Industry outlook good for agribusinesses - Associate Professor

The agricultural sector is buoyant, the strongest it has been in several decades, according to Stuart Locke, Director Institute of Business Research, The University of Waikato.

With commodity prices up and interest rates down, the exception of the Kiwifruit PSA debacle, it is a good time for farmers, Locke says.

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There is nothing to signal a drop in commodities, and with low farm prices offering good value for succession planning, the outlook over the next couple of years is favourable, says Locke

Economically the situation for farmers is good as the situation in Christchurch is helping keep interest rates down and the high dollar is only a problem in the US market.

Environmental concerns are around run off from farms need to be addressed by the industry, he says, while New Zealander’s ongoing concerns about foreign ownership of farms will continue to be an ongoing problem for New Zealand.

Locke says some perspective is needed as we have high levels of foreign ownership in banks, so it is an issue with Chinese corporates coming in to buy up supply chains which is the real issue.

For farmers, Locke says the big issues are around getting good labour across the board. Locke says we need to train our labour force more and many farms need to get a better model of management in place as this will be important with banks and others institutions in the future.

Locke says Farmers need to take ownership of many of the environmental issues.

They “need to de-politicise the issues” and not wait for the law to change and for councils to enforce environmental standards.

He says farmers need to take ownership of the environmental issues otherwise it could be bad news long term.

Locke says many of the environmental problems have occurred over long periods and farmers thought about things differently 20 years ago to how they do now.

“We have moved on in our understanding of how to care for the land and water and air.”

“We have too much govt with policy about how to control things ... than the grass roots making it work.”

Locke also says Innovation is extremely important as we need to make better use of our land and capital to increase productivity.

He says, In the next few decades we will see a big movement to barn raised cows as farmers look for ways to increase productivity from their land, but, “has to be done in a way to not effect our clean green image”.

While there is a lot facing farmers, he says they are well educated and equipped to improve their business.

There is a “thirst for knowledge” and a “desire to do things better all the way through and when lead farmers demonstrate there is a better way to do it others follow.”

He says the Industry works on osmosis and farmers tend to get close to those who do it well and do what they do.

He sees the University of Waikato’s focus as being on agri-business and research with a focus on PHD students doing research to provide the knowledge base to agri-business in the future.