing well at present – and I stress at present – other export sectors of the economy certainly are not. As such it is of real concern that many of the underlying problems facing the New Zealand economy are not being addressed.
Right now we have a high dollar, tight monetary policy, an unsustainable current account deficit, low productivity, an overvalued housing market, and inflation at an uncomfortable level. These have resulted in the highest interest rates seen in this country since the late eighties.
These symptoms were all apparent during the bad old days of the 1970s and 1980s and more recently during recessions in 1991 and 1998. But there is more to add to the mix: high oil prices, a tight labour market, runaway government spending and creeping growth in regulation resulting in the highest level of compliance costs that we have ever known.
Yes, the future outlook for this country is far from certain.
It is vital for New Zealand to address the balance of payments deficit. For that to happen it is necessary for the private sector and the export sector in particular to flourish.
The continual drive by government to regulate, and add cost to business without recognizing the cumulative effects of such regulation, are to blame for many of the symptoms I have listed. These cannot be continually ignored.
If New Zealand is to prosper, government spending has to be reined in, and it has to refocus on core issues so that New Zealanders can be assured of a future standard of living that is comparable to other first world nations.
The dairy industry has a part to play in this. We are the best chance to grow the New Zealand economy. We know that we have to be responsible and to do all that we can to minimise our environmental footprint. But, we expect that all other sectors will take up the challenge to do likewise.
Environmental footprint
Turning to the environment, the old saying “people in glass houses should not throw stones†comes to mind. There is no activity that does not have some affect on the environment. Terms like natural or organic do not mean that there are no effects.
The issue here is that these words are bandied around as if these types of production systems will save the world. They will not. In many cases the environmental effects of these systems are similar to “conventional†systems. The problem is that much of this is unspoken.
The dairy industry has made a commitment with the Dairy Industry Strategy for Sustainable Environmental Management to reduce our impact on the environment. We are meeting our targets.
The dairy industry has been working with fertiliser companies and their representatives to ensure that all dairy farmers who have done fertiliser soil tests have also done nutrient budgets. This has, in many cases, meant a reduction in fertiliser applied, as more detailed information has allowed a better, more targeted approach to fertiliser use.
Most dairy farmers have now fenced off waterways and are much more conscious of the need to manage farm effluent correctly. Regional councils have taken some time to come to grips with their role in monitoring and achieving good compliance with regard to effluent management.
The Kyoto Protocol
The third issue I want to talk about is the Kyoto Protocol.
How the dairy industry is going to help New Zealand meet its commitments to the Kyoto Protocol has been a subject of discussion in the news lately, with many single issue advocates arguing for the full cost of our emissions should be met out of expected increases in returns from milk. Many of those advocating solutions are also playing politics with the issues, while showing remarkable ignorance of the facts. Politicians deciding who is guilty in a debate that scientists haven’t even figured out, is highly dangerous. I believe that all of those that benefit from the returns from agriculture should contribute to the cost of the liability under the Kyoto Protocol.
Currently agriculture is being blamed for 49 percent of New Zealand’s greenhouse gas emissions. This fails to reflect the offset from soil carbon stored under farm pasture and in tree plantings.
Farmers will not only suffer pressure to reduce animal and soil emissions. We will also have to bear the same liabilities as all other New Zealand taxpayers for the fuel, transport and energy we use on-farm.
Despite all this, the government is still developing policy it believes will help New Zealand best meet its obligations under the Kyoto Protocol. At the same time we are seeing blame and derision towards a sector that is undeniably important to the wellbeing of our nation. This blame and derision is coming from politicians seeking popular support from their electorate.
Given the tools that farmers have to work with, there is little opportunity for mitigation in the short term. Reducing stocking rates will hurt New Zealanders and New Zealand. I ask that people wait for the scientists to discover solutions which are good for the environment without hurting the economy.
The world food scene
On the grand scale of world demand, feeding the world’s growing population will become more difficult as land that has been used for food production, is taken up with growing biofuels.
The cost of food in some markets has risen to the point that it is becoming unaffordable. Large stocks of grain and dairy products that used to be measured in supply terms of up to 365 days are no longer there. This has been one of the drivers that has caused dairy product prices to double.
Add to this the increased demand for dairy products world wide as the standard of living of 15 to 20 million people per year in China, India and South East Asia lifts to become middle class with middle class incomes. The drivers for improved nutrition become paramount.
Currently about 90 percent of world meat and dairy production is produced in feedlot type systems. This requires large stocks of grain and other fodder to be available for stock feed.
The current drive to produce biofuels is putting huge upward pressure on the cost of stock feed and driving up the cost of production for these systems. It is expected that those of us who use grass feeding systems will benefit. The New Zealand economy will benefit from the lift in export income but the level of the New Zealand dollar is reducing those benefits.
Looking ahead
For next season the payout for dairy products is much improved but the expected cost increases are already starting to occur even before the cheques start coming. Increases in fertiliser costs of between nine to 24 percent will mean that farmers will need to be careful before changing to higher input production systems, as we may well need all the gains in revenue to meet the inevitable rise in costs.
The future in dairy farming holds out huge potential for New Zealand to lift its economic performance and with it our ranking in the order of OECD countries. We must however rely on the politicians to see that it happens.