New Zealand’s agri-food future under threat?

By Shaun Hendy 19/04/2010

KPMG released a report today by Ian Proodfoot, who predicts that New Zealand has as little as 5 years before its competitive advantage in production of bulk commodities is eliminated by the growth of large scale intensive farming practices in developing countries.  This will not be news to many in the agri-food sector.

Last Wednesday I attended the Riddet Institute’s Agri-Food Forum on the future of the food sector in New Zealand. The forum encompassed a broad range of views, so while there were presentations from both local and international experts in food science, there were also talks from outsiders such as Sir Peter Gluckman, the Prime Minister’s Chief Science Advisor, and Andrew Clelland, CEO of IPENZ.

There is little doubt that the agri-food sector is one of the most important parts of our economy and that it will continue to be extremely important for the foreseeable future, even as commodity prices plunge.  Of the developed countries, New Zealand’s economy is the most dependent on agri-food by a wide margin.

Indeed, when it comes to ’picking winners’, the argument is often made that it is a small improvement made in such a large sector that brings the best bang for the buck.  Yet from the talks I saw at the Forum, it seems that the low hanging fruit in this sector is gone.  The sector realises that it must move away from simply increasing its yield of commodity, and even premium, food products to focus on value-added food.  The KPMG report serves to underline this realisation.

So what can be done?  The unanimous view expressed by those at the Riddet Institute’s Forum was that the sector must embrace science and technology like never before.  However, a glance at the number of agri-food PhDs we have produced in recent times suggest that our capacity to develop value-added foods has also been eroded by long term underinvestment in skills and training.

Furthermore,  the most value is likely to be gained by introducing new ideas and technologies from outside of the food sector.  In order to sell value-added foods with proven clinical effects, for instance, the food sector would need to collaborate with leading medical researchers.  While it can try to look off-shore for these collaborations, the reality is that world class international research teams have little incentive to work closely with our food industry.  Attracting these sorts of international collaborations here requires matching domestic capabilities.

Thus our underinvestment in other areas of science limits the chances for cross-sectoral technology transfer domestically and internationally.  Only by increasing R&D effort across the board will New Zealand be able to maintain the value of its agri-food sector.

0 Responses to “New Zealand’s agri-food future under threat?”

  • The related take out from the day was that until agri-food businesses started to invest in R&D we aren’t going anywhere here, particularly if we plan to move beyond commodities.

    As I’ve noted here before the NZ Primary and Food businesses combined invest less in R&D than the Machinery and Equipment manufacturers, and little more than the Computer Services industry.

  • I have not yet read the complete report, but a quick skim shows some cause for alarm:
    – The report reads like a love sonnet to conventional right-wing policy; PPPs, less regulation – particularly of water, GMOs, etc, … Profit! There is little evidence that the proposed “remedies” will actually work.
    – There is an assumption that the world will return to more normal growth patterns fairly soon, with a resulting export-led recovery, which may well not be the case.
    – There is some talk of sustainability, but not much on how (un-)sustainable fossil-fuel powered agriculture actually is.
    – There is some discussion of lower labour costs in other economies being an issue, but I have not yet found where the authors show that this is not just our destiny, as well.

    The biggest omission is the lack of recognition of oil (and other fossil fuels) depletion, which is absolutely key to agriculture. Even if this is not as imminent as some say (and there are many credible sources who do say there is a near issue), it’s high impact. There is likely to be some noticeable change within 5-10 years, if not sooner. Quick searches for terms related to this found few mentions, let alone a full section devoted to the topic, as I would expect for such a critical issue.

    The truth is that we are far from our markets, relatively expensive in labour terms, and like many of the less “clean and green” producers, fossil-fuel dependent for our agricultural processes.

    How much of our produce is airfreighted out of here? (Genuine question, I don’t know – some superficial data fondling over at Stats suggests 15-20%). How well would that work if oil prices headed north of $140 again, or supplies became scarce? Look at the impacts of the Icelandic volcano on food availability in the UK (even after a small disruption).

    Taking labour costs out of agriculture is a doubtless noble goal in times of plenty, but fairly pointless if the (reduced?) taxes on the greater profits that might result need to be spent on paying welfare to those displaced out of work (and with few other options). Even more of an issue if we sell bits of our dairy industry to China. (Note I am not proposing abolishing welfare).

    Modern industrial agriculture is fossil-fuel soaked: soil fertility is declining, with extensive use of fertilisers and pesticides (and GMOs don’t tend to decrease pesticide use, as I understand things). Soil is treated as a substrate to pour chemical-based fertility onto, and restoring soils to a more conventional management regime takes decades. We do seem to import a great deal of fertiliser. Now, I’m sure you folks out there with greater science knowledge than I have will tell me both urea and DAP can be synthesised from other sources (ammonia from coal rather than methane or naptha, for instance) but carbon emissions also need to be considered.

    I would suggest that in a world of increasing fossil shortage and cost, far away from our markets, and constrained by at least some regard for the climate, NZ agriculture is not in a strong position. Therefore neither is NZ, generally. In this I do agree with the report authors. And, yes -science is likely to be more of a solution than superstition would be – but there are more important political issues to be addressed. This is not going to be remedied with techno-fixes, but will require profound social change.

    “Many argue that consumers both here and overseas do not want genetically modified products under any circumstances due to the unknown long term health and environmental impacts. There is a growing body of opinion that believes the market is ready to accept genetically modified products and in reality has little choice if we are to feed the growing population if the climate warms as many
    world’s population expect.”

    Rather dodgy logic and writing: who is the “growing body of opinion”? Where were they surveyed to determine this? Do we really have little choice, of are they just begging the question? If I were editing that I’d send it back.